1. PROFILE OF THE RURAL CONSUMER

India is a vast country having an area of 3.3million sq.km. It has 6,38,365 villages, 4,500 regulated markets 22,000 primary rural markets, 1.5 million rural sales outlets and about 60000 fair price shops. The population of India is widely scattered over villages and towns two thirds of the consumers live in rural areas and almost half of the national income is generated here. 32% villages can be reached and are connected by pucca roads; still 68% of the rural market lies untapped due to various reasons from inaccessibility to lack of awareness. Rural consumers are willing to go for premium brands in any product category. With the market providing them options, tastes are also changing. Old reliable like detergent cakes and single –edged blades have given way for detergent powders and twin blades. Companies such as Hindustan lever, Godrej, Palmolive, Cavin-care, Nerolac paints, Asian paints, Glaxo and many others have made in-roads into the countryside. Rural reach is on rise and it is fast becoming the most important route to growth. The rural population occupies an important position in the Indian market. PROFILE OF RURAL CONSUMERS

Low Literacy level

It is estimated that the literacy level in rural India is 45%as compared to 52% for the entire country .The rural literacy in the rural area is on an increase. Among the rural population Kerala tops with 77%. However the Literacy rates the much lower in Bihar and Rajasthan. Rural income

Rural prosperity and the discretionary income with rural are consumer is directly up with agricultural prosperity. A large part of the income is spent on meeting the basic necessities of life i.e. food, clothing and shelter leaving a smaller portion for other consumer goods. Rural savings

The rural consumers have been drawn into the saving habit in a big way. The commercial banks and the co-operatives have been marketing the saving habit in the rural areas for quite some years. Today nearly 70% of the rural households are saving a part of their income.

Occupation

In the rural area the main occupation is farming, trading, craft and

other odd jobs, like plumbing, electrical work, masonry work, carpentry etc. Reference groups

In rural areas the primary health workers, doctors, teachers and the Panchayat-Raj members belong to the reference groups and also influence in the decision making process of the rural consumers. Media habits

The rural folk are very much fond of music and folklore. TAMASHA and NAUTANKI are the popular form of entertainment in Maharashtra and Uttar Pradesh and then there are television, radio and video films. Conscious customer

Rural customers though not well educated, have good common sense, wise & sharp and are very conscious of “Value for money”. Brand loyalist

Rural customer senses patronizing attitudes and even formidable barriers to protect themselves and is bigger brand loyalists than their urban counterparts. High degree of involvement

A typical rural customer checks and rechecks the expensive product they are buying and they cannot be pushed too far as there is no urgent requirement for the products. Inter-personal communication

A word of mouth recommendations by users and sheer familiarity influences rural folk in their purchase decisions. Consultation

Decisions regarding the brand of consumer durables are taken by the man in the household in consultation with others in the community. Significant aspects

It can be seen in general sense low purchasing power, low standard of living, low per capita income, low literacy level and over all low social and economic positions are traits of rural consumers.

Classifications of the rural consumers on the basis of economic status

The Affluent Group

This group is very small and can afford conspicuous consumption of a highest order but they do not form a demand base large enough for manufacturing but with the exception for those who deal with real luxury items. The chilly merchants in Guntur (AP) and Cash rich wheat farmers in Punjab fall in the affluent s group. The middle Class

This class is estimated to be 300 million in size and it is undergoing tremendous expansion. It constitutes the largest segment and it forms the base for demand for manufactured goods in the country. The Jute farmers in West Bengal and sugar cane cultivators in UP fall in this class. The Poor

The size of this category is very large. This group receives the benefits of several social, educational and economic schemes and may advance economically and merge into middle class. The poorest farmers growing jowar, bajra etc. of Orissa And Bihar comes under5 this class. RURAL CONSUMER BEHAVIOUR

The basic foundation of every business is the consumer. In order to fine tone their marketing offers and achieve a high level of consumer’s acceptance and satisfaction, it is very important for the marketers to know what consumer sees, thinks, prefer and buys. The emergence of rural market has sparked a new interest among marketers to explore and understand them. An understanding of consumer behavior is essential in formulating the marketing strategies. FACTORS INFLUENCING RURAL CONSUMER BEHAVIOUR

Stimuli

Any inputs to any of our senses are termed as stimuli. They arise internally or externally. Inter stimuli originates from the individual own self. External stimuli are caused by environment or by marketing offer. Marketing stimuli includes a number of variables that affect consumer perception. The stimuli from environment may come from one or more of the factors or events in economic, political, technological or socio-cultural environment.

Perception

It is a process by which people select, organize and interpret information to form meaningful picture of the object. Three perceptual processes make effective communication a challenge to the marketers. Selective attention Selective distortion Selective retention Beliefs and attitudes

A belief is a descriptive thought that a person holds about anything. It may be based on knowledge, opinion, faith or emotion. Attitudes describes on persons consistent evaluation, feelings and tendencies towards an object or idea. It has three components. Cognitive Conative Behaviors Changing Behavior

Rural consumers are used to traditional forms of oral hygiene but Colgate under its operation Jagruti persuaded the people to convert to oral hygiene products. Need and motives

A motive is defined as “an inner urge that moves or prompts an action “. There is a primary and secondary motive. According to Abraham Maslow individuals have basic, productivity, social, esteem, self-actualization needs. Occupation

Goods and services bought by a person are influenced by the occupation of the individual. Economic situation

The purchasing power of an individual depends upon his disposable income, which is very low. So sachets and several other products in small units are convenient for purchase to the rural consumers who are mostly daily wage earners. Influence groups

The influence group involves reference groups-teachers, mukhiya of a village or family member, choupals; opinion leaders, family and innovation.

2. RURAL PRICE One of the most important constituents of rural marketing mix is pricing. In the rural market value for-money brands give the fastest sales for fast moving consumer goods. In the segments like bathing soaps, washing soaps and detergents, toothpaste etc. the consumers are increasingly opting for more VFM launcher. VFM brands like Nirma’s soap, Nirma, Britannia’s Tiger, and Colgate Cibaca Top are doing better than other premier brands from their own companies. Pricing strategy requires a holistic approach. Pricing is a part of the marketing strategy. It should be designed in such a way that it contributes to the objectives of the marketers and needs and wants of the consumer groups. RURAL PRICING OBJECTIVES

As far as pricing is concerned rural marketing Companies have a number of objectives. The following are the pricing objectives of a marketer in the rural area Deeper penetration of market

Basically Rural Markets are adopted for deeper penetration and expansion because of its size. For an example the price of VIM washing bar is Rs.15 in the urban market but it is offered forRs.4/- in the rural markets. Long run profit maximization

A company that enters the rural market should not anticipate profits in the short-run but wait for success in the long run. Hence penetrating pricing strategy is the best option. Recover profit through distribution cost

A company thinking of going rural should prepare its pricing objectives in such a way that it can recover the costs involved in distribution, production and dealer margin too. Competitive pricing

Rural marketers study the pricing strategy of the competitors and accordingly fix the price of their product. Increase sales volume and market share

Pricing will play an important role in order to increase the sales volume, which is main objective of pricing. E.g. Anchor white toothpaste

positioned itself as India’s first 100 percent vegetarian toothpaste and priced it much lower than the leading brand. METHODS OF PRICING

Marketers can employ the following methods when price-quality relationships are associated. Discriminatory Pricing

This is employed to charge different customer groups differently projecting differences of quality of offer. The different discriminatory pricing is Product form pricing: Different version of the product are priced differently E.g. Chota Pepsi – Rs.5 Location pricing: Same product is priced differently at different at different locations E.g. Residential places in city are costly Time pricing: Prices varies by days or seasons e.g., museums and zoo parks charges higher prices on Holidays and Sundays. Perceived value pricing

In order to enhance the customer’s perceived value, companies add features to their products. For each feature, which enhances attractiveness, reliability, durability, convenience; etc. the marketer charges an extra price. E.g. a farmer may value a power tiller by considering several points, which are value to him. Psychological pricing

Psychological pricing may be in the form of reference pricing or image pricing. In reference pricing, the marketers position and sell products at higher prices by endorsing the product by celebrities or placing products with classy products. E.g. a shampoo is referred to re.1 or a matchbox to 50 paisa. Image pricing is effective in case of ego sensitive products like cameras, sunglasses, cars etc. RURAL PRICING STATEGIES

Rural dealers generally require credit and therefore product pricing has to be adjusted to meet their requirements. The marketing manager has to formulate an appropriate pricing strategy to achieve the marketing objectives. Low price

Unit price of a product will have an impact on sales in rural areas.E.g.Cavin Kare studied rural buyer behavior and introduced Chik shampoo in small sachet of 4ml at low price of 50 paisa.

No frills product

The production cost can be lowered by using less sophistication and rather concentrating on sturdiness and utility of the product E.g. Maharaja Appliances Ltd, sells a sturdy Bonus washing machine, without a drier for rural market at Rs.2990/-. Refill/ reusable packaging

By giving refill packaging marketer can add value to the pricing of the product. E.g. Bourn vita available in refill pack and detergent made available in reusable packaging. Discounts

Discounts are offered to motivate the retailers to sell more of the company’s products. A discount of 5-10% is given on the maximum retail price in the case of fast moving consumer goods. Promotional schemes

Special promotion schemes such as new product introduction scheme, festival offer by way of special discounts, exchange offer i.e., taking back used consumer durables are aggressively promoted during harvesting and festival seasons in rural areas for increasing sales of the products. Value engineering

This is an internationally used technique, which helps organization not only lower costs but enhances value to customer. E.g. the success of Nirma is due to affordable price, medium quality, availability at village shops and use of rural specific mass media.

3. RURAL PRODUCT Rural consumer, outlook is very different from the urban consumer and what works for the urban consumer may not work for the rural consumer. Most of the companies treat rural market as a dumping ground for lower end products designed for an urban audience. It could tremendously benefit the companies if they use a little bit of their technical expertise to create specific products for rural economy. The product must be affordable and satisfy the rural needs. It also depends on the consumer’s attitude towards the product and the cost benefit analysis done by him before buying the product. Product life cycle

The product life cycle (PLC) refers to the stages through which the product passes over time. The PLC is graphically presented using a sales curve, ranging from the seeding stage to the perishing stage. Studying the PLC could give an insight into managing the profitable phases of the life span of the product. A rural product goes through four definite stages during the course of its life. These are Seeding Stage

In this stage, the product usually enters the market as a newborn with a certain amount of vulnerability in terms of low sales, lack of demand and low profits. The length of this stage depends on consumer acceptance and other variables like price preposition, innovativeness and nature of the product. For e.g., with a largely illiterate and rural population, computing has to be affordable and usable by people who have never been to school. The Simputer, made by Indian Institute of science, Bangalore, is a trailblazer in the digital revolution, which can replace the computer and provide specialized services like weather reports and crop prices. Sapling Stage

Here, the product has gained a substantial visibility and its sales are shooting up. Eventually, with the emergence of new competitors, even the markets grow. Pricing here is very important because it is more competition oriented and companies cannot dictate to the customer. For e.g. Coke and Pepsi have targeted rural markets by launching 200 ml bottles (‘Mini Coke’ and ‘chotta Pepsi’) priced at Rs.5 each.

