Unit 3• Definition and Scope of Rural Markets • Rural Vs Urban Markets • Rural Marketing Environment • Rural Consumer Profile • Consumer Behaviour • Rural Marketing Mix • Rural Market Segmentation • Targeting and Positioning • Marketing of Consumer Durables • Rural Sales Force Management Unit 4 • Agricultural Produce Marketing – Importance – Problems – Lines of Improvement – Regulated Markets – Quality Orientation Indian Markets 4. Impact of Globalisation on – Standardisation and Grading E chaupals ,Commodity Markets andimportance Role of financial institutions in Agricultural marketing – Innovative Marketing Techniques and Recent Trend in Rural Markets Chapter 4 Contd.. RTI, 2005 Intended to get access to information under control of public authorities Aims at containing corruption and holding government accountable The central govt has Central Information Commission & State Govt has State Information Commission Applicability Extends to whole of India except J&K Each public authority maintains all its records indexed & computerised Public Information Officers (PIO) are officers designated by public authorities in all administrative units All officials have to help PIO whenever demanded Procedure PIO deals with all requests made in writing Where the request cannot be made in writing, assistance is given to the person seeking information If the needed information is connected to another public authority, the PIO has to transfer the request to that public authority within 5 days He must also inform the applicant immediately The PIO has to provide with the information, or reject the request within 30 days If the information is concerning life or liberty of a person, the information has to be provided within 48 hours If the PIO doesn’t give a decision on the request, his refusal is assumed In case of rejection, the PIO has to communicate the reason for rejection He must also specify the period within which an appeal against such rejection can be made Information Exempted from Disclosure Information exempted under the Official Secrets Act, 1923 (can be disclosed if public interest in disclosure overweighs the harm to the protected interest) Information disclosure of which would prejudicially affect the sovereignty and integrity of India, the security, strategic, scientific or economic interest of the State Information the disclosure of which would cause a breach of privilege (powers) of Parliament or State Legislature Fee for Seeking Information A person who desires to seek some information from a public authority is required to send, along with the application, a demand draft or a banker’s cheque or an Indian Postal Order of Rs. 10/ The applicant may also be required to pay further fee towards the cost of providing the information (a) Rs. 2/- for each page ( in A-4 or A-3 size paper) created or copied (b) actual charge or cost price of a copy in larger size paper (c) actual cost or price for samples or models (d) for information provided in diskette or floppy, Rs. 50/- per diskette or floppy A citizen has a right to inspect the records of a public authority For inspection of records, the public authority shall charge no fee for the first hour But a fee of Rs. 5 for each subsequent hour shall be charged Penalties Central Information Commission can impose a penalty of Rs. 250 for each day till information is given. Maximum penalty is Rs. 25000 The Commission can take disciplinary action again PIO if : He doesn't give reasonable cause of rejection Doesn't furnish information in time Knowingly gives incorrect/incomplete or misleading information Destroys/obstructs information Chapter 5 Rights & powers of managing committee of a Co-operative society To scrutinise all applications for membership Check account books & ensure timely recovery of money Sanction working expenses Ensure that cash book is updated daily Deal with complaints Deposit funds of society in bank account Appoint suspend or remove any officer Appoint, fix duties & remuneration for employees Sanction emergency expenditure Rights of a member Right to vote at general body meeting To contest elections To know affairs of the society To receive copies of documents on payment of fees To refer disputes to co-operative court for decision. To transfer shares after holding them for at least one year. To resign or withdraw membership To receive dividends not exceeding 15% To pay dues of the society regularly To comply with provisions of the act & bye-laws of the society Not to bring disrepute to the society Rights of registrar of co-operatives Deciding policies Guidance Registration of Co-op societies Handle complaints regarding membership Giving consent for amendment for bye-laws Investing society’s funds and advances Audit and inspection of society . 