Page 287 - DMGT509_RURAL MARKETING

Rural Marketing

Notes Sustainability of rural industries has become a crucial area of debate in recent times. Marketing
was considered a problem rather than an opportunity. This ‘problem’ was addressed through
enhanced public policy interventions, such as bhandars and common marketing centres organised
by the government, marketing federations and co-operatives.
The fact that products of rural industries do not attract an appropriate market points to a basic
lacuna in rural industrialisation policy. The official focus has been primarily on the preservation
and revitalisation of traditional industries, and not on a programme for rural industrialisation.
As a result, rural industries have not played an effective role in providing reasonable incomes
to those engaged in them, or in integrating the rural areas into the overall industrialisation
process. Some economists point out that the problem of rural industrialisation was never
considered as an aspect of spatial diversification of industries, addressing the wider questions of
location flexibility, economies of scale and agglomeration, infrastructure and incentives and
concessions. On the other hand, it was viewed in terms of a limited concept of promoting village
industries. Under such a limited approach, a vicious circle of static technology, competition
from substitutes and low income elasticity of demand, are natural These issues gain added
complexity under globalisation, where markets are characterised by extreme competition and
volatility. While rural industry has been perceived traditionally as catering to the local market,
or at best, to a wider national market through limited formal channels, the reality of globalisation
since the 1990s introduced a new dimension to the market for such products. While the public
outlets lost their capability of providing marketing opportunities, the reality of the market
itself became complex.

The issue of rural industrialisation, therefore, needs to be viewed from a new angle and on far
more scientific lines. The core of a scientific approach is to understand the market opportunities
for rural products along with the country’s development priorities and to chalk out a strategy
where rural industries have an important role to play. It is often presumed that in rural areas,
industries form only a subsidiary occupation. Most traditional industries are household-based
and family labour-based. However, in an open economy, where materials and technology flow
freely and markets are open and global in nature, production at the household level becomes
rather difficult. This demands a change in the household organisation of production itself. The
production structure and the consumption pattern of rural and urban areas are characteristically
distinct. With rising rural incomes, a shift both in the input structure of production and commodity
structure of consumption in favour of the so-called urban products is inevitable. In order to take
advantage of these changes, rural industries need to have some dynamism relating to technology,
product design and organisational structure.
While before the globalisation era, the switchover was relatively easy through supply-side
interventions, under globalisation the situation has completely changed. While rural products
are forced to increasingly become part of global supply chains, these products need to adapt
themselves, not only according to the changing tastes of the national market, but also according
to changes in tastes in the international market. It is in this context that the importance of
networking of enterprises becomes important. The crucial questions that emerge are the
following:
1. Are we able to protect rural industry with existing policies and programmes?
2. Is there a role for rural industry in the overall programme of economic development?

An answer to these questions is not simple. More than being questions in economics, they are
wider questions in political economy. A review of policy exercises for rural industry during the
last one and half decades of active liberalisation has shown that there has been an enhanced
patron-client relationship emerging in this sector. While rural industry has been considered
outside the mainstream of debates on small industry, the thrust on it has been largely out of

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