Maturity Stage

This stage signifies a saturation point in terms of demand with heightened supply from several competing sources. Even though sales volumes do not shrink, the price competition reaches at peak and the company has to stand out of the competitors clutter by applying a little bit of product differentiation or milking brand equity to the fullest. For e.g. ITC, which exports agricultural commodities worth Rs. 700 crore, in its maturity stage discovered a way to pass the age old mandi system and buy directly from farmers. ITC se up e- choupals where farmers could skip the trip to the mandi and yet be aware of the prevailing prices. Withering Stage

This stage is the waning of the product, which shows an evident sales drop. Demand diminishes, leaving the marketer to gradually phase out his shrinking product from the market. Some companies try to link it up with the other products they have developed and stretch the life of the declining product. For e.g. Glaxo had stopped its marketing activities in rural areas with its product facing sluggish sales and thin margins. After over three years of operations, the company had accumulated losses due to product expiry, which was as high as 10 percent in rural activities, and distribution cost, which was again 3 or 4 times higher than urban areas. Rural packaging

Packaging is providing a container or wrapper for a product for protection and handling. It is done at three levels. Primary package: To hold the product e.g. bottles. Secondary package: To hold the primary package e.g. cardboard box. Shipping package: to carry the secondary package from one place to another e.g. corrugated boxes. Rural packaging strategy

Marketers have realized that to enter the rural market, it is necessary to offer products at the lowest unit price. At the same time, innovative packages are necessary toad value to the premium products. Small packs:

Small pack sizes help the rural consumer pick the product at a price that he can afford. The small pack sizes are convenient to the retailer to do his business and promote the national brands. E.g. many companies have participated in the package revolution that is sweeping the rural side. Marico Industries launched low prices sachets of hair oil.

Combi-packs:

When related products are packed together and sold at economy prices, the consumer finds it a better option to buy. E.g. The Johnson and Johnson baby’s care assortment packages priced around Rs.175 consist of a powder soap, shampoo, hair-oil and cream. See-through packs:

Many companies are coming up with new packages that are attractive as well as economical, E.g. The see- through wrappers, which are a first of its kind in India, enable Colgate Palmolive to offer a premium product at a competitive price of Rs.17 for a 100 gm pack. Rural branding

Brand is the name, term, sign, symbol, design or a combination of them, which helps to identity sellers’ products and differentiates them from those of competitors. The primary purpose of branding is creating an identity of the product. The brand name for the rural market should be such that it is instantly understood and recognized by the rural consumer. The rural brands are recognized mostly through symbols, logos and colour, E.g. Battery with cat as a symbol- Eveready. The rural consumer remembers it as “Billie walli cell”. The process of rural branding involves. Creating an identity: E.g. ‘Tata shakti’ a sign of power, which leaves lasting identity in consumers mind. Enhancing recognition: E.g. Eveready batteries-A symbol of cat-‘Billie walli cell’. Building a brand image: E.g. Bhumiputra-Mahindra & Mahindra tractor. Rural Product strategies

Product is the most important element of marketing mix and product strategies used by companies in rural markets are as follows: Sturdy products:

Most of the rural consumers believe that heavier the item, higher the power and durability. E.g. Bullet motorcycle continues to be popular in villages due its ruggedness. Designing products:

Considering the field conditions in rural areas, companies can come out with sturdy products.E.g. PVC shoes and chap pals. Small unit packing have been used for many consumer products.E.g. Ponds have gained market share over the past few years by focusing on the rural market and it has introduced 20 gm Talcum powder.

Utility products:

The rural people are concerned with the utility of the items rather than appearance. E.g. Philips has introduced FreepowerRadio RL 117 priced at Rs 995/- for the first time in India. The radio requires no external batteries or electricity for operation. A one-minute winding of the lever runs the radio for about 30 minutes. Branding: Brand is a name, word, symbol, design or a picture or a combination of them used to identify the product and distinguish it from that of the competitions. E.g. Colgate toothpaste, lifebuoy soap, Nirma washing powder, bourn vita, Horlicks, Lipton tea etc. are very popular brands among consumer goods.

4. Rural Communication Though the rural markets offer big attractions to the marketers, one of the most important question frequently asked is ‘How do we reach the large rural population through different media and methods?’ Advertising media are the vehicles used to carry the advertising message from the sender to the receiver. All advertisers do not use all the available media at the same time. Depending on his own requirement and financial conditions the advertiser can use one or more of the media. Factors affecting rural communication

Literacy Levels

Literacy levels are low in rural areas. However, it has been growing at a steady rate. As per the Indian demographic Report 2001, the literacy rate at present is at 55 %. Most rural people read newspapers in vernacular languages. For e.g. Dainik bhaskar is planning to launch newspapers in all 28 states. Media habits

Markets research on the media habits of farmers in Andhra Pradesh, haryana and Punjab are quite revealing. They clearly show that, contrary to popular belief; organized media have considerable reach among rural consumers. Over 70 % of the population listens to the radio, about 65 % in Andhra Pradesh go to cinemas. The corresponding figure for Punjab and Haryana is 26% In both these areas, over 30% read newspaper regularly. Increasing penetration in the Hinterland

More than 70% of India’s total population is in villages and about 26% of the national income comes from rural areas. There is an inequitable distribution of this rural income among rural folk: the majority has low incomes and consumption levels; a few are rich. Area of coverage

Companies are getting aggressive in rural markets, as competition is intensifying. Companies are extending their distribution networks to satellite villages and interior tribal areas. It will be a challenge to advertise in these areas. Advertising can harness the potential of the rural people by creating rural specific campaigns.

Growing purchasing power

The increase in purchasing power in rural areas has generated vast potential markets for manufactured goods because people want to raise their standard of living. Market research and consumer surveys are essential and cover a fairly wide area of rural life, including the attitudes and aspirations of the rural buyer. Macro Environment

Advertising does not create immediate demand. It can enhance demand only when favorable environmental conditions have been created. Rural advertising in a country in a country like India faces political, social and economic issues. Rural India is a set of regional markets where cultural factors playa very important role. The advertiser has to understand rural people, as the rural market is very heterogeneous in nature. For e.g. the poor spend lavishly on marriages, the caste system still maintains a rigid hold in some areas, the community is context with whatever little it has, and many preach non violence and practice violence. Problems of rural communication:

Marketing communication and promotion too possess problem in the rural market. There are many constraints from the profile of the audience and the availability of media. Some of the problems are discussed below: Low literacy rate:

The literacy rate among the rural consumer being low, the printed word has limited use in the rural context. In addition to the low level literacy, the traditional bound nature of rural people is also a problem. Limited reach of the organized media:

It has been estimated that all organized media put together can reach only30% of the rural population of India. T.V. is an ideal medium for communicating with the rural masses but its reach in the rural areas is limited even today. As regards the print media the various publications reach only 18% of the rural population. Expensive communication:

Repeat exposure is a must for rural communication to be effective and if the gap between exposures is long the messages lose its edge during this period. These factors make rural communication more expensive. Traditional ways of communication:

The crux of marketing communication in the rural context is one of the finding a media mix that will deliver the required message in a cost effective manner to a target audience i.e. predominantly illiterate. Types of rural media

In the rural context the firm has to choose a combination of formal and non-formal media. Formal media

Newspapers and magazines:

The local languages newspapers and magazines are becoming popular among the educated families in rural areas. E.g. Punjab Kesari in North, Loksatta in Maharashtra etc. TV:

TV has the potential to become the primary medium for rural communication. Television has made a great impact and large audience has been exposed to this medium Regional TV channels have become very popular especially in Southern states E.g. Sun TV is a very popular even in rural areas in Tamil Nadu and Asia net is a preferred regional channel in Kerala Radio:

Radio reaches large population in rural areas at a relatively low cost. E.g. the farmers have a habit of listening to regional news/ agricultural news in the morning and late evening. The advertisement has to be released during this time to get maximum coverage in rural areas.

Film:

Film viewing habit is high in certain states like Tamil Nadu, Karnataka and Andhra Pradesh. Village theatres do roaring business during festivals by having four shows per day. E g films on products like Vicks, lifebuoy, are shown in rural cinema halls. Wall:

Wall painting is an effective and economical medium for communication in rural areas, since it stays there for a long time depending upon the weather conditions

Direct Mail:

Direct Mail Advertising is a way of passing on information relating to goods or services for sale, directly to potential customers through the medium of post. E.g. Mailers in regional language for promoting seeds and pesticides.

Informal /Rural specific Media

Farm-to-farm/House-to-House:

Rural people prefer face-to-face communication and farm visits facilitate tow- way communication.eg many LIC agents and companies dealing in two wheelers have tried this approach with success in rich rural areas. . Group meeting of rural customer as well as prospects is an important part of interpersonal media. The company is able to pass on the message regarding benefits of the products to a large number of customers through such meetings. E.g. MRF Tyres conduct Tractors Owners Meet in villages to discuss repairs and maintenance of tractors. Opinion leader is a person who is considered to be knowledgeable and is consulted by others and his advice is normally followed. E.g. Asian Paints promoted its Utsav brand of paints by painting the village sarpanch’s house a few months prior to the launch to demonstrate that the paint does not peel off. Melas are of different types i.e. commodity fairs, cattle fairs and religious fairs and may be held only for a day or may extend over a week. Many companies have come out with creative ideas for participating in such melas. E.g. screening of popular films along with ad films by fertilizer/pesticides companies in south India. Field demonstration is based on the extension principle “seeing is believing” and is one of the most effective methods to show the superiority of the company’s products to the customers. E.g. spraying a particular brand of an insecticide against insect pests and showing the farmer how effectively the insects are controlled. Audiovisual publicity (AVP vans) is one of the effective tools for rural communication. The van is a mobile promotion station having facilities for screening films slides and mike publicity. Portable exhibition kit can be carried in the van and an exhibition of the products could be put up as and when required. E.g. Companies such as HLL, Colgate, and Phillips have made effective use of AVP vans for popularizing their products in the rural areas. Folk dances are well-appreciated form of entertainment available to the village people. The troupe consists dancers, drummers and musicians and they move in a well-decorated van from one village to another village singing and dancing. Mike announcement is made about the company’s

products and leaflets are distributed. After the dance programme, the sales person, if any, about the product answers queries. The haats: Traditionally on certain days of week, both the sellers and buyer meet in the village to buy and sell goods and services. These are haats that are being held regularly in all rural areas. For the marketers, the haat can be ideal platform for advertising and selling of goods.

5. Markets and classification of markets

In a country of India’s magnitude and consumption production diversities, agricultural marketing is extremely crucial. Agricultural marketing is an essential element of economic planning that helps us to break the poverty syndrome and achieve the planned objectives. Marketing is not merely an economic link between the producer and the consumer but it maintains a balance between demand and supply and it helps to achieve the objectives of price stability, rapid economic growth and equitable distribution of goods and services. Classification of Agricultural Markets:

Location:

Village markets, which are, located in small villages and their major transactions, takes place among buyers and sellers of village. Primary wholesale market: Primary markets are weekly or bi-weekly markets they are locally called as “Shan dies or Haats” generally commodities produced in the nearby surrounding areas are brought here and sold in these markets. Secondary wholesale markets: These markets are located at taluka, or district headquarters and other towns and are popularly known as Mandis or Gunjs. Large quantities of commodities arrive from other markets into these markets. Terminal markets: are those markets where the produce is finally disposed off directly to the consumers or the processor or it is assembled for exports. Price locating activities operate in such markets and buyers and sellers represent the different regions or nations meet sometimes to adjust the demand and supply. The terminal markets are located in highly populated cities. Area of coverage:

Local or village markets where buying and selling are confined to buyers and sellers from the same village or nearby villages and it deal in small lots such as fresh milk and vegetables. Regional markets are those where buyers and sellers are drawn from a larger area and mostly deal in food grains.