20000. To be entered as a member in the register of members. To hold shares not exceeding 1/5th of total share capital or Rs. unity and cooperation among members He inspects if the society works on prociples of cooperation He checks if the society maintains accounts as per the Act He observes loans taken by the society He makes sure that board of directors are using their powers and doing their duties well Prepares audit report Auditor does an audit from three dimensions: Members dimension: If they get goods and services from the society Society dimension: If cooperative principles are followed to make society economically viable Ethical dimension: If the society is ethical in its business and abides by the Act . Instruct societies to conduct regular meetings Amalgamation & reconstruction of societies Impose penalties Give decisions in disputes Assist land development bank to recover loans Stoppage of business in society Responsibilities of an auditor He certifies the final accounts are true and correct He assesses the atmosphere. According to NSSO .Right of an auditor Access to balance sheets & all books of accounts Power to summon any member in charge of the books of accounts Right to receive information Right to be informed of and to attend the general body meeting Challenges for cooperatives Slow pace of growth Mismanagement and Manipulation (in case of large membership) Lack of awareness Lack of funds Inadequate supply of support material Lack of trainers Restricted coverage Threat from liberalisation Rural Markets (Chapter 1) What is Rural? Government agencies like IRDA (Insurance Regulatory And Development Agency)and NCAER (National Council for applied Economic Research) define Rural as villages with a population <5000 with 75% male population engaged in agriculture .National Sample Survey Office ( Census) : • Population density < 400 / Sq Km . promoting. Marketing of agricultural products from rural to urban areas 2. Marketing of manufactured goods and services in rural areas • Hence rural marketing is. pricing. Urban products in rural areas 2.000 are considered rural According to NABARD/RBI: • All locations with a population up to 10. distributing rural specific goods and services leading to exchange between urban and rural markets. Marketing of1. which satisfies consumer demand and achieves organisational objectives Aspects covered by rural marketing 1. Marketing within rural areas (rural to rural) . 000 are considered rural What is Rural Marketing? • Developing of the market in the area which is defined as ‘Rural’ • Process of developing.• 75 percent of the male working population is engaged in agriculture • No Municipal corporation / board According to Planning Commission : • Towns up to population of 15. Rural products in urban areas 3. Urban Why Rural Markets? • Growing urbanisation • Higher purchasing power • Infrastructural facilities • Role of women in decision making • Relevance of opinion leaders • Media exposure • Rise of alert buyers • Saturated urban markets Reasons for growth in rural markets • Increase in population. Increase in income . Small Industries Training.40 % Distinguish URBAN MARKET RURAL MARKET . ITC etc. LG.Dabur.50 % • LG.60 % • Dabur. technology • Government investment in rural development (Jawahar Rojgar Yojna.Use of scientific methods.50% • Colgate. Rural Electrification. fertilizers. Britania .40 % • Videocon. • Evolution of new cadre of entrepreneurs in rural areas • Higher rural literacy rate – Almost 59% Revenue generated by rural markets for• HUL.50 % • Asian Paints. Primary Education). consumer goods on installment basis • Changing lifestyles/attraction of higher standards of living by firms like HUL. Videocon. Honda.40 % • Cadbury’s. initiatives like Green & White revolution (Dairy).• Increased productivity of agriculture.25 % • Hero Honda. tax exemption in backward areas etc • Initiatives by banks for more branches and Kisan credit card to buy seeds. Spending on Health and Sanitation. Mostly concentrated Widely spread and scattered High infrastructural level Low infrastructural level High density of population per sq km Low density of population per sq km Good physical connectivity and high mobility Poor physical connectivity and low mo Incomes are more stable and permanent People work in less certain environmen Occupations are government employment. less retail out Rural Marketing Environment Who is the consumer? • Consumables & Lifestyle products: School going children & young adults • 20-35 yrs = 1/4th India’s consumption base . Mostly agricultural occupation Income received at regular income Acute seasonality in income receipts Social norms are less visible Social norms influencing individuals Caste influence indirect and less visible Caste influence direct and strong High exposure to variety of products Low exposure to variety of products High brand awareness Low brand awareness High exposure to multiple sources of information Low exposure to and limited sources o information More convenient buying. industry etc. business. more retail outlets Less convenient buying. • 48% of the rural India’s population is below 20 • Improvement in literacy rates= mature decisions. 