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MARKETS
Group No. :
Roll No
Name
05.
Puja Awasthi
25.
Manan Dhamecha
33.
Ajay Jain
34.
Ankita Jain
41.
Aakash Kakkad
59.
Ruchi Mehta
ACKNOWLEDGEMENT
INDEX
o Introduction : Rural & Urban Area
o Needs Of Rural Markets & Urban Markets
o Limitation Of Rural Markets & Urban Markets
o Difference Between Rural & Urban Markets
i.
ii.
iii.
DEFINITION OF RURAL:
Define "rural" as those areas which are not urban in nature. Census Bureau's definition of
rural as being an area of fewer than 1000 people per square mile. The 2000 Census reported that
rural America was home to nearly 21% of the U.S. population (59,274,000 people).
DEFINITION OF URBAN:
It is in defining the Urbans areas that problems generally arise. However for the 1971
Census the definition adopted for an urban area which follows the pattern of 1961 was as
follows:(a) All places with a Municipality, Corporation or Cantonment or Notified Town Area
(b) All other places which satisfied the following criteria:
i.
ii.
iii.
70% of Indias population lives in 627000 villages in rural areas. As per the National
Council for Applied Economic Research (NCAER) study, there area as many middle income
and above households in the rural areas as there are in the urban areas. At the highest income
level there are 2.3 million urban households as against 1.6 million households in rural areas.
According to NCAER projections, the number of middle & high income households in rural
India is expected to grow 80 million to 111 million by 2007.However, myths abound. Indias
rural markets are often misunderstood. A clear distinction needs to be made with regard to the
reality versus the image of rural India. If such a distinction is not made, we will be unable to
distinguish between the serpent and the rope.
Formal markets in rural areas play an important role in improving agricultural marketing. They
can:
Retail facilities:
In some countries farmers travel from door to door to sell their produce. This can be time
consuming and exhausting and may require investment in transport, such as a bicycle. Door-todoor selling also makes price setting difficult because farmers have little information regarding
prices being charged by other sellers. Markets, on the other hand, provide a location where all
buyers and sellers can meet. Consumers can see the range and prices of produce on offer and
make choices based on their preferences and income. Sellers can take their produce to one
location rather than having to go from door to door. They can see how much of a particular
product is on offer, compare the quality of their produce with that of other sellers, and set their
prices accordingly.
In order to achieve such benefits, however, markets must be situated in locations
acceptable to both sellers and buyers. This is emphasized strongly in this guide. There have been
many examples of new markets being constructed in unsuitable locations and never being used!
Existing market sites, or places where buyers and sellers meet informally (e.g. a plot of land at
the side of the road), is usually the best places to construct new markets because they are clearly
at locations favored by the users.
Improve hygiene:
Existing markets are often just areas of available land that buyers and sellers find
convenient to use. They may be well established in the sense that they have existed at the site for
a long time, or they may be temporary, for example, a vacant plot of land used until it is
reclaimed by the owner for some other purpose. Either way, hygienic conditions are usually very
poor. In most cases there are no toilet facilities or running water and probably no arrangements
for waste disposal. In the rainy or monsoon season the market area may be extremely muddy, but
sellers may display their produce on the ground, with a risk of contamination from the soil or
mud. Many municipal markets are like this, even though users are often charged a fee. Improved
markets should minimize all of these problems. Apart from providing a healthier overall market
environment, such improvements can reduce the danger of food contamination.
Unimproved markets usually lack any form of shelter. Produce is displayed and stored in
the sun. Apart from conditions being very difficult for those using the markets, the lack of
protection from the sun can have a major impact on the life of fresh produce and on its
nutritional value. Leafy produce, for example, can be kept fresh by protecting it from the sun and
by keeping it moist. This is not possible in markets that do not have either shelter or fresh water
supplies.
Retail markets frequently play an important social function. Farmers in many countries
prefer to take their own produce to market rather than sell it to traders. The visit to the rural
centre provides them with the opportunity to buy items unavailable in their villages and to catch
up with local news. In many countries markets function as more than just trading places. They
are the focal point of a rural centre and provide an important place where people can meet.
Markets that are attractive places to do business draw buyers and sellers alike. Competition is
promoted amongst sellers and at the same time the sellers have a large number of potential
customers.