National markets are those where buyers and sellers deal in durable commodities like jute and tea. World market where buyers and sellers are drawn from the world and they deal in goods like gold, silver, cotton and coffee. Time span:

Short period markets where products of highly perishable nature such as fish, milk etc are traded. It is held for a few hours. Long period markets where products such as oilseeds, food grains, etc. that are less perishable are traded. Secular markets deal in manufactured goods. These are permanent in nature. Volume of transactions:

Wholesale markets where goods are bought sold in large quantities and bulk transactions take s place between traders. Retail markets where commodities are bought and sold accordingly to the consumer requirement. Nature of transaction:

Spot or cash market where goods are exchanged for money immediately after fixing the rates. Forward market in which purchase and sale of goods takes place at ‘X’ time but the exchanges of goods take place at some specific date in future. General market where all types of commodities such as food grains, oilseeds, fiber crops etc. are brought and sold. Specialized market where transaction takes place only in one or two commodities E.g. cloth market, food grains market etc. Degree of competition

Perfect market where there are large number of buyers and sellers. Imperfect market where there is monopolistic competition. Nature of commodities:

Service market which deals in services such such as professional consultancy.

Capital market where dealing in bonds, shares and securities takes place. Commodity market which deals in goods and raw material such as barely cotton. Extent of public intervention:

Regulated market where business is carried in accordance with the rules and regulations framed by a statutory market organization. Unregulated market where business is conducted without any set rules and regulations.

Hats and Shan dies

Hats are villages markets often held once r twice in a week while shandies are also village markets held at long intervals or on special occasions. People from rural areas and agricultural workers purchase their requirements from these markets. Small and marginal farmers sell their produce in such markets. Big farmers with large surplus go to large wholesale markets. Structure of agricultural markets

Primary markets: Every weekly market provides marketing services to the people within the vicinity of 16km. The locations of such weekly markets are fixed as per the convenience of the people. The local Grampanchayats manages and controls such markets. Secondary markets: The secondary markets exit in small towns and cities. They are known as bazaars or man dies. Wholesale as well as retail trade takes place in these markets. The traders who purchase from the primary wholesale markets, the same wholesale trader sells in this market. The wholesaler performs the marketing function of assembling and distribution. Terminal markets: The terminal markets are generally located near the ports. The goods are to be imported or exported through these ports. Warehousing and cold storage facilities are available in these markets. These markets receive goods from interior areas. The terminal markets are the end markets of big cities and port. Regulated markets

Under the traditional system of marketing of agricultural products, producer-seller incurred a high marketing cost and suffered from unauthorized deductions of marketing charges and the prevalence of various malpractices.

In order to improve the marketing conditions, increasing the bargaining power of the producer-seller was considered to be the most important prerequisite of orderly marketing. Most of the defects, and malpractices under, the then existing marketing system of agricultural products have been more or less removed by the exercise of public control over the market. By establishing regulated markets in the country. In India, markets came into regulation mainly after independence, although some steps had been taken in that direction during the British rule. The need for regulation of markets arose from the anxiety of British rulers to make available pure cotton at reasonable prices to the British textile mills. A regulated market is one, which aims at the elimination of the unhealthy and unscrupulous practices, reducing marketing charges and providing facilities to producer-seller in the market. Any legislative measure designed to regulate the marketing of agricultural produce in order to establish, improve and enforce standard marketing practices and charges may be termed as one, which aims at the establishment of regulated markets. Marketing Co-operatives

Cooperative marketing is based on the principles of co-operation. It is a system by which a group of farmers join together to carry out some or all the processes involved in carrying agricultural produce from the producer to the consumer. It is a voluntary association formed by its members for mutual benefit and help. Such an association brings diverse benefits to its members in terms of fair prices. They have also helped government agencies in the execution of policy decisions bearing on the procurement and distribution of food grains and other essential commodities. A cooperative marketing is a cooperative association of cultivators formed primarily for the purpose of helping the members to market their produce move profitably than is possible through private trade.

6. Rural distributions

There are about 6 million retail outlets, both in urban and rural markets, in India. Out of these, 3 million outlets are located in urban India in 4000 towns and cities whereas the balance 3 million outlets are scattered in about 6 lakh villages. Even if a company has a product that meets the requirements of rural consumer, it will succeed only if it is made available as and when required by the consumer. Physical distribution

Physical distribution activities include order processing, handling of goods, packaging warehousing, transportation, inventory control, banking and customer service. Channels of distribution

Marketing channel is the route taken by the title to the product as it moves from the producer the ultimate consumer. Every marketing channel starts with the producer and ends with the consumer. The channel member consists of wholesalers and retailer who is middleman in distribution and they perform all marketing functions. These middlemen facilities the process of exchange of goods; create time, place and possession utilities. There are many channels used for the distribution of goods in rural areas and details are given below: Manufacturer-Consumer (direct sale): In this case, the stocks are directly supplied to the ultimate consumer avoiding middlemen and their commission. E.g. In many states, the Government has encouraged farmers to sell vegetables directly to urban consumers by setting up “farmers” market.

Manufacturer-retailer consumer: here the stocks are sold to the consumers through a network of retailers.E.g. Manufactures of two wheelers have direct dealers in semi-urban markets. Manufacturer-Wholesaler-retailer-Consumer: the manufacturers appoint wholesaler in key rural market and these wholesaler in key rural markets and these wholesaler cater to needs of retailers in villages. This is a popular channel option used by manufacturers.E.g. Distribution of seeds and pesticides in rural areas. Manufacturer-consumer-Depot/C & f agent retailer-consumer: In this case, the manufacturer moves the stocks to company depot/depot

operated by a C and F agent and from these depots, stocks are supplied directly to the retailers. E.g. Good lass Nerolac have depots in Kolhapur, Pune, Nagpur and Aurangabad in Maharashtra and stocks are supplied directly to the retailers in rural markets. Manufacturer-company depot/ C and F Agent-Wholesaler-Retailer-

Consumer: this is a lengthy marketing channel and the manufacturer opens his own depots or appoints C and F agents in state capital or in key cities in each state. Goods are supplied to wholesaler working at district headquarters or in commercial centers. Wholesalers in turn service a network of village retailers. E.g. companies like Colgate, HLL, Marico and BAL Sara to penetrate rural markets have used this method. The social side of effective distribution

Discussion has be centered on how various commercial organizations in the private, public or cooperative sectors could plan and set up an effective distribution network in the rural environment. There is an inherent difference between the approach of a commercial organization and the government or a state agency when it comes to effective distribution. The prime objective of the government is to make available essential commodities at fair prices to all rural consumers in adequate measure and at the right time. The government often aims to also act as a catalyst and an agent of change for the overall economic development of the nation and it approaches effective distribution mainly from these two angles. With its commitment to the ideals of welfare, state, social justice, etc, it would also like to ensure that the fruits of economic growth- increased productivity and production – go to all the sections of the society. The contrast. A commercial firm approaches the physical distribution job purely from the point of viex of its marketing goals and objectives, including providing proper services to the consumer and long term market development. However, it cannot ignore the social side of distribution. Operation Streamline

In 1997 HLL launched its Operation Streamline to extend its distribution in the rural market. It started as a pilot project in Uttar Pradesh and now being used to cover many new villages. Each of the 450 districts in India has as many as 100 village connected to them at times even thousands. HLL appoints redistribution stockiest who approach district stockiest often turned as wholesaler, some people in the remote villages are appointed as “Star seller”. They take the stocks on credit from redistributors and sell them in the remote villages. As soon as the stock gets exhausted they approach the redistributors in the district again. In this way HLL is able to penetrate deeper and deeper into the rural market. HLL has increased it’s

sales in a big way in villages of Bihar, Uttar Pradesh, and Madhya Pradesh. It now wants to replicate this model in the villages of Maharashtra and Gujarat.

7. Rural sales force management

Every organization has people who are entrusted with the responsibility of dealing with prospects and customers to sell their products or services its salesmen. They may be called technical executives, sales executives or marketing executives. Whatever the term used, the major concern in the sales function is to constantly improve the profitability of the territory. Strategic planning for rural sales force management

The following are the main tasks of a marketer to use his rural sales force effectively. Determining the personal selling objectives of the firm

The objective of personal selling may vary from company to company and it depends on the overall objectives of the company, the corporate strategy adopted by it, the type of products marketed, the nature of the target market, the type of channels chosen, the resources available and its competitor’s practice. Formulating sales policies

Formulating sales policies is the next key task in rural sales management. Sales policies have to be set in a wide range of areas like product, distribution and pricing. Structuring the sales force

Organizations usually structure their rural sales force on a territory basis or on a product/product-line basis.

Deciding on the size of the sales force

The size of the rural sales force has to be fixed at an optimum level. A number of interrelated considerations are involved such as Level of rural sales expected and the number of salespersons needed for generating the sales, minimum number of salesmen needed and cost involved in maintaining the rural sales force. Fixing sales quotas/targets

Sales quotas or targets are nothing but quantified objectives for salesmen. It should reflect the firm’s personal selling objectives, overall sales plan, and the size of the sales force and the nature of the sales territories. It should not be too high or too low.

Creating a sales force: selection, recruitment and training

The first step in developing an effective sales force is recruiting first class salesmen. Training, motivation, development and other aspects of sales management will help the process but the men recruited must be good. Managing the sales force: compensation, motivation and supervision

Recruitment is just the first part of building a top notch sales force. The other parts relate to retaining them, managing them and making them contribute their best is a good compensation plan is the first requisite for retaining and motivating salesmen. Sales communication and reporting

Sales management is carried out largely through communication. The sales manager lets his men know what they are expected to achieve, how they are performing, how they can improve and perform better. Sales reports are also useful tools in sales administration, implementation, control and coordination and also in communication. Sales coordination/control

Sales control ensures to sales executive that all personal selling objectives of the firm are achieved and helps him ensure sales goals are properly aligned with the other goals of the firm. Sales coordination go hand in hand with sales control. He has the responsibility of coordinating the different elements of the selling effort. Important traits for rural sales person

While the basic traits of personal selling such as enthusiasm, communication skill and the knowledge of selling techniques in equal measures by urban and rural salesman, the later require certain additional traits and capabilities in order to match the peculiar conditions of the rural market. Some of the unique traits are discussed below: Knowledge of local language:

The rural salesman needs a strong background of the local language. In fact, he has to go one step further i.e. he must be well versed is specific lingo an idiom of the local area/ community, for in rural India, within each major language group the colloquial expressions and speaking manners vary considerably from locality to locality. Willingness to get located in rural areas:

It is known that the rural areas lack modern amenities compared with urban areas. Because of this factors the salesman are generally

elected to work in rural centers. Experience has shown that successful rural marketing firms locate their rural salesman right in the midst of the rural area to be covered. Lipton India, For example, has located one of its salesman is Khategaon, an interior place in Devas district in Madhya Pradesh. Cultural Congruence:

The salesman must have proper acquaintances with the cultural pattern of rural life in the given rural territory. Since the cultural patterns of the rural communities differ from one another, a cultural background i.e. in console Nance with the culture of given rural community is a specific requisite of success for the rural salesman. They should not fool the customer into buying all the products in the catalogues. Instead they must help them to eliminate items that are outside their specific requirement and those which are beyond their financial reach. Attitude Factor: The rural salesman must have a great deal of patience, as their customer is a traditional and conscious person. It will not be possible for the rural salesman to clinch the sales quickly. He may have to spend a lot of time with customer and make several visits to gain a favorable response from him. Capacity to handle a large number of product lines:

The rural salesmen are often required to handle a much large number of product lines as compared with their urban counterparts. The rural salesmen usually do not generate economic value of business if they handle few products. They are compelled to handle a large variety of items. In short the rural salesmen are required to become to become jack-of-all-trades. Greater creativity:

The rural salesman must endeavor to introduce them in the rural market through creative selling, using consumption pioneers and opinion leaders. The rural salesman has to be a carrier of a developmental message to the less privileged rural community. Functions of the rural sales persons

The major concern in sales function is to constantly improve profitability of the territory. The salesperson has to undertake the following activities in the field:

Increase Sales:

The sales person has to identity his own and customer’s potential, call on more customers consisting of farmers, dealers and influential, increase sale by making use of selling skills and by undertaking fieldwork. Training and motivating the distributor, dealers and sales assistant help to improve trade sales. The services of NGO’s can be used. For e.g. Colgate Palmolive use NGOs to promote its toothpaste, Colgate super Shakti in rural markets. Improve Company’s Image:

A sales person is the link between the customer and he is the company’s ambassador in the market. Therefore, the salesperson has to create a good impression with the customer by his conduct in professional and personal life. Develop future market:

The salesperson has to keep in touch with the latest changes in the cropping patterns, competition, government policies, local practices etc. Identification of new markets, developing distribution system and undertaking demand generation activities is necessary in order to the market for future. Effective use of resources:

Salesperson should not resort to dumping of stocks with distributors and dealers in order to achieve sales targets. He should ensure that stocking of goods is proportional to the expected sales. This will enable him to collect the dues as per the credit policy of the company.