59% in 2001 Large and scattered market: Rural population is 72% of total population and it is scattered over a wide range of geographical area Diverse socio-economic background Changing demand pattern: Demand pattern of rural customer is fast changing due to increasing in income and credit facilities offered by banks like ‘Kisan credit card’ Major income comes from agriculture: About 60% of the rural income is from agriculture and hence the demand for consumer goods is high during harvesting season Saving habits: Rural consumer is now having saving habits due to the efforts of co-operative and commercial banks Traditional outlook: Rural customer values old customs and traditions Low standard of living compared to urban Poor infrastructure facilities: Facilities like roads. Communication: Around 6 lakhs villages are still without telephone facilities. Hence physical distribution becomes costly Media reach: The reach of print media is 10% followed by TV 31%. more brand awareness & hence brand consciousness Characteristics of rural markets Rural literacy levels: 36% in 1981. 45% in 1991. Electrification: About 88% of villages have been electrified Kisan Credit Card • A Kisan Credit Card is a credit card to provide affordable credit for farmers in India . are inadequate in rural areas. radio 31% and cinema 33%. etc. warehouses. communication system. and National Bank for Agriculture and Rural Development (NABARD) in 1998-99 to help farmers access timely and adequate credit • The Kisan Credit Card allows farmers to have cash credit facilities without going through time-consuming bank credit screening processes repeatedly • Repayment can be rescheduled if there is a bad crop season. Chilly merchants in Gunthur. Jute farmers in West Bengal and sugarcane farmers in UP.g.• It was started by the Government of India. and a passbook Classification of Rural Consumer by Income • Affluent Group: This group is very small and can afford luxury products. E. Reserve Bank of India (RBI). • Middle Class: This class is about 30 crores in size and is expanding. Their purchasing power is very low. Poor farmers of jawar and bajra of Bihar and Orissa. Profile of Rural Consumer • Educational profile • Occupation • Low income levels • Opinion leaders • Media habits . E. and extensions are offered for up to four years • The card is valid for three years and subject to annual renewals • Withdrawals are made using slips. • Poor: This class is about 25 crores in size. Andhra Pradesh and wheat farmers in Punjab.g. cards. E.g. Characteristics of Rural Consumer that affect the buying process • Age and life cycle stage • Occupation • Purchasing power (small packs & prices. what. consuming class. very rich) • Personality & self Concept • Psychological factor – Perception – Cognition (knowledge) – Beliefs & attitudes – Motivation Rural consumer’s Buying behavior . how and from whom to purchase goods and services. when. climbers. Aspirants.• Increase in brand consciousness • Value for money Rural consumer behavior • What is Consumer Behaviour? – Human behaviour that go to make purchase decisions. installments & discounts and free gifts) • Lifestyle ( Poor. It’s the reaction of individuals in obtaining and using goods and services of a particular type • Definition: – Is the process whereby individuals decide whether. etc. are bought in smaller size Small packs are easy to display and they increase the visual appeal Small packs are convenient to retailer to do his business Example: Cavin Kare introduced shampoo in 4 ml sachets at 0.50 paise .• Socio-Cultural factors – Culture – Social class – Groups – Family – Role & status – Sociability (interactions between one another) • Technological factors • Economic factors • Political Factors Chapter 3 PRODUCT STRATEGY 1) Small Unit Packaging Small packs are preferred due to the following reasons: Small packs help the rural consumer to pick the product at affordable price Individual use products like shampoo. toilet soaps. 1 Ponds introduced 20 gm talcum powder Tiger biscuit is available in four biscuits pack at Re. Rasna is now available in sachet at Re. The rural consumers believe that heavier the. which are heavy 4) Utility Oriented Products Rural consumers are more concerned with the utility of the product and its appearance . higher he power and durability Example: Bullet motorcycle is popular in village due to its ruggedness Escorts has positioned their motorcycle “Rajdoot” as a tough vehicle Rural consumer prefer dry battery cell. 1 2) New Product Design The products are designed as per the rural lifestyle Example: PVC shoes and chappals are designed to work in adverse conditions LG electronics launched “Sampoorna” TV that can withstand power fluctuations Philips introduced small refrigerators especially for rural consumers 3) Sturdy Products Sturdiness of a product is an important factor for rural consumers. which was failed and fund that rural consumer purchase radio not only for news but also for entertainment 5) Brand Name Rural consumers are more brand loyalists than urban consumer. logo or color Example: Everyday battery with a cat symbol – rural consumers remember it as ‘billi wali battery’ Lifebuoy soap – rural consumers remember it as ‘lal saboon’ Mahindra tractor’s brand ‘Bhumiputra’ Slogan of Red Label Tea “jiyo mere lal” proved very effective to promote sale DUPLICATE AND COUNTERFEIT PRODUCTS IN RURAL MARKET Counterfeiting is a kind of duplication where the fake products bear the identical name of the original product. The slight changes are made to avoid legal problems Example: . its packaging. design and even same name and address as the genuine manufacturer