Marketing facilities and other post-harvest infrastructure are usually limited in expanding urban
areas. Urbanization is largely unplanned and local authorities generally do not have clear policies
on developing facilities to meet their future needs.
The objective of marketing interventions is to bring an improvement in the marketing of
horticultural and other agricultural produce, promoting strategies for increasing food security. An
efficient and functioning marketing system is a precondition for agricultural diversification and
improved nutrition. This enables better prices to be obtained by producers (leading to higher
incomes) and improves the availability of competitively priced produce to consumers.
THE PROBLEM:
An efficient marketing system can provide better prices to producers and improve the
availability of competitively priced produce to consumers. In some cases new markets or
improvements to existing markets in rural areas can help overcome many of the marketing
problems faced. However, before considering whether to carry out improvements to markets and
what type of improvements to introduce, it is important to be sure that markets, or lack of them,
represent the main problem. Other causes of inefficient marketing could be:
Poor roads;
A lack of knowledge about marketing among farmers;
An inadequate quantity of products to attract sufficient traders.
Access to urban markets, by rural livestock producers, depends upon the existence of an
infrastructure including communications and transport, intermediaries, market places and
processing facilities.
The links between producers and consumers, often direct in rural markets, are more likely
to be extended through a chain of intermediary traders to reach urban markets. Within the
market chain, products are transported from one location to another, and processed from
one form into another. All these operations must be financed as well as the transaction
costs of negotiating and enforcing contracts.
Access, and hence tradability, also differs between types of livestock and their products.
For e.g : Large animals may be moved large distances, on the hoof, but may lose
condition as a result. Where motorized transport is available, it may well prove a cheaper
alternative. Small animals, and poultry require transport but are bulky and therefore
costly to move over large distances. None the less, for remote rural producers live
animals are more readily tradable than most other livestock products.
Products such as meat, milk and eggs are all perishable, while meat and milk require
chilled transport if moved over large distances. Transport costs are considerably higher,
per ton, than they are for live animals. Since transport costs also vary with distance to the
market, the producer prices net of transport costs are much lower in remote production
areas, than in locations close to the main markets. For similar reasons the costs of new
inputs, supplied from urban areas are more costly for livestock producers in remote areas.
Small-scale producers are at a particular disadvantage, due to the high unit costs of
moving small consignments.
Most of the products are still sold at the local rural haats. This means that the products
may not fetch a good price as there is limited demand for the products in the limited local
market. Limited demand also implies a low turnover, resulting in turn in, and low income
for the producer. Also, as these consumers are not overly conscious of the quality, the
chances for product improvement remain bleak.
There is limited awareness in the global market either about the availability of these
products or about the existence of these micro-enterprises and their activities. With
limited publicity, the products can hardly hope to build a market for themselves.
The exhibitions and melas are not frequent phenomena. Also, their venues keep changing
and are limited to a few towns/cities. Thus, the products are not available all the time in
most of the places.
There is no denying the fact that an intelligent market analysis goes a long way in
sustaining the market for any product. Though a formidable task in itself, it assumes
gigantic proportions in the present context as the rural poor, with his limited knowledge
and finances can hardly be expected to carry out this exercise. Not only this, the existing
marketing infrastructure is equally ill equipped to undertake the task. Nevertheless, such
an exercise will help in analyzing the market for customer preferences and accordingly
sensitizing the rural poor producers to the demand patterns of the market.
Infrastructure: The facilities like Electricity, Internet, Roads and Buildings, Educational
Institutions, Financial Institutions, Communication and Organized Market, Other Facilities
differs in Urban and Rural market. In urban everything gets implemented soon and Availability
is also there. Where as in rural market everything takes a good amount of time.
Economy: Here the Economy means, the earning Capacity in a rural Market. The cost of Living
always depends upon their way of earning. So, the Income levels are unreliable, as Most of them
are depended upon the seasons and Agriculture. So the Income levels cannot be a fixed one.
Lifestyle: The Lifestyle, that is living pattern of both the markets differ a lot. This can be
important factor which influences the companies to think of when they approach rural market.
Socio- Cultural Background: Due to the illiteracy level, and Culture adaptability from long
time the rural market always gets differ than the urban market. The superstition and other belief
as well as the way of thinking towards products and goods differ in these two markets.