Self-improvement and development:

The salesman need comprehensive on the job training in selected village markets. They need to be educated about the rural marketing environment in addition to be trained in salesmanship and in selling techniques. The rural sales manager must also support his salesman with non-conventional needs of market promotion suitable to rural consumers. The rural salesmen need more intensive sales training, as they have to handle a variety of products. For E.g. Hindustan Levers salesmen have to cover 70000 rural locations. Naturally administering such a large and scattered sales force, supporting them in sales calls, coaching them on the job, attending to their official and personal problems and motivating them for better results is a challenging task for the sales manager.

8. Agricultural marketing finance

Moneylenders were the main sources of credit during the 1950’s and were the most convenient and easiest source of credit. His credit was available when the farmer needed it. Cultivators depended upon moneylenders for their cash requirements. According to the All India Rural Credit Survey, in 1951, the moneylenders accounted for nearly 70 %of all rural credit, the figure in 1981 was 16% and these shows that the moneylenders are losing ground to institutional agencies. The government took various steps in order to solve the problem of the rural credit and thus enabling agricultural development Finance in villages can be classified into: Non-Agricultural Finance

Agricultural Finance: Production credit Consumption credit Non-Agricultural finance

A farmer will take a loan to finance hi family’s daily subsistence requirements and personal needs. These basically include building a house, marriage expenses of his on or daughter, etc. Sources of agricultural credit

As the needs are different from those of the urban counterparts, the credit structure of agriculture is also different. There are Non-institutional sources of finance

i. Moneylenders: As they are the most important sources of finance for farmers. They charge high interest rate and are known for their cruelty and exploitation of farmers.

ii. Landlords/Jamindars: They are mainly the richest and the most influential persons in the village after the Sarpanch. They advance money to small cultivators on the condition that the produce is sold through them.

iii. Pucca Arahatias: These are very important link between the farmers and the wholesale market and are the commission agent, trading in bulk quantities of the produce. They provide credit to the farmers for harvesting and post harvesting operations.

iv. Beoparis: These are the local traders who move from village to village to procure agricultural produce and they advance money with an understanding that the produce will be sold at a discounted price to them.

Institutional sources of finance

i. Credit co-operatives: These are voluntary organizations formed by likeminded members in order to achieve a common economic objective. Their main objectives are to provide timely and increased flow of credit, ensure balanced regional credit and to arrest the monopoly control of moneylenders.

ii. PACS, LAMPS: A co-operative credit society commonly known as the Primary Agricultural Credit Society is started normally by the people belonging to one village and the loans given are for short periods, normally for a year, for agricultural operations. LAMPS (Large Sized Adivasi Multipurpose Societies) provide rural credit and other support services in extremely remote and adivasi areas.

iii. Regional rural banks: The RRB’s provide credit to the marginal farmers, agricultural laborers etc. to ensure growth and development of agriculture, trade and other productive activities. The lending rates of RRB’s are usually lower than the prevailing rates in cooperative societies.

iv. Lead bank scheme: Under this scheme one of the commercial banks becomes a lead bank in the district and coordinates credit deployment activities. It acts a link between the co-operative, commercial and other financial banks and institutions. It enables rapid branch expansion and it helps identify districts where there are no banks to open branches there. It extends short and medium term loans to farmers and also extends direct and indirect support to meet the needs of farmers.

v. NABARD: It is a specialized financial institution in the field of agriculture and rural development. It has been designed specially as an organizational device for providing undivided attention, forceful direction and pointed focus, to the credit problems of rural sector. It has enough financial resources to support agricultural and development programmers.

National bank for agricultural and rural development (NABARD)

NABARD is a specialized financial institution in field of agriculture and rural development. It has been designed specially as an organizational device for providing undivided attention, forceful direction and pointed focus, to the credit problems of rural sector. RBI and other half by the government contributed half of NABARD’s capital. It has enough financial resources to support agricultural and rural development programmes.

Functions of NABARD

1. It works as an apex body, which looks after the financial needs of

agriculture and rural development.

2. It provides short-term loans (upon 18 months) to state cooperatives for seasonal agricultural operations.

3. In provides medium term credit (18 months to 7 years) to state cooperatives and RRBs for approved agricultural purposes.

4. It maintains research and development fund to be used to promote research in agriculture and rural development.

5. It has authority to oversee the functioning of co-operative sector through agricultural credit development.

6. It is entrusted with the responsibility of inspecting central and state co-operative banks and RRBs.

7. It provides long term and medium term credit (not exceeding 25 years) for investment in agriculture to state co-operative banks, RRBs and commercial banks.

8. It provides long term assistance in form of loans to state government not exceeding 20 years for contribution to share capital of co-operatives credit institution.

Agricultural financial credit

Finance had a very limited role in traditional settings as the transactions were undertaken within the limits of village. Cash was only needed to pay land revenue or to purchase consumption goods. The need for finance grew with modernization. Frequent crop failures forced farmers to borrow from moneylenders for meeting consumptions requirements. Due to this, the self-sufficient communities were exposed to credit gap. A gap of one year implies a perpetual time and over a time spreads to the entire village community. Agricultural credit is classified into two:

Production credit:

Short term:

Credit repayable within a period of 15 to 18 months is short-term credit. These loans are granted to meet the daily working capital requirements of farmers. Short-term loans are granted to purchase seed, fuel, fertilizer, insecticides, pesticides and other input requirements. The important form of short-term credit is the crop loan. Crop loan have two components

(a) One for meeting current cash outlays and (b) Another, which can be distributed in kind.

a) Cash component: It is made to meet the cash requirements by the farmers during the time of production.

b) Kind component: Financial agencies may make necessary arrangements with co-operative marketing societies to supply needed inputs by the farmers instead of giving cash loans, which are ultimately meant for purchasing various inputs.

Medium term loans: Medium term loans are required mainly for creating capital aspects. They may also be used for purchasing livestocks; agricultural machinery and equipment such as diesel engine, electric motors, etc. medium term loan are mainly granted for production purpose. Medium term loan defined by survey committee is one which is repayable over a period of 15 months to 5 years. After the establishment of NABARD medium term period is increased between 18 months to 7 years. Long-term loans: Long-term loan is granted basically for permanent improvement or for acquiring new assets. It is the one, which is repayable between the period of 5 or 7 years to 20 or 25 years. Long term finance is needed by farmers for intensifying the agricultural operation on existing holding by making permanent improvements on land, green revolution is associated with intensive use of capital.

Consumption credit: In India, agriculture is dependant upon nature. Good rainfall lead to good crop failure of monsoon damages the crop. India agriculture a continues to be a gamble in monsoon. Consumption loan is basically for survival of farmer’s families. They could be considered as production loans.

9. Standardization &Grading

Agricultural products are heterogeneous. They are not uniform in size, shape, quality and other physical characteristics. Because of this, different varieties of the same product fetch different prices. Hence goods are classified into different types so as to price them accordingly. This classification is done on the basis of certain predefined grades and standards. Standards are certain specifications that are set: limits that a product must conform to in order to be graded as having the necessary qualities. Grades are guidelines on the basis of which existing products are classified to differentiate them into various types. Standardization

Standardization means determination of basic characteristics of a product on the basis of which the product can be divided into various groups. It also means determining standards of products to be produced with respect to quality, utility, size, form, co lour etc. Standards are model products, which forms basis of comparison with other products. Standardization is the application of standards to goods meant for marketing with a view to further sub-dividing them into several grades or classes. Generally it includes establishment of standards, the sorting and grading of the products to confirm to these standards, re-packing, breaking up large quantities into smaller units of desirable size and products inspection. Advantages of standardization

1. Convenience in selling.

2. No need for inspection.

3. Advantages for manufacturers.

4. Expanding the market.

5. Availability of finance.

6. Elimination of risk.

7. Increase in demand. Grading

Grading is an important function of standardization. It implies the division of products into classes made up of unit possessing similar characteristics of size and quality. Grading is mostly done in case of raw materials, mineral products and agricultural products. There is no need to divide industrial products as they are produced according to pre-determined standards. It is necessary to divide mineral and agricultural

products, as these products are generally not equal and uniform. There may be differences, in quality or size or shape or characteristics of the products. Grade standards for commodities are laid down first and then the commodities are sorted out according to the accepted standards. Grading helps the producer to get proper prices for these products because different prices may be fixed for different lots. Types of grading

1.Fixed or Mandatory grading

The grades in this method are fixed and do not change over time. The person has to follow the specifications given if he wishes to use these grades. 2.permissive or variable grading.

Unlike fixed grades, here the specifications change and alter over a period of time and space. In this method, individual choice in grading is permitted. However in India this method of grading is not allowed. 3. Centralized/Decentralized grading.

Grading may be centralized, that is, supervised by government agencies, or may be decentralized to certain local bodies.

4. Grading at Producer’s level.

Under this programme, free grading services are provided to the farmers for sorting the produce before offering for sale. This enables them to realize prices commensurate with the quality of the produce. Several regulated markets and warehouses are manned with grading personnel with the central assistance. Grading in India

The Agricultural produce (grading and Marking) Act, 1937

To improve the quality of agricultural products in India, an act was introduced for grading and marking-The agricultural Produce (Grading and Marking) Act, 1937. The act authorized the central government to frame rules relating to the fixing of grade standard and the procedure to be adapted to grade agricultural commodities. The act of 1937 has been amended from time to time to widen its scope and include as many crops as possible. Initially, only nineteen commodities were included for grading purposes; now there are 153 commodities in the schedule for which and grades are available.

Prevention of food adulteration act, 1954

The act came into effect on 1 April 1976. It was enacted to achieve three main objectives: 1.To protect the public from poisonous and harmful foods. 2. To prevent sale of sub-standard food. 3. To protect the interest of the consumer by eliminating fraudulent practices. Food product order, 1953

It is now called the Essential Commodities Act 1955. It exercises control over the production of food products in the interest of the manufacturer and the consumer. Standard of weights acts, 1956

This act was passed in 1956 to bring uniformity in weights and measures. It was amended in 1976 to establish the standards of weights and measures based on the units adopted by the General Conference of Weights and Measures and International Organization of Legal Metrology. The act was enacted to check the malpractices in weights and measures done by the sellers. AGMARK

AGMARK is the acronym for agricultural marketing. It is a quality certification mark under the Central Agricultural produce (Grading and Marking) Act, 1937. The Agricultural Marketing Board to grade agricultural products introduced AGMARK. The AGMARK label indicates the products meet certain standards of purity and quality that have been laid down. Labels of different colours are used to indicate the grades of the product. Strict procedures are followed and rules are laid down to ensure conformity to the standards set as per the grades given. Quality checks and tests are done to maintain standards.