A pass-off product is one that comes with a few minor changes from the original product. color pattern. The brand name should instantly be understood by the rural consumers Rural consumers are unfamiliar with English and absurd names More preferably rural brand is a symbol. graphics.Example: Philips introduced low cost radio “Bahadur” with only medium wave receiver. The price can be kept low. Example – same as of small unit packs 2. Refill / Reusable Packaging Refill packs benefits the rural consumers in terms of price and also the packaging material should be reusable in rural areas Example – Many farmers demand for fertilizers packed in durable sacks. a discount of 5-10% is given on the MRP particularly in case of FMC goods 5. Promotional Schemes . Discounts In order to motivate the rural retailer to sell more. Application of Value Engineering The aim of value engineering is to reduce the value of the product so that a larger segment of population can afford it to buy Eg: Soya protein can be used instead of milk protein. They feel that they get sacks free of cost by purchasing fertilizers 4. nutrition content of both is same but the soya protein is cheaper then milk protein 3. Low Cost Products Rural customer is price conscious manly because of low income. Head and Shower – Head and Shoulder Pantane – Pantene. etc PRICING STRATEGY 1. by low unit packaging This is a common strategy adopted by many companies marketing in rural areas. 4 (200 gm) in rural markets 2. Increase sales and market share: The pricing objectives should be such that it boosts the sales in rural markets.g. E. Anchor white toothpaste launched with much lower price than the leading brands and captured the market CONSUMER CATEGORIES WITH RESPECT TO PRICING 1) Quality Conscious Consumers – They are very rich and are mainly concerned with quality of the products and services Pricing Methods: Discriminatory Pricing – charging different customer groups differently. E. .g. and Pongal etc. Rural consumer normally buys household articles during festivals like Eid. Long run profit maximisation: A company enters in rural market should wait for success in long run. Deeper penetration of market: Basically rural markets are adopted for deeper penetration and expansion because of its size. Hence penetration-pricing strategy is the best option 3. special discounts. Competing pricing: Rural marketer should study the pricing strategy of its competitors and accordingly fix its prices 5. etc RURAL PRICING OBJECTIVES 1. 15 (400 gm) in the urban market but it is offered for Rs. Recover distribution cost: The pricing objective of a rural marketer should recover the costs involved in distribution alongwith production cost and dealer margin 4. VIM washing bar is Rs. Diwali. special promotional schemes could be introduced on such occasions like exchange offers. Hence the pricing objectives are different for rural and urban markets. Knowledge of local language 2.g. They watch for promotional offers and purchase cheap or fake products Pricing Methods: Psychological Pricing – Psychological pricing is one that ends in an odd number e. price-off.95. E. It conveys two notions to consumer that there is a discount or bargain and it belongs to lower price category Promotional Pricing – It includes mini packs. Willingness to get located in villages 3. special discounts.g. Rs.g. Skimming pricing – Charging high prices at initial level. 99. Cultural Congruence: Rural salesman must have proper acquaintance with the cultural pattern of rural life . Vicks Value Pricing – Setting the price reasonably lower than the competitor’s price 3) Price Conscious Customers – They are climbers. E. P&G launched Tide detergent at high price and then reduced it lower than other brands 2) Value Conscious Customers – They are of middle class and are mainly concerned with functional benefits and value for money Pricing Methods: Penetration Pricing – Charging low prices at initial level then increasing gradually when brand name has been established. credit facilities etc PROMOTIONAL STRATEGY -Qualities Required for a Rural Sales Person 1. Maggie noodles. aspirants and destitutes (poor). Greater Creativity: Rural marketing involves greater creativity. Dina Thanthi in Tamilnadu. wall paintings. illuminations and other displays are also now being used for rural communication B] Rural Specific Media Music Records: Inexpensive medium. Radio reaches large rural population at low cost Point Of Purchase: Colors. Patience 5. symbols and pictures should be used more than the written words Outdoors: Hoardings. he has to introduce it using consumption pioneers and opinion leaders ALTERNATIVE MEDIA FOR RURAL COMMUNICATION A] Formal Organised Media: Newspapers and Magazines: E. Capacity to handle number of products lines: Rural salesman usually does not generate economic value of business if he handles few products.4. A complete language group can be reached on a low budget through cassettes that can be played in the place where rural people gather . If the product is very new in the rural context.g. Adfilms and documentaries that combine knowledge and advertisement are useful for rural communication Radio: It is a well-established