Availability or Reach: Due to the areas which are diverted Geographically and Heterogeneous
market the reach is very difficult. The logistics for rural market is a tough task than to reach the
Urban Market.
Habits: The daily routine of the people makes them to cultivate different habits. Apart from due
to the awareness is low in Media terms there will be a difference in the habits.
Competition: The competition in the market for brands and Companies always differ As in rural
markets it is always the channel Partner and Retailer plays a vital role. But where as in Urban
Market Brand plays a great role.
Tools and Technologies together brought Rural and Urban markets closer.
Numbering over five lakhs, bamboo artisans in India face various problems relating to purchase
of raw material, their processing, production of commercially viable items, and their subsequent
sale. The Industrial Design Centre (IDC) has developed a number of technologies to bolster the
unorganized craft sector by helping artisans produce value-added, contemporary bamboo
products to compete with other materials in the urban and international markets they are:
Development of simple pedal powered devices such as water pump, battery charging unit,
potters wheel, paddy thresher and flour/masala grinding units
Process description for making chemical-free cane jaggery with desired characteristics;
packaging solutions for jaggery; storage, preservation and awareness workshop for jaggery
makers, traders and consumers
An improved process to prepare herbal painkiller Sneha Oil, and setting up the pilot plant for
manufacturing of the oil at Yusuf Meherauli Centre, Tara Village, Maharashtra
Biochar unit with a burner system, which can be retrofitted to the existing wood fired bakery
unit with simultaneous production of charcoal
A simple, easy to operate and cost effective solar air heater unit for maintaining honey storage
space above 18C throughout a year
It is expected that this Technology Interface Unit Collaborative Joint Project between KVIC and
IIT-Bombay will facilitate close interactions between rural industry needs for technology up
gradation / development and product testing. Efforts are being made to foster interest of faculty
and students to solve the rural development issues through such initiatives.
1. Average levels of income in rural areas are lower than that in urban areas. For the purpose of
comparison, the country's total population has been divided into five equal income quintiles
and the average income in the highest quintile for urban areas has been assumed to be 100.
Income brackets
Urban
Rural
Rural Income as % of
urban
Q5
100
51
51%
Q4
45
22
49%
Q3
30
15
50%
Q2
20
11
55%
Q1
11
64%
Source: NCAER
Another comparison between the top 20 cities, comprising the bulk of the total economic
activity in the urban areas by value, and the rural areas highlights the difference in income
levels in monetary terms.
Rural (INR)
Q5
301,734
135,936
Q1
43,878
19,536
Source: NCAER
2. While the bulk of purchases in urban areas is concentrated during festivals and auspicious
occasions, maximum consumption in the rural pattern occurs around the harvesting season
when the farm produce is sold. And because of this seasonal nature of earning, the ability of
rural consumers to pay back loans is lower than their urban counterparts.
3. Rural customers trust domestic brands more than international ones since their level of
awareness of global products (and information pertaining to them) is relatively low.
4. Customers in urban area are more "brand conscious" and are ready to pay higher prices for a
branded product, whereas in rural areas, awareness of brands is low and thus, there is low
brand premium.
5. The size of an average household in rural areas is 4.8 as compared to 4.3 members in urban
areas. As a result, the ratio of earning members to dependents is lower in rural areas, resulting
in lower disposable incomes and consequent lower spending on discretionary products.
6. Haats & melas, mandis and word-of-mouth publicity are the usual channels of communication
for product promotion in rural areas, whereas television and the print media are the primary
means of advertising in the urban market.
From an automotive standpoint, vehicle penetration levels in rural India at 2.3%, as compared to
10% in urban areas offers a huge potential for players. Another factor that makes the rural
market a suitable destination is its lower dependence on retail finance. Due to the limited
availability of finance and seasonal income pattern, the number of cash purchases in rural areas
is higher, as compared to urban areas, and therefore, this market has been relatively less affected
by the credit crisis.
Traditionally, rural markets have always been smaller in size in comparison with urban centres.
Considering smaller cities as a reflection of rural markets, it is noted that over the past few years,
growth in rural areas has been higher than in urban ones. Going forward in 2009, according to
National Council of Applied Economic Research (NCAER), automobile sales in rural markets
are expected to post double-digit growth in 2009, which is higher than overall industry growth
estimates.