10. Methods of sale & marketing agencies

Marketing is as critical to better performance in agriculture as farming itself. An inefficient marketing system is a stumbling block to increasing agricultural production. Agricultural marketing includes all business activities involved in moving agricultural products from producers to consumers and transferring ownership at various levels in the marketing channels. There are reported 21 methods of sale in existence and are very popular for marketing agricultural produce. Methods of sale

Under cover of a cloth

The buyer and the commission agent of the seller settle the prices of the produce by pressing the fingers of each other’s hand under a piece of cloth. The negotiation continue till a final price is settled When all buyers have made their offers, the name and offer price of the highest bidder is given to seller by the commission agent. Private negotiations

In this method individual buyers come to the shops of the commission agents at his convenient time. He inspects the samples and offers the prices for the produce. If the price is accepted the commission agent conveys the decision to the seller and the produce is weighed and given. It is time consuming and are not suitable where large quantities have to be sold. Quotations on sample, taken by commission agent

In this method the producer or the commission agent shows the sample to the trader and finalizes the price. E.g. During clove and cardamom auction the buyer quotes the price for the produce by just looking at the samples. Dara sale method

In t6his method of sale, the produce is mixed and then sold as one lot. The main advantage of this method is that within a short period of time a large number of lots are sold off. The disadvantage is that the produce of good quality and also of poor quality gets the same price Which can discourages the farmers interest in producing high quality crops.

Moghum sale method

The produce is sold on the basis of a verbal understanding between the buyer and the seller without any pre-settled price, but on the distinct understanding that the price of the produce to be paid will be the one prevailing in the market on that day. This method is common in many villages where farmers are indebted to local moneylenders. Open auction method

Prospective buyers gather at the shops of the commission agent around the heap of produce, examine it and shout out their bids. The produce is given to the highest bidder after taking the consent of seller farmer. In most regulated markets sale of produce is permissible only through this method. Types of Auctions

1. Phar system of open auction

2. Random bid system of open auction

3. Rostev bid system of open auction

Closed tender system

The produce displayed at the shops of commission agents is allotted lot numbers. The prospective buyers visit the shops, inspect the produce, offer a price on a slip of paper, and deposit the slip in a sealed box for buying at the commission agents shops. When the auction time is over the slips are arranged according to the produce number and the highest bidder is informed by the commission agent that bid has been accepted and that he should take delivery of the produce. State trading

The government for distribution purchases huge quantities of paddy or wheat. While the procurement price is fixed, the actual price paid depends upon the quality of the produce. Forward sale

Under this system the producer sells his anticipated future produce in advance to the trader directly at a price fixed at the time of striking the deal. Being an oral contract, it is not enforceable by the law. Jalap sale

In this method the traders purchase the standing crop of the producer well in advance of the harvest at a price fixed on the date of bargain. E.g. Many contractors, who deal in different fruits like mangoes, approach the mango grower and enter into a verbal agreement with them by just looking at the flowers setting.

Marketing agencies

Marketing agencies act as a link between the producer and the buyer. They play a very crucial role in the marketing of agricultural produce. Different types of people play different roles in the marketing of agricultural products. Producers

The farmers or producers perform various marketing functions before the produce is moved on in order to reach the final consumer. They play a key role as they form the base of the entire system. Middlemen

Middlemen are those individuals or business concerns that specialize in performing the various the various functions and rendering such services as are involved in the marketing of goods. They are classified on the basis of their functions: Merchant middlemen: Wholesalers, retailers, beoparis. Agent middlemen: Commission agents, arahatias, brokers. Facilitative middlemen: Those who do not buy sell directly but assist in the

marketing process such as hamal, Weigh men, tolas, graders etc. Beoparis

They purchase the produce of those who have either taken fiancé from them or those who are not able to go to the market. They often visit nearby markets or keep in touch with prevailing prices. They either ell the collected produce in the nearby market or retain it for sale at a later date in the village itself. Arahatias

Kaccha arahatias primarily act for the sellers including farmers. They sometimes provide advance money to farmers or itinerant beoparis on condition that the produce will be disposed of through them. They charge arahatis in addition to normal rate of interest on the money they pay in advance. Pacca arahatias act on behalf of traders in the consuming market. The processors and wholesalers in the consuming markets employ pacca arahatis as their agents for the purchase of a specified quantity of goods within a given price range.

11. Defects in agricultural marketing and lines of improvement

Efficient marketing is a prerequisite for the development of any economy. Efficient marketing ensures remunerative price to producers, reduce marketing costs and margins, and provides commodities to consumers at reasonable prices, and promotes the movement of surpluses for economic development. There are many imperfections in the marketing system for agricultural commodities in India. Some of them are given below. Defects in agricultural marketing

Heavy village sales of agricultural commodities

A majority of Indian farmers sell a large part of their produce in the villages, which result in low returns for their produce. Village sales account for 20-60 % of trade in food grains, 35-80 % in cash crops and 80-90% in perishable commodities. Post harvest immediate sales by farmers

A majority of the cultivators tend to sell their produce immediately after the harvest at whatever price that prevails. This is due to the poor retention power of the farmers, which arises due to their pressing need for cash in order to repay debts and meet their cash needs for paying land revenue, meet social obligation and purchase basic necessities. Inadequacy of the institutional marketing infrastructure and lack of

producer’s organizations

Farmers are disorganized and market their produce individually. Because of this, they have low bargaining power, and they have to deal with traders who have strong organizations. They cannot therefore insist on a reserve price for their produce and watch silently as the open auction takes place. Existence of too many middlemen

The government does not impose any restrictions on the entry of market middlemen. Therefore, there are many middlemen between the producer and the consumer. As a result, the length of the marketing channel increases and the cost of marketing and market margins go up. Hence, producers receive a low price, while consumers pay a high price.

Multiplicity of market charges

For the same value of goods, the cost of marketing agricultural produce is much higher than the products of other sectors. A large number of market charges are paid – commission, brokerage, weighment, hamali, karda (impurity charges), dhalta (excessive moisture charge), mudidat (charge for market cash payment), darmada (charity for gosh alas, water huts); etc. These charges also vary from market to market. Existence of malpractices

Unauthorized market charges, spurious deductions, unfair weighing, taking away a part of produce as sample by bidders, bungling of accounts, etc. result in an increase in the real cost of marketing produce. Lack of reliable and up-to-date market information

There are no reliable channels of communication to provide price information to producer-farmers, who are isolated in remote villages. In the absence of reliable information, farmers depend on hearsay reports that they receive from village merchants, and as a result sell their produce at lower rates. Absence of proper standardization or grading of produce

Most farmers have little knowledge of their practice of grading of produce prior to its sale. They usually mix superior or inferior quality products to make a single lot. As a result, they get a lower price for their produce. Sometimes farmers are penalized by traders for the existence of a small percentage of poor quality, produce in the lot. Inadequate storage facilities

By its very nature, agricultural production is not only confined to a few areas but is also limited to a few seasons in a year. But its consumption is spread throughout the year. Only adequate and efficient storage facilities can ensure continuous supplies throughout the year. At present, storage facilities are not only inadequate but the available god owns are not properly managed. This leads to wastage or reduced supplies, resulting in high prices during the off-season. Inadequate transport or communication facilities

Inadequate transport or communication facilities are one of the major obstacles to improving marketing efficiency. Because of resources specifically or fixity, certain crops and products can be grown only in certain regions. The surplus produce of these areas has to be distributed to other places that are in need of it.

High costs of borrowing

Charging exorbitant rates, cheating illiterate borrowers by recording larger amounts than borrowed, non-issue of receipts for repayments were, and are some of the major problems faced by farmers while borrowing from moneylenders. The situation has not improved much even with the entry of institutional credit as farmers find the institutional sources more cumbersome and rigid. Lines of improvement

Establishment of regulated markets

In a regulated market the transactions are governed by the set rules and regulations. The market may operate under state legislation or regulated by local bodies. The representative of growers, traders and the government look after the functioning of these markets. They ensure fair trading practices, license market functionaries, curb the deductions of unauthorized market charges, enforce standard weights and measure and also introduce open auction system of the sales. In short regulated markets can remove the major defects of traditional rural market. Use of standard weights and measures

In a regulated market a licensed weigh man with standard weights and platform scales does weighing. The use of standards weights and measures safeguards the interest of parties against cheating by false or underweight. Standardization of contracts

With the setting up of regulated markets, all the irregularities of marketing can be eliminated to a large extent, A series of legislations came into effect and many marketing charges such as darmada, karda, dhalta and muddat have been abolished. Improvement of transport facilities

There are some ways in which transport can be improved and transport costs reduced which are as follows:

1. Full utilization of the capacity of the vehicle in terms of load in order to reduce per quintal cost of transportation.

2. Fixing the rate of transportation by different means. 3. Using the correct type of wagons to reduce spoilage,

damage, breakage or pilferage. 4. Reduce the barriers that came in the way of interstate

movement of produce.

Increase storage provision and warehousing facilities

In 1979 the government launched a scheme called the National Grid of Rural God owns which was to be shared equally by the central and state governments. In case of perishable commodities cold storage facilities have to be established or made available to the farmers at affordable cost. In order to prevent distress sales and loss arising out of inadequate and defective storage facilities a network of rural storage centers should be build on priority basis. Such storage centers may be constructed and managed by Panchayats, co-operatives and other organizations selected by the state government. Improvement in standardization and grading

Grading and standardization enables the farmers to get higher prices for their produce, reduce market costs by minimizing expenses on physical inspection of the produce, minimizes storage losses and also ensures better scope for exports. Provision of finance

Finance is a major problem for the farmers. Small and marginal farmers entirely dependent on credit to meet their needs and carry out farm activities. Large numbers of farmers commit suicide every year due to bankruptcy and inability to repay loans. Hence it is very important that the rural credit structure is improved so that more credit is made available to farmers, thus improving their financial status. State trading in food grains

The food departments of the central and the state governments took up state trading in food grains initially. The food corporation of India was set up in January 1955 to undertake the purchase, storage, movement, transport, distribution and sale of food grains. Make inspection, research and training

Proper arrangements for market inspection, research and training will help solve the problems of agricultural marketing in many ways. With the help of this research, an efficient marketing system can be developed. Inspection will help in identifying the nature of the problems and their root cause. Development of co-operative marketing

Cooperative organizations are voluntary entities formed by members with a felt need to market their own produce to collectively maximize advantages compared to the private trade. Co-operative

marketing will help link, integrate and streamline production marketing or processing. E.g. of co-operative marketing agencies are NOGA (Nagpur Orange Growers Association) and HPMC (Himachal Pradesh Marketing Corporation). Provision of marketing information

Marketing information is vital for production and marketing decisions. It can be broadly defined as a communication, reception of knowledge or intelligence. It includes al the facts, estimates, opinion and other information tat affect the marketing of goods and services. There is a need to improve the information network in order to make the farmers aware of the conditions, demand, pricing, etc. This will enable them to market their products at better prices and get higher returns. Government agencies must publish accurate and timely information regularly and make hem available to the farmers.