medium in rural areas. Cinema: Short feature films with advertisement message. He is required to handle much large number of products lines as compared to urban salesman 6. Punjab Kesri in North and Loksatta in Maharashtra TV: Regional channel is very popular like SUN TV in Tamilnadu and Asianet in Kerala. AV van is very effective tool in rural communication but its cost is very high as the target population is very high . etc Group Meeting: It is a component of interpersonal media. Promotion staff does not sell the products. Eg: Sounds and drama division of the government of India used puppets to promote various government projects LIC used puppets to educate rural masses about ‘jeevan beema’ in Lucknow Folk Theater: Folk theatre is mainly short and rhythmic in form. The performer uses puppets as a medium to communicate. Demonstration of products can also be carried out House-to-House Campaign: In these campaigns. ideas. The van can be used for sales campaign in addition to promotion campaigns. Puppetry: The indigenous theatre of India. rural people prefer face-toface communication than mass communication. most popular form of entertainment available to the village people. It is very popular with rural marketing firms particularly agro business firms. It has been used as an effective medium for social protest against injustice and exploitation Interpersonal Media: In many cases. audiovisual presentations. values and social messages. slide shows etc. AV van exhibits films. promotional staff makes house-to-house visits in rural areas. folk. Salesman can effectively convey the product message at these meetings. This is different from door-to-door selling campaigns. they only propagate the products Field Demonstrations: AV Vans: AV van is a comprehensive mobile promotion station. A firm can contact audience through fairs & festivals. Doctors etc. These people should be taken into consideration while chalking the rural communication Constraints in Rural Communication Low Literacy Rate Low Spending Capacity Joint Families and Strong Kinship Ties: Difficult to reach female consumers directly Linguistic and Socio-cultural Differences . Syndicated AV Vans: It is an AV van publicity service provided by the independent agencies. The retailer usually paints its shops wall and name board which acts as a status symbol Use of Logos and Symbols: Illiterate villagers would remember brands only by picture. scientific practices. can utilise the syndicate van services Stalls. Sarpanch. information on whether. which cannot afford to have their own publicity van. market prices etc Focus on Reference Groups: They are the opinion leaders and are the key persons of the village e. symbols more than the name Use of Information Technology: ITC developed a web portal in regional languages to provide information to the farmers about the products and services which they need in order to enhance farm productivity. Firms.g. Melas: These are useful media of rural communication to spread the message and to induce brand trials Wall Paintings: The speech or the film comes to an end but the paintings stay as long as whether allows it to stay. Teachers. Haats (a temporary & periodic market). Gram Sevak. inspite of having salesman. The disadvantage of this system is that the salesman has to spend lot of time in organizing transport Working by Independent Stockist: In this system. the salesman hire a public carrier like a taxi or a truck. Magazines are not read at all Expensive Communication: Repeat exposure is a must otherwise the message loss its effect during gap periods Poor Infrastructure Lack of Research Data: Decisions regarding messages and media mix for rural communication depends only on sales force and distributors. a salesman loads the van with stocks and from the company stock point and distribute in the surrounding market. It is the best but an expensive method Hired Vehicles: In this system. In this way he moves from one stock point to another and returns to company’s stock point. In this system the number of outlets covered is limited because of slow transportation . company gives this job to the stockist. which is insufficient DISTRIBUTION STRATEGY -METHODS OF DISTRIBUTION Stockist’s Van / Company Owned Vehicles: In this system. Then he moves the next stock point and covers all surrounding markets. Each stockist is asked to cover his surrounding market. Unique Media Habits: Newspapers are found mostly at groceries shop. It is useful only to companies with high volume turnover Selling Through Bullock Cart / Camel: This is used to market in remote villages with no motorable roads. tea stall etc. Thus firms have to depend on large network of intermediaries. controlling of which is a difficult task. it is expensive as well as unmanageable. Such multiple tiers and scattered outfits increase the costs and make channel management difficult Poor Viability of Retail Outlets: Retail outlets suffer from poor viability because the business volume is not adequate enough to sustain the profitability RURAL RETAILER BEHAVIOUR Seasonal Pattern: There is particular seasonal pattern in stock holding of rural retailer. Appointment of Primary Dealers: Here a big retailer in