The rural Indian market, which accounts for nearly 70% of the total number of households in the
country, witnessed a 25% annual growth in consumer durables for 2008, while the urban market
reflected an annual growth rate of 7-10%. Let's look at the factors, which make the rural market
an attractive proposition for the automotive industry.
1. Large customer base - With a total population of more than 750 million, and covering
around 95% of the country, rural areas have a huge customer base. Although due to the
increase in urbanization, the rural population as a percentage of the country's total
population is expected to fall, but in absolute terms, it continues to comprise a large pool
of customers and is estimated to touch 900 million by 2020.
2. Increased income levels - There have been several factors that have resulted in an
increase in income levels in the last few years. According to estimates, the percentage of
households earning less than USD1 was as high as 96% in 1985, which is estimated to
come down to 29% by 2025. Similarly, the percentage of households earning within
USD2 to USD5 is expected to increase from 1% in 1985 to 20% by 2025.
Let's look at some factors that will result in increased purchasing power in rural India.
a) Increase in Minimum Support Price (MSP): Record food grain production
(230 million tonnes for FY08) and the increase in MSP in the last couple of years
have increased purchasing power in rural and semi-urban areas of the country. For
example, this has resulted in an additional income of INR 6,000 per acre per crop
cycle for paddy.
b) National Rural Employment Guarantee Scheme (NREGS): The primary
objective of NREGS is to provide gainful employment to nearly 45 million rural
families (mainly landless labourers) that live below the poverty line. The scheme
guarantees 100 days of employment (in a financial year) to every household those
volunteers to participate. It has resulted in a rise in minimum wages in many
states, with the average wage rise being around 32%.
c) Sixth Pay Commission: According to estimates, 52% of the employees who
benefited from the Sixth Pay Commission live in "C" and unclassified cities.
Under the pay commission, the average salary has been increased by 21 %, which
entails an additional government expenditure of INR 80 billion every year in
addition to a one-time payment of arrears for 2 years, which is estimated at INR
180 billion.
d) Farm loan waiver: In the last budget, the government waived agricultural
loans to the extent of 100% for around 30 million small and marginal farmers and
25% for other farmers. These farmers also became eligible for fresh agricultural
loans. The total cost to the government for these waivers is estimated to be INR
720 billion.
4. Infrastructure development
Infrastructural development in India's rural belt has gained momentum in recent years
and is the key to narrow the urban-rural divide in the country. Currently, 60% of the
villages are connected with road networks. As a part of the Eleventh Five Year Plan,
the government plans to construct 130,000 kilometers of new rural roads and has
earmarked around 30% of the total public investment for rural infrastructure
development. The Pradhan Mantri Gram Sadak Yojana (PMGSY) aims to connect all
villages with a population of 500 and above (250 in the case of hilly and desert areas)
with all-weather roads. The target is to construct 146,000 kilometers of rural roads
and upgrade another 196,000 kilometers.
Conclusion:
Indian rural market is undoubtedly complex but there are some simple truths that we need to
accept. The rural consumers are very value-conscious. They may or may not have purchasing
power, but they can make a difference to the company's growth if concentrated. Gone were the
days when a rural consumer had to go to a nearby town or city to buy a branded product. The
growing power of the rural consumer is an opportunity for the companies to flock to the rural
markets. Gandhiji believed that India's future lay in her villages and rural markets will have a
significant part in India's economy. With the technological innovations, infrastructure
development and enrichment of human capital in rural areas, backed by policy support by the
government recognizes agriculture as one of powerful growth engine.
Changes in Urban Markets are oriented towards increasing social well-being, strengthening
living standard, improving the quality of life, and creating conditions for a faster inclusion in
INDIAN business and social trends. These objectives are realized through the transition process
on basis of compliance with the criteria of free market economy and market democracy.
Transition of local government is a part of the process. The transition which realizes a shift from
socialist to capitalist systems is performed with the aim of realizing macroeconomic stability,
economic liberalization, high share of private sector in GDP, efficient management in private
and public sector, reliable legal system and effective protection of property rights.
REFERENCE
1. http://www.pib.nic.in/
2. http://www.livemint.com/2011/12/15003725/The-rise-of-middle-India.html
3. Co-Operative & Rural Markets SYBMS (Vipuls By Kale & Ahmed)
(Thank You)