12. Rural marketing strategy

A company has to adopt a step by sep approach when it comes to rural marketing. It is very dangerous to enter the rural markets at a single shot. The villages are widely scattered and logistics will pose a big problem. So it is better to follow a sequential approach to rural marketing. The Indian market can be broadly classified into four regions: north, east, west, and south. A company has to find potential for the product in these markets and then enter accordingly. For a startup company it is better to concentrate on locational advantage. For e.g. Cavinkare Ltd launched its Chik Shampoo first in rural markets in the south and then gradually spread to other parts of the country. The rural marketing strategy involves three stages: The planning stage.

This is the first stage of the rural marketing strategy. A strategy is a set o predetermined objectives prepared in order to achieve the determined goals. Hence, planning plays a crucial role in strategy implementation. The planning stage is sub-divided into four sub stages. They include: Profiling the rural market

Before the company decides to enter the rural market, it should conduct the profile of villages to enter: potential villages, availability of target customers, affordability, etc. Profiling the rural customer

Once the company decides which markets it wants to enter, it should profile the demographics of each village or district. Important inputs like age, sex, income will play a major role. Studying consumer behavior and marketing research

Based on a consumer profile, the company should study consumer behavior. Marketing research can be used to get insights into consumer behavior. However companies should take illiteracy into account and adopt innovative MR practice to study rural consumer behavior. Segmentation, targeting and positioning of the rural product

After the marketing research is carried out and consumer has to segment the rural market. The most important parameter for segmentation, the targeting can create a positioning strategy.

Execution and implementation stage

This is the most crucial stage of the rural marketing strategy and proper care should be taken during this stage. Any mistakes during this stage can affect the entire rural marketing strategy. This stages is further divided into: Designing the product

Company can launch a product that has been successful in urban markets directly, introduce it with some minor changes or launch an entirely new product specifically designed for the rural market.. Rural pricing

Company arrives at the price of the rural product after taking into consideration the purchasing power of the rural customer and also the cost involved in manufacturing, distribution and promotion. For e.g. Videocon launched a stripped down version of its washing machine, named it the washer. It priced the product at Rs. 6500, which is affordable for the rural customer. Rural distribution

Distribution is a crucial element during the implementation phase of the rural product. With no adequate infrastructure support by way of the railways and poor or non-existent roads, it is difficult for companies to penetrate into more isolated pockets of the rural hinterland. E.g. HLL uses bullock carts and self help groups to distribute its lifebuoy brand of toilet soap. Rural sales force management:

Company has to supply goods in rural markets, which consist of major areas of India.. Many areas are still not connected to pucca roads, and people still use kuccha roads. It’s a difficult job to make available the company’s product in such areas; so many companies are taking help of SHG’s and syndicated distribution. Rural communication

It is very difficult to communicate to rural audiences because of the innumerable languages and dialects in the country. A carefully designed communication strategy that takes culture and traditions into account has to be adopted in each part of the country. E.g. When Clinic Plus shampoo dubbed an urban advertisement into vernacular languages it did not take into consideration the cultural values in rural areas. The ad depicted a women showing off her hair, which is not acceptable in rural areas, where women usually cover their heads with their saris.

Feedback stage

This is the third and final stage of the rural marketing strategy. Any planning effort should also have a considerable control aspect. A strategy, when executed has to be carefully monitored. This stage is further divided into. Monitoring the rural market.

A strategy has to be carefully monitored to avoid faulty implementation. If there is any gap in execution it can be addressed and checked before the rollout. Monitoring can be done through sales figures, customer feedback etc. Feedback and control

Controlling can be done through constant feedback mechanics. Quarterly results, dealer feedback, salesman feedback and market surveys are useful tools to collect feedback and maintain effective control on the rural marketing strategy. Developmental marketing

The rural marketer have come up with a way of convincing rural customer to buy their products because of the lack of awareness, illiteracy, and no direct media impact. This concept is called ‘developmental marketing’. Developmental marketing is a process through which awareness is created well before the product is launched. The awareness is created, free samples are distributed using traditional media like folk shows, puppet shows. The company should wait patiently because rural consumers are very reluctant to try anything new.

The steps in developmental marketing are :

E.g. Marico industries went a step further in its application of developmental marketing while attacking spurious brands that were cutting into the sales of its parachute coconut oil brand. It launched its ‘Shudhta ki pehchaan’ campaign where customers were asked to smell parachute oil to differentiate it from spurious brands.

Awareness

Trial

Purchase

Post-purchase satisfaction

13. Agricultural marketing in India Marketing is a critical to better agriculture as farming itself. Therefore, market reform ought to be an integral part of any policy for agricultural developmental. Agricultural marketing is the study of all the activities, agencies and policies involved in the procurement of farm inputs by the farmers and the movement of agricultural products from the farms to the consumer. The agricultural marketing system is a link between the farm and the non-farm sectors. Definition

According to national Commission on Agriculture-XII Report “Agricultural marketing is the process which starts with a decision to produce a suitable farm commodity or product and it involves all aspects of market structure or systems, both functional ad institutional, based on technical and economic considerations and include pre and post harvest operations like assembling, grading, storage, transportation, and distribution.” Why agricultural marketing is complicated

Agricultural marketing has its own special characteristics, which make it very risky and complicated. Some of these are as follows.

1. Most agricultural produce is perishable and therefore requires special processing, storage and timely diposal.

2. Agricultural produce is consumed throughout the year, but produced on a seasonal basis. Therefore special storage and stocking is needed.

3. Timely collection of agricultural produce from scattered small producers is very difficult and costly.

4. Demand for the produce is spread throughout the country and throughout the year. Making available to consumers what they want and when they want it needs considerable planning and investment.

5. Agricultural produce, unlike other products, loses weight and also suffers from quality deterioration. Very good storing, maintenance and transportation are essential.

6. Producers/farmers need continuous support, guidance and the latest technology to increase yields.

Marketing of agricultural products

Agricultural marketing has two types

Input marketing

This refers to marketing of products required for agricultural production. Unlike urban markets, rural areas are production centers. To produce food grains, vegetables, fruits etc a large number of inputs are needed. These include seeds, fertilizers, pesticides, agricultural implements, and cattle feed, poultry feed. Input marketing also includes marketing services such as diesel engine repair and health care. Output marketing

This includes the marketing of food grains, vegetables, milk etc. because of high degree of fragmentation of holdings, the producer finds it difficult to sell hi product at a remunerative price. In order to overcome this problem, the government provides support prices; enters the rural market to purchase agricultural produce at a fixed minimum price.

Agricultural Marketing

Input marketing Output marketing

14. Transportation, Storage and warehousing

Agricultural marketing involves the supply of agricultural produce from the farmers to the ultimate consumers. There is a wide gap between the producers i.e. the farmer and the consumer. The farmer lives in remote villages and the consumers are widely scattered in the urban and semi urban areas. The farming activity is seasonal, a particular crop is produced only during a particular part of the year but consumed throughout the year, hence in order to meet the demands, the supply needs to be handled very carefully. Due to this the functions of transportation, storage and warehousing play an important role in agricultural marketing process. Transportation

Transportation is one of the most important functions of marketing’s it creates place utility. Most of the goods are not consumed where they are produced. In case of farm products they have to be brought from the farm to local market and from there to the primary wholesale markets, secondary wholesale market, retail market and finally to the consumer. Advantages of transportation

Market development

Transportation helps in widening of market by bridging the gap between the producers and the consumer located in different areas. Without transportation the markets would have just been local markets. In the absence of transportation, the exchange of goods between different districts, regions or countries would have been impossible. Employment creation

Transportation requires various infrastructure facilities and ancillary services. For e.g. loading, unloading, packing, repair services etc. Thus it provides employment to a large number of people. Transformation of economy

Due to efficient transportation the economy is transformed from subsistence stage to the developed commercial stage. The raw material produced in the rural area is supplied to the industries thereby stimulating its growth. The goods manufactured are than transported to the place of consumption.

Mobility of factors of production

The mobility of capital; and lab our fro one area to another is possible due to transportation. Entrepreneur gets opportunity for investment in new avenues where there are high markets potential and profit is also higher. Labour turnover takes place in the form of migration of people for a better living and remuneration. This mobility is possible due to transportation. Facilities specialized farming

Different crops grow under different climatic conditions and soil. Farmers can go in for specialization in the commodity most suitable to their area and exchange the goods required by them from others area at a cheaper price. Storage

Storage involves holding and preserving goods from the time they are produced until they are needed for consumption. Storage protects the product from deterioration and surplus supplies in times of plenty are carried over to the season of scarcity. It adds time utility to the product. Agriculture is characterized by relatively large and irregular seasonal fluctuations in production. On the other hand consumption of most farm products is relatively stable. This conflicting behavior of demand and supply makes it necessary that large quantities of farm produce should be stored for a considerable period of time. The storage function is performed at all levels in trade. Producers hold a part of their output at their place. Traders store it in order to take advantage of the price. Processing plants hold a reserve stock of their raw material in order to run their plant on a continuous basis, retailers store various goods in order to satisfy the day to day needs of the customers and finally even the consumer stores food grain and other requirement depending on their financial condition. Warehousing

Warehousing may be defined as the assumption of responsibility for the storage of goods. It may be called the Protector of National wealth, for the produce stored in warehouses is preserved and protected against rodent’s insects and pests and against the ill effect of moisture and dampness. Warehouses are scientific structures especially constructed for the protection of quantity and quality of stored products.

Types of warehouses

On the basis of ownership

Private warehouses

Private warehouses are the ones which are owned by the traders to store there own stock of goods. Private warehouses are considered to be very useful to business community. It is easy to have direct control as these warehouses are near to place of work. Goods can be handled easily and the transportation cost can be avoided. Private warehouses require very heavy capital outlay. They have very limited value and utility as other business units cannot use them. Public warehouses

Public warehouses are the one, which are run to store goods of public. Manufacturers, wholesalers, exporters, importers, government agencies, etc mostly use these houses. Public warehouses can be owned by government agencies, private agencies or even by dock authorities. Warehousing receipts are given to those who keep their goods in warehouses. Bonded warehouses

These warehouses are specially constructed at a seaport or an airport and accept imported goods fore storage till the payment of customs by the importer of goods. The owner of the warehouse gives an undertaking to the government that custom duty will be collected from the person before he is allowed to remove the goods from the warehouse. On the basis of commodity stored

General warehouses

These are ordinary warehouses used for storage of most of food grains, fertilizers etc. While constructing such warehouses no commodity specific requirement is kept in view. Special commodity warehouses

These warehouses are specially constructed for the storage of specific commodities like cotton, tobacco wool and petroleum products. They are constructed on the basis of specific requirement of the commodity. Refrigerated warehouses

These are warehouses in which temperature is maintained as per the requirement and are meant for such perishable commodities as vegetables, fruits fish eggs and meat. The temperature in these

warehouses is maintained below 30degree to 50degreeF or even less, so that the product must not get spoiled by high atmospheric temperature. Functions of warehouses

Scientific storage

In this a large bulk of agricultural commodities may be shored. The stored product is protected against qualitative and quantitative losses by the use of such methods of preservation. Price stabilization

Warehouses help price stabilization of agricultural commodities by checking the tendency to making post harvest sales among the farmers. Financing

Nationalized banks advance credit on the security of the warehouse receipt for the stored product to the extent of 75% to 80% of their value. Market intelligence

Warehouses also offer the facility of market information to persons who hold their produce in them. They inform them about the prices prevailing during the period and also inform them when to sell their product.