a village is appointed as a primary dealer ad is asked to purchase the goods from nearby stockist with a special discount Using Urban Wholesalers: Company can ask the urban wholesaler to recommend and sell its products through their rural retailers. mandi level distributor and wholesaler in town. In return. company gives them 1% incentives on actual sales made PROBLEMS OF RURAL DISTRIBUTION Transportation Problems Warehousing Problems Communication Problems Non-Availability of Dealers Greater Dependence on Dealers: Scope of manufacturers direct outlets in rural market is limited. During the harvest he stocks variety of . Higher Cost and Administrative Problems: Distribution chain in the rural context requires large number of tiers including village level shopkeeper. In this way a multiplier effect create in rural demand Chapter 3 Segmentation in Rural Market 1.consumer goods. South. he will start stocking this product and will recommend and push this product to other rural retailers These rural retailers will in turn. because the main buying season in rural areas is during harvest Transfer of Capital: When the harvest is over and cash is realized. the retailers make purchases 3 to 4 times a week from urban wholesaler. the retailers invest in inventories for his shop Credit Pattern: Credits offered to consumers by retailers is different from area to area. Geographic Segmentation: Segmentation on the basis of geography is done depending on various factors such as: • Region/Zone: North. . Normally consumers have a running credit with a part of outstanding is paid every month and the balance is paid during the harvest Purchasing Cycle: In high turnover feeder villages. sell to smaller retailers of smaller villages. East and West. the rural retailer put this item on his shopping list when visiting the wholesaler in the nearby town This action by the rural retailer starts a chain reaction with the urban wholesaler. In other villages they buy once a week or fortnightly Multiplier Effect of Rural Demand Once a product gains acceptance in rural markets. once the urban wholesaler knows that for such a product a rural demand is possible. size of consumption • Loyalty to brands (whether Low. limitations of the segment . moderate. Middle. Psychographics / Behavioral Segmentation: Such segmentation is done using variables such as: • Social Class (Upper. > 5000 people • Proximity to the feeder town • Density: The number of people per sq. Lower) • Lifestyle of the people. km • Climate: Moderate. (whether rigid. Price and Service) • Usage rate. growth rate. Evaluate the segments: Based on profitability of the segment. scanty or none at all 2. literacy level and income of the rural consumer 3. age group.• Village Size: < 500 people. rain fed or dry with scanty rainfall • Level of Irrigation: Whether good. Medium or High) Targeting 1. 501 – 2000 people. company objectives. traditional or changing) • Occasion (whether purchases on a regular day or a special occasion) • Benefits sought from the product (such as Quality. 2001 – 5000 people. attractiveness. Demographic Segmentation: It is based on the population. Select the differences that have greater competitive advantage 3.High to low: TV. Identifying own USP via a vis competition 2. Product 2. Service 3. Coverage of segments: Types: Differentiated. signs. People/brand endorsers 4. Select the segments: Rates the above parameters on high. logos etc Marketing of Consumer Durables • Income level determines demand • Purchase priority. Overall image using ads. Communicate such advantages to target audience • Marketer can differentiate using: 1. AC… • Changes in demand pattern due to consumer finance • High growth witnessed in rural demand • Exchange schemes work well Issues . symbols. medium or low and comes with a score for each segment 3. undifferentiated and concentrated Positioning • It is what you do to the mind of the prospect • Involves: 1. Fridge. colors.2. washing m/c. water) • No economies of scale for rural retailer • Spending tendency more on labor than machines Chapter 4 Agricultural Produce Marketing Agricultural marketing is a process which starts with a decision to produce a farm commodity It involves all aspects of market structure and includes pre and post harvest operations like assembling.• Low penetration compared to potential • Lack of infrastructure (Power. On the Basis of Location Village Markets: Located in small villages Primary Wholesale Markets: Held weekly or bi-weekly at different villages and locally called as ‘Shandi’ or ‘Haat’ . storage and distribution Characteristics of Agricultural Produce Uncertain quality/quantity of output Bulky Perishable Seasonal in many cases Need processing Classification of Markets 1. grading. Number of Commodities General Market: All types of commodities are bought and sold Specialised Market: Only one or two commodities are sold.g. cloth market . Nature of Transaction Spot or Cash Market: Money is realized immediately after the sale Forward Market: Process of purchase and sale is done but goods and money is exchanged at some specific date 5. milk etc. e. Time Span Short Period Markets: Perishable products such as fish. Volume of Transaction