15. Marketed and marketable surplus

In agricultural marketing, marketed and marketable surplus is a very important concept to understand and see the true picture of a county’s agricultural scenario. The amount of produce a farmer sells depends on various factors, which in turn determines the total quantity that may be available for sale. Marketable surplus

Marketable surplus is the quantity of the produce that can be made available to the non-farm population of the country. It is the residual left with the producer- farmer after meeting his requirements, for family consumption, farm needs, seeds, and feed for cattle, payment to lab our in kind, payment to artisans ( carpenter, blacksmiths, potters and mechanics), rent payment to the landlord, and social and religious payments in kind. MSI = P-C Where, MSI = marketable surplus P = Total production C = Total requirements

Marketed surplus

Marketed surplus is the quantity of produce that the producer- farmer actually sells in the market, irrespective of the requirements for family consumption, farm needs and other payments. Marketed surplus can be less than, equal to or greater than marketable surplus. Marketed surplus> marketable surplus:

This occur when farmers retain smaller quantity of the crop than their actual requirements for filmy and farm needs. Marketed surplus< marketable surplus: This occurs when the farmers retains some of the surplus produce. This situation holds true under following the situation

(a) Large farmers generally sell less than their marketable surplus, because of their ability to wait for payment. They retain extra produce in the hope that they ill get a higher price later.

(b) Farmers may exchange one cop for another, either for family consumption or for feeding their livestock, because of the variation

in the prices. With a fall in price of a competing crop, the farmers ay consume more of their own crop and less of the other crop.

Marketed surplus = marketable surplus:

This occurs when the farmer retain neither more nor less than his requirement. This holds true for perishable commodities and for average farmers. Factors affecting marketable surplus

Size of holding

There s a position relationship between the size of te holding and marketable surplus. Level of production: There is a positive relationship. Price of communication: Has positive or negative relationship depending upon whether one considers short or long run, or micro or macro levels. Size of the family: the larger the family, the smaller the surplus from the farm. Requirements of seeds: higher the requirements, the smaller the marketable surplus. Consumption habits: In south India, Andhra Pradesh and Karnataka are predominantly rice- consuming states, and hence, wheat enters the market. Cash requirements: if fixed, marketable surplus will vary inversely with price changes. If variable, marketable surplus ill go up in response to an increase in price. Nature of crops: farmers produce two types of cops: food cops and sh crops. Food crops are retained, while cash crops enter the market. Mode of production: if the farm uses traditional methods, there is less marketable surplus. If it uses new technologies, HYV seeds, chemical fertilizers etc, there is more marketable surplus.

Relationship between prices and marketable surplus

Inverse relationship:

The farmer’s cash requirements are nearly fixed; and given the price level, the marketed portion of the output is determined. This implies that the farmer’s consumption is a residual, and tat the marketed surplus is inversely proportional to the price level. This behavior assumes that farmers have inelastic cash requirements. Positive relationship:

V.M. Dandekar and Raja Krishnan say that there is a positive relationship. Raja Krishnan has pointed out that the elasticity of the marketable surplus is not negative, so long as the substitution effect is non-zero.

16. Rural market segmentation, targeting and positioning

Rural markets are widely scattered and the culture, buying habits etc. vary from one region to the other. Marketers therefore have to divide the market into several sub-markets, which is called ‘market segmentation’. Rural segmentation is very tough to implement because there are a lot of parameters that have to be taken into consideration. Segmenting, Targeting and Positioning (STP) plays a crucial role in the marketing strategies of a firm. A rural marketer has to be careful and cautious in studying the consumer for STP. Segmentation

Rural consumers are not homogeneous as far as economic conditions, literacy, lifestyles or buying behavior etc are concerned. It would therefore be unwise for firms to assume that the rural market as a whole and be served by a single offer or a single product-price-promotion combination. Firm’s can analyze the rural consumer in-depth and through market segmentation select relevant segment as target markets by developing a distinctive positioning strategy. Identify segments variable

A company can segment rural markets by using several bases. Following are some of the variables according to which companies can segment rural markets in India: 1. Geographic segmentation 2. Demographic segmentation 3. Psychographic segmentation 4. Buyer behavioral segmentation Segment the market

The marketer has different variables for segmenting the rural market, he has to decide which ones are the most suitable. Since the characteristics of the rural customer are widely spread across several variables, different bases can be used in combination to segment a given rural market. The different variables can be used in a suitable order for the market concerned; this type of segmentation I called multi level segmentation. Multi level segmentation provides the advantage of better selection of target markets and better choice of marketing mix.

Develop the profile

After deciding the variables according to which market segmentation is to be done, a marketer needs to develop the profile of the markets with the help of selected variables. Any elements from the variables listed above can be used by a marketer for segmentation purposes. A marketer should use a combination of variables to segment the rural market, which is very large and scattered.

Select the target market Selecting the target market is related to, but not synonymous with, market segmentation. It is the next step to multi level segmentation. A target market signifies only those segments that a company wants to adopt as its market. Here the step of selection is involved. Evaluate the market Evaluating the target market is the next step. Target markets can be evaluated with reference to their relevance, accessibility, size and profitability. The sales and profit potential of each segment must be accessed. The marketer also needs to evaluate its resources and then accordingly choose the market. Evaluate the segments

A segment should be selected only after a proper evaluation of different target segments is made. The marketer has to evaluate the segment selected, whether it is sizeable, growing, profitable, accessible, and compatible with the firm’s resources and capabilities etc. Targeting

After a thorough evaluation of the selected segment, the marketer has to choose the target market and then formulate a marketing strategy, which I further linked to the positioning formulation. A marketer cannot formulate an effective strategy without proper targeting. It is through the process of segmentation and targeting that a marketer understands not only the characteristics of each of the segment but also the distinctive excellence that he requires to cater to specific needs of consumers in each of them. Positioning

Positing is a platform for the brand to get through to the target consumer. In positioning, the firm decides how and around what parameters the product offer has to b placed before target consumers. The need for positioning arises from the fact that a product cannot be everything to everyone but has to be something to someone (segment). Positioning can be done by taking into consideration some unique

features of the product, some special needs of the market or some noticeable gap in competitor’s products and then positioning the product around some features or a combined one for particular target consumers. Identify the positioning concept The marketer has to take into consideration the fact that the rural consumer is governed by certain motives while buying a product. A marketer who is trying to identify the positioning theme for his product has to study the possible buying motives of rural consumers and figure out how to appeal to them. Select the concept Now that there are so many parameters for positioning the product, the marketer has to select the best and effective alternatives. A marketer has to select a positioning concept that is a bride between the products and the target market. Often products fail in the initial stage due to improper selection of the positioning strategy when they are launched. Develop the concept Once the positioning strategy is selected, the marketer needs to develop the concept in an effective manner such that it can be properly addressed to the target market and has to find the most appropriate media that reaches the maximum part of the target market effectively. The marketer should try to relate and link the positioning strategy to the target consumers and ensure that it appeals to them. Communicate the concept The advertising agency needs to effectively communicate the positioning that the marketer seeks to the target consumer. The ad agency also has to come up with the appropriate media, message, source, headlines and display so as to effectively communicate the positioning to rural consumers. An effective advertisement is one that clarifies the target market, value proposition and the supporting product differentiation- in other words clarifies successfully the positioning strategy of the product. Offer product After STP, the company should offer the rural product to the market for acceptance. As communication about the product has already been done, the company will just have to make it available to rural people with the help of it distribution network. This will further lead to sales of products.

Post-sales feedback After a few months, the company should assess whether a product is a success or a failure. If the brand is not doing well, minor changes should be done. And if it’s successful, the company should expand that market. After-sales service A company needs to provide service for the product after it is sold, especially for consumer durables. Post sales service is an important factor in purchase decisions in rural areas, because most of the sales are through reference groups.

17. Agriculture in India

With 72 percent of our population till dependent on agriculture for their livelihood, there is no doubt that India is an agrarian economy. Today the agricultural sector contributes nearly 26 percent to India’s GDP and, after services, employs the maximum number of people. On the negative side, there are the declining levels of agricultural research, low credit growth, environmental degradation, faulty incentive systems and unorganized storage, marketing and public distribution system. Today the drivers of agriculture are the strong forces of the market, global agreements on agriculture, free trade and subsidy rationalization. On the negative side, there are the declining levels of agricultural research, low credit growth, environmental degradation, faulty incentive systems and unorganized storage, marketing and public distribution system. Stages of growth of Indian agriculture

1. Agriculture marketing during the British period (pre independence

period). 2. Agricultural marketing post independence. 3. Agricultural marketing in the new millennium

From prosperity to poverty

Food habits in India over the last two decades have undergone a marked change due to rising per capita income. Poor people now want to emulate the diet of the rich. With growing incomes, more emphasis is laid on the quality of food products and consuming a variety of processed foods. In India, cereals account for the largest share of consumption expenditure. However, cereal consumption has been declining over the past several years. Cereals are mainly consumed as processed products like rice from paddy and flour from wheat. Maximum support

The central government announces minimum support prices for all food grains, but enforces them only for a few crops such as rice and wheat. The result is that other food crops such as jowar, bajra, maize, ragi and pulses and lost out; their share in food grains output has fallen.

Grain drain

The government also failed in distributing food grains to the common man. Not a pretty picture for a country hose public distribution

system(PDS) is the world largest food security programme, serving over 230 million ration card holders through a network of almost 500000 fir price hop. They are mostly serving the people below poverty line; these needy people neither have the ration cards nor does the wherewithal to buy from the shops what sell the subsidized grains. The PDS has been improved, reformed and targeted several times and has been renamed Revamped Public Distribution System (RPDS) and Targeted Public Distribution System (TPDS) which is being implemented now. But none of these experiments have really worked. Evils of globalization (WTO reforms)

India has to gear up to meet the provisions of the WTO agreements on the agricultural sector. In 2005 and beyond, the agricultural sector has to prepare itself for the challenges posed by WTO reform. It could lead to losing patents on agricultural products (India already lost Basmati ice and neem to USA), removal of subsidies on crops, agricultural inputs etc. Norms like organic farming, trade liberalization and the emergence of market forces will also change the economic scenario. India should take on the challenges of future perils and stand firm to sustain the dominance of agriculture in the world economy.

18. Rural marketing research

Rural marketing has been witnessing a lot of action from both the FMCG sector and consumer durables products manufacturers, but there’s been little improvement in the manner in which rural marketing research is carried out. Marketing research is a formalized means of obtaining information to be used in making marketing decisions. The American marketing Association’s definition of marketing research reflects this theme: “Marketing Research is a function which links the consumer, customer and public to the marketer through information – information used to identify and define marketing opportunities and problems; generate, refine and evaluate marketing actions; monitor marketing performance; and improve understanding of marketing as a process.” Sources for conducting rural marketing research

It is advisable for the company to tap the district than the whole state when preliminary research is conducted. However, established companies, which already have a presence in the rural market, can outsource their marketing research activity to specialized agencies that deal with rural markets. E.g. Rural relations, MART, IMRB, A.C.Nielson or ORG-MARG. Companies seeking information about rural markets have to be familiar with the basic sources for conducting market surveys. These include: Primary sources

Primary data are collected especially to address a specific research objective. A variety of methods, ranging from qualitative research to surveys to experiments., may be employed. Collecting this type of data is costlier and time consuming. Some places where primary research may be conducted are: 1. Retail shops/STD booth

Retailers generally know everything about the village and can be a good source of information since a wide variety of people visit their shops. A retailer can use his influence to request the customer to respond to the researcher

2. Tea stalls A tea stall is one place where you can find people at any time of the day. The researcher can drink tea; this will give him time with the

villagers. He can gradually build up the conversation and involve them in the interview. 3. Playgrounds/school These are the best places to locate youth uring the morning and evening hours. Many of them may be busy playing but thre are always some who have come just to pass the time or watch the games. They can be easily targeted for the interview. 4. Chou pals

It is an important village gathering point where most of the influential people meet. A marketing researcher should be very careful in understanding the psyche of a rural customer and thereby use the traditional tools in knowing him better. 5. Haats and melas

Around 48000 haats and 25000 melas are held annually in rural India. People from surrounding villages come in large numbers to this gathering, which is useful for marketer conducting market research, especially for those ho want to find out customer responses to FMCG products. Market can promote new products by giving out free samples and asking villagers to give their opinion on them. 6. Influence groups The influence group involves reference groups, opinion leaders, sarpanches/headmen, schoolteachers, doctors from primary health centers, etc. These groups have great influence over the behavior of village folk, which a marketer has to analyze by drawing up a proper framework. It helps the marketer to understand the likes and dislikes of villagers and accordingly offer them a product suitable to their needs and budget. Secondary Sources They are readymade sources of information that marketer can use for his/her research. This kind of data can be collected from government publications, websites research agencies, etc. They are easily available and at a comparatively lower cost than primary data, since you don’t’ need to conduct interviews, appoint interviewer, analyze data, etc. A marketer can just buy the data; sometimes it’s available free of cost. Some of the sources from which a marketer can obtain information on rural markets are: Government websites:

The government publishes information specifically on rural India on the Internet from time to time. These can be obtained at a reasonable can be had. They include www.censusindia.com, www.agroindia.com etc. Private bodies: Many private firms conduct regular market research in rural areas to measure consumption pattern, awareness, reach, taste, etc. These companies publish their finings and make them available to marketers who are seeking information at a reasonable price. This way, the marketer saves money an time. Publications:

Many newspapers, journals, government surveys and reports are published regularly for individuals seeking information on rural market. Some government b9odies like the ministers of agriculture, rural development, population, education etc. publish magazines, journals and reports on rural markets. Rural research method

There is a gold mine in rural India and most marketers are trying hard to unearth it. One of the first hurdles is the lack of a map with a big black ’X’ marked on it. Corporate India finds urban markets highly competitive and hading toward saturation. Sales are stagnating and therefore the search for new markets. However, the corporate sector does not fully understand the behavior and practices of rural buyers. The marketer’s knowledge of the rural consumer is based on long held stereotypes that are no longer valid. Illiterate and semi literate rural people are unable to comprehend eastern tools like ranking and attitude measurement scales and hence studies have been restricted to yes/no/can’t say type response. So the new set of tools more appropriate for rural market research must be developed and limitations of conventional western methods must be studied. The researcher’s new toolkit

An inventory of tools was developed for the rural market. The tools and their purpose are listed here and explained subsequently. Faces In order to explain these tools, the example used was of fie brands of soap- Lu, lifebuoy, OK, Ham am and Nirma bath- in rural setting. Pictures of faces were used to rank responses. The happiest face was placed on the extreme left and the saddest to the extreme right with others in between. The explanation of each face was given to the

respondent and nothing was written on the faces to indicate what the face represented. Respondents were asked their opinions about the product or how they would feel after using the product by pointing out the facial expression that they felt best represented their feelings. This gave the rating of the product. Rating 5 4 3 2 1

Face1 Face2 face3 Face4 Face5 Colour wheel

Colour adds liveliness and vigour to rural people’s lives, which are otherwise insipid and mundane. The colour wheel has a circular base with a rotting pointer attached at its center. It is divided into five equal segments. There are two possible tools. In one the wheel has different shades of the same colour. In the other, the wheel has different colours. Initially the colour chosen were dark green, light green, yellow, orange and red. The selection of colours was done on the basis of the association of the rural people with colours. Each colour or shade represents a comparative rating. The respondent is given the representation of each colour and then asked to move the pointer to the colour or shade that represents his rating of the items.

Dice

A big wooden die is made. The respondent is asked to rate the items by assigning the face values of the die to the item. Higher face value means higher rating-a face value of one is least important and six means most important. Rummy coins/carom coins/weights

Three different counters were used with the same technique-carrom coins, rummy coins of the same denomination and co lour, and 50 gm weights (for convenience in denomination and handling). The tools were used differently for rating and ranking. They were administered in two different methods each for rating and ranking.

Ranking-distribution technique

Fifteen coins are given to the respondent, to be distributed amongst soap brands in order of preference. The brand getting the highest number of coins would be ranked first, the next highest ranked second and so on. It also consists of three techniques as follows: Stacking technique: stacks of fie, four, three, two and one coins are made and kept ready. The respondent is asked to assign one stack to one product. The ranking scheme is as follows:

Coins/Soap Lux Lifebuoy OK Hamam Nirma

Coins 5 4 3 2 1

Rank 1 2 3 4 5

Rating Stacking technique: Stacks of five, four, three, two and one coins are made as shown in the stacking technique for ranking. The respondent is asked to assign a stack to the item after which the assigned stack is put back in its position. The procedure is continued till the respondent has rated all the items. Five coins technique: The respondent is given five coins ns asked to assign the coins to an item on the basis of his preference. The rating of the item is equal to the number of coins assigned out of the five coins. The assigned coins are returned to the respondent after every assignment so that he is left with five coins every time. To explain, the analog given was of a teacher assigning marks to students in an examination on the basis of their performance. Ladder

A small bamboo ladder with the same number of rungs as the number of items to be compared is construed Do’s and Don’ts for rural marketing research

1. Villagers are very suspicious about urbanites and may even suspect the researcher to be either government official or company salespersons promoting some product. Thus, the biggest challenge before a rural researcher is to overcome the inhibitions of rural respondents and build rapport with them.

2. it is important to wear simple clothes so that villagers feel that the researcher is one among them. Be informal and behave as if you are one of them e.g. sit at the same level without hesitation.

3. A researcher should be familiar with the local dialect or requests an educated resident of the area to accompany them to explain the

issues and questions to interviewees to avoid language problems. Once the researcher is familiar with a few typical local words, he can manage on his own.

4. It is desirable to invest time in building report by discussing issues that may be unrelated to the survey but of interest to them. This puts the villager at ease regarding the researcher and helps in dispelling my doubts in his mind.

5. Build up the conversation gradually to lead to the interview. Unless the purpose of the study in clear, the villagers will not share appropriate information. Always explain the purpose of the research at the outset to get their cooperation.

6. Explain the expected benefits to make the respondent a part of the research project. For example. The interviewee can be told that his response is very important for the company and that this will help the company bring out a better product.

7. once the researcher has won the confidence of the respondent, it is important to maintain it till the end of the process. Give the interviewee importance by listening actively to his concerns even though they may not be related to the study. Make him feel secure by not carrying any writing material to note down the responses.

8. Let the respondent feel he is leading the interview since it is observed that villagers like to be in control of the situation. The interviewer should talk a good deal about general topics to show that he understands conditions in the region and that he is interested in acquiring new knowledge.

9. Try and obtain specific information by interspersing interview questions with general conversation. Occasional physical contact, such as touching the arm of a young male interviewee, establishes kinship, but it can be done only after building some rapport. But a male researcher should never try to do this with women and elderly people because4 the latter are held in high respect and touching would suggest trying to equal them in status.

10. The villagers may offer their hospitality, which should not be refused to avoid hurting their sentiments; even if it is refused, it should be done tactfully. Villagers are sensitive and at times feel inferior to urbanites. Thus, they tend to get hurt very easily during the interview. Wait until the respondent is ready to talk. Handle issues sensitive to them with utmost care. For example. While asking the literacy level of the interviewee instead of asking “Aap padhe likhe hai kya?”(“Are you literate?”). ask “Aap kitna padhe huye hain?” (“How much have you studied?”).

19. New trends in Indian agriculture

Agencies involved in Agro marketing

Agro marketing is in a state of flux. For years now, the pathetic state of marketing of agricultural produce has been blamed for the state Indian agriculture is in. Experts have repeatedly spoken about the need for improving the marketing side of agriculture. In the pat decade and more, we have seen the rise and establishment of agencies promoting the selling, distribution and marketing of agriculture produce. Let us briefly look into the activities of some of them. APEDA

APEDA stands for the Agricultural & Processed Food Products Export Development Authority. It is an autonomous organization attached to the ministry of commerce of the government of India. Its main function is to build links between Indian producers and the global markets. APEDA undertakes the following development programmes: Development of databases on products, markets and services. Publicity and information dissemination. Organizing product promotions a broad and visits of official and trade delegations abroad. Organizing seminars, workshops and awareness programmers on exports as well as latest farming processes. Participation in international trade fairs in India and abroad. Organizing buyer-seller meets and other business interactions. Recommendatory, advisory and other support services to the trade and industry. Help in dealing with government agencies and organizations, the RBI, customs, import/export procedures, and problems with importers through Indian missions abroad. APEDA also offers financial assistance under various schemes to promote and develop agro exports. APEDA has an extensive database of Indian exporters of agricultural produce from all major cities and large towns. It also regularly publishes an informative journal on a quarterly basis. This journal, called APEX Update, lists all the recent developments in India, seminars, workshops and exhibitions to be held in the future as well as a section on foreign importers interested in trade with India. NAFED

The national Agricultural Cooperative marketing Federation of India Ltd (NAFED) was set up on 2 October 1958. NAFED functions s the national

apex body of cooperative marketing in the country. It functions in coordination with 27 state level marketing federations, 16 state level special commodity marketing federations, 10 state level tribal cooperative development corporations/ federations, 172 district and regional marketing societies. This network of primary cooperative marketing societies covers all important primary and secondary markets in the country. NAFED promotes cooperative marketing of agricultural produce for the benefits of farmers through its own branches and the cooperative marketing network spread across the entire length and breadth of the country. It undertakes internal trade, covering a wide range of agricultural, horticulture, tribal and allied produce. It is a nodal agency for the procurement of selected oilseeds and pulses under the price support scheme of the government of India. It also implements a market intervention scheme in respect of horticulture and other crops for rendering marketing support to the Farmers as and when warranted and decided by the government of India. MARKFED

MARKFED is the name of the state level marketing organizations in states like Madhya Pradesh, Andhra Pradesh and Punjab. In Andhra Pradesh, it is a federation of marketing cooperative societies. Their main object I to help the farmers secure a better price for their produce by taking are of their market needs and providing agricultural inputs. Against this objective’s, MARFED’s present activity consists of sale of farm inputs like chemical fertilizers, pesticides and seeds, maintenance of godowns and procurement of agricultural commodities through its member societies. HPMC

HPMC, the HP Horticultural produce Marketing and Processing Corporation Ltd., was established in 1974 by the Himachal Pradesh government with the objective of facilitating the marketing and processing of fruits and vegetables to help farmers get remunerative prices for their produce. Apples, oranges, pears, plums and peaches are the main fruits being marketed and processed. The HPMC offers the following facilities:

Post harvest infrastructure:

Cool chain with pre-cooling units, refrigerated vans and cold storage coupled with a chain of grading/packing houses. Marketing outlets for fresh fruits and vegetables:

Marketing outlets in all the metropolises and big cities. This enables farmers to send their fruits to the place where the best prices prevail. Processing plants:

Processing plants produce juices, pulps and concentrates of the fruits. Marketing of processed products:

HPMC has more than 400 booths all over India to sell consumer products like juices, jam, squashes, canned fruits etc. in addition to a well knit distributor network to provide quality fruit products at reasonable prices to consumers. Food processing and value addition

The agro products and food processing sector in India is one of the largest in terms of production, consumption, export and growth prospects. India is the world’s second largest producer of fruits and vegetables, but hardly two percent of the produce is processed. Production of spices amounts to 25 30 percent of world production. It is also the largest producer of milk in the world. And, if you take into account India’s varied agro climatic zones, then what we have is a nation blessed with all the right ingredients for success in agriculture.

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