Wholesale Markets: Goods are bought and sold in large quantities Retail Markets: Goods are bought and sold according to the consumer’s requirement 4. are traded Long Period Markets: Less perishable products such as oilseed food grains are traded 3. Secondary Wholesale Markets: Located at taluka or district headquarters and towns and known as ‘Mandi’ or ‘Gunj’ Terminal Markets: Located in metro cities where buyers and sellers come from different regions or nations Seaboard Markets: Located near seashore for the purpose of import and export 2. They are: Farmers who bring their produce to market Cultivators who collect the produce of other farmers Landlords who collect the produce of their tenants Merchants or village banias Arhatiya that is wholesale merchants and manufacturers 2. Distribution: It is the process of storage and selling of processed or unprocessed products Secondary Marketing Functions: 1. Transportation 4. Financing . Processing: It is a process that adds utility to a commodity. Storing 5.Marketing Functions Primary Marketing Functions: 1. It improves the quality of produce like polishing of rice 3. Assembling: It is the process of collecting agricultural produce from small cultivators and marketing them in large quantities in wholesale markets In assembling process number of agents take part. Standardisation & Grading: Difficult to grade agricultural products because of the wide variation from region to region and even from farm to farm 2. Packaging 3. farmers take advance from the buyer before the harvest without fixing the price. everyone is not informed Roster Bid System: Bidding starts from a particular shop in the market and the bidders after the auction of produce at one shop move to the next in a clockwise or anticlockwise direction till the auction at all shops is over Closed Tender System: In this system the bidders are asked to quote their offer price in a prescribed form and submit it to the seller. with an understanding that the buyer will pay the prevailing rate after the harvest Private Negotiations: In this method. pick samples and shows it to the buyers. If price is accepted the agent convey the decisions to the seller and the produce is weighed and given . Open Auction System: In this system. the seller piles-up his produce at one place. All the bidders are invited on a fix date and time and sealed tenders are opened in presence of all bidders. This system has been banned by government because of the possibility of cheating. Dalal visits each piled-up stocks. The agent then invites bids and the produce is sold to the highest bidder Random Bid System: Dalal invites only few buyers. inspects the sample and offers his price. buyer comes to the shops of agent.Methods of Sale Under Cover of a Cloth (Hatta) System: The price is fixed by the Commission agent and the retailers (Purchaser) under the cover of cloth by making signs on the palm (Hatta system). The name and price of highest bidders is announced and goods are sold to him Mogum Sale: In this system. Market Charges and Deductions Arhat – Commission Bardana – Rent for supply of gunny bags Borioto – Charges for holding the gunny bags while filling Hamali – Handling charges Tulai – Weighing charges Munimi – Clerk’s allowance Karda – Trade allowance to buyer to compensate for loss in weight on account of impurities etc Direct Marketing for Agricultural Produce Apni Mandi / Kisan Mandi A direct contact between the farmer and consumer without the involvement of middlemen Minimises the marketing costs and zero middlemen margin The Apni Mandi is fully covered from top but open on the sides It accommodates raised platforms of 6'x8' size each These platforms are allocated temporarily to the famers to display their produce and sell it to the consumers directly First Apni Mandi was started by Punjab Mandi Board at Chandigarh in 1987 State government provides various facilities like space. sheds. water. counters etc to the market committee of the area where Apni Mandi is located . pesticides and guidelines to grow crops and buy back the products with a rate specified in advance. communication gap etc . debt. Mother Dairy opened these booths in almost all colonies of Delhi to sell vegetables in retail Contract Farming: Agro processing companies enter into contract with the farmers that they provide the farmers with the inputs like fertilizers. It has no middlemen or commission agents Rythu Bazar: It is located in major cities of Andhra Pradesh Uzhavar Shandies: Located at selected municipal panchayats of Tamilnadu Shetkari Bazar: Established in Maharashtra for marketing fruits and vegetables Krushak Bazar: Established in Orissa for marketing fruits and vegetables Mother Dairy Booth: After the notorious onion and potatoes price crisis. Today. the country has 7. seeds. Problems in Marketing Agricultural Produce Lack of organisation among producers Superfluous middlemen Forced sale due to poverty.246 such mandis each of which caters to an average area of nearly 450 sq km Only 20 per cent of the over 242 million tonne of fruits and vegetables produced in India is traded through regulated markets Hadapsar Vegetable Market: It is located at Pune and is a model market for direct marketing of vegetables. there is a `Market Committee’ . munimi etc Multiple weights and measures Adulteration by farmers Malpractices like large samples taken are not paid for Under developed infrastructure & transportation Absence of grading and standardisation Lack of easy finance Information gap Inadequate storage facilities Chapter 5 Regulated markets The regulated markets are established as per the provisions of the `Marketing of Agricultural Produce Acts’ of the State Government The Commodities with which the market will deal. It also aims at reducing the non-functional margins of the commission agents For controlling the activities of the marketing. are also declared Regulated markets aim at the development of marketing structures to ensure remunerative prices to the producers and to narrow down the price spread between the producer and the consumer. Market charges like commission. namoona. etc. place for parking of vehicles. texture. The Committee consists of representatives of the farmers. are also created in the market yards for the benefit of the farmers Open auction method of sale Market charges vary from state to state Payment of goods on the same day Standardisation & Grading Standardization refers to the process of setting up basic measures or standards to which the products must conform It ensures that the goods actually produced adhere to these standards Standards are established on the characteristics like weight. etc Grading is the process of sorting individual units of a product into well defined classes or grades of quality . Amenities like rest house. commission agents and the Government nominees The Committee issues licences to the Commission Agents. ripeness. appearance. and other functionaries. weigh men. The rate of Commission to be charged is fixed by the Committee Weighing is done properly by the weigh men appointed by the Committee There is an arbitration Sub-Committee to look into the grievances of the farmers. taste. coldstorages. color. size. moisture. etc. grading involves the division of products into classes made up of units possessing similar characteristics of size and quality.. avoids detailed inspection Sell better and also fetch a better price Reduces risk of purchase by wholesalers/firms . The goods are graded or sorted out into different lots in accordance with the specified standards The established standards lay down the grades of the product In case of manufactured goods. Standardization and Grading are interdependent activities Standardization lay down the standards or grade of quality Grading involves classifying the products into specific lots as per the established standards Why Standardisation? Improves physical handling of goods – goods of similar standards can be stored/transported together Facilitates buying and selling of goods by sample or description. classes or grades of quality are set and different units of the product are sorted into the established standard grades Thus. But agricultural products like fruits and vegetables. goods can be of uniform quality. vary in quality Therefore. traders and agents Role of financial institutions more prominent in recent years Types of credit: ◦ Short term ◦ Medium Term ◦ Long term NABARD National Bank for Agriculture and Rural Development . cold storage etc Standardisation and grading Concept of contract farming becoming popular Finance & Agricultural marketing Traditionally dominance of private money lenders. Provides easy availability of finance Helps increase exports Improves appropriate targeting of right quality of produce to the right market Recent trends in Agricultural marketing Reduction in length of supply chain Modern communication methods Better transportation Improved infrastructure – warehousing. Apex body looking after rural credit requirements It provides loans to State Cooperative Banks and Regional Rural Banks Short term loans upto 18 months. medium term upto 7 years and long term upto 25 years Overlooks and inspects functioning of SCBs and RRBs Maintains R & D fund for research in agriculture and rural development Impact of Globalisation on Indian Markets Higher standard of living Better profits to agro based firms Improvement in product standards Better employment opportunities Optimum use of natural resources Economic Growth Attracts more FDI E-Choupal Initiative by ITC Provides computer with internet connection to farmers Good source of information and discussion for farmers across the country Main motive is to conduct agricultural commodity trading at multiple locations . assesses the quality and gives a quote to the farmer The quote is given on basis of previous day mandi prices that Sanchalak finds through the website The farmer may choose to sell via ITC He is given written note of details of the sample and the quoted price Sanchalak takes the sample to nearest ITC procurement centre A chemist tests the sample If approved. the farmer collects his full payment from the centre . By passes the middlemen and their charges The internet kiosk located at an influential person in village – the Sanchalak He has access to entire site contents The process… Farmer brings sample to sanchalak He inspects the produce.