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ORGANISATIONAL FORMS AND MARKET INTERMEDIATIONS: A STUDY

ON RURAL WOMEN ENTREPRENEURS IN INDIA

Nilabja Ghosh*

This paper examines the insights provided by investigations into the ground level realities of marketing rural products by women entrepreneurs in India. Production for local marketing through direct selling is a relatively easy and prevalent strategy but such a method is inconsistent in a modern economy in which the rural enterprises have to compete with more organised firms. The paper finds evidences of new models of organisation and marketing emerging in the rural scene but argues that entrepreneurial strategy must utilise both the lessons drawn from the modern marketing discipline and the strengths of the informal network-based traditional experience.

I. BACKGROUND

Despite their high work participation rates, rural women’s economic engagements hover around the basic urgency for subsistence rather than relating to human aspiration, growth and development. Since the Mexico Conference of 1975, the government has given more attention to programmes that would expectedly develop and harness women power. Empirical evidences have found women in agricultural households to be occupied with relatively low paid, tedious and exhaustive farm jobs (Mencher and Saradamoni, 1982, Kaur and Goyal, 1996, Rani, et al., 1990) even while encountering a deteriorating bargaining power in the labour market (Hirway and Roy, 1999, ).During the course of the subsequent Five Year Plans, reforms in property rights, credit institutions and marketing regimes, and beneficiary-oriented employment programmes such as the Training of Rural Youth for Self-Employment (TRYSEM) and the Development of Women and Children in Rural Areas (DWACRA) were some of the landmarks that recognised women as partners in development. Training was a significant innovation in the process while the DWACRA and the Self-help Group (SHG) movement spearheaded by the National Bank for Agriculture and Rural Development (NABARD) have, in recent times, succeeded in organising the women to enable them to avail of the necessary finance for economic activities. The growing recognition of the usefulness of directing income earnings towards women has further strengthened the policy initiatives towards designing women-oriented alternative employment programmes (World Bank, 2008, Gulati, 1978, Guha Khasnobis and Hazarika, 2006).

The Government of India had implemented a number of programmes under the head ‘Women in Agriculture’ under which training was imparted to women in enterprises relating to agriculture. Starting in the early 1980s these programmes had covered several

The Indian Journal of Labour Economics, Vol. 53, No. 2, 2010

* Institute of Economic Growth, Delhi. E-mail: [email protected]

382 THE INDIAN JouRNAL oF LABouR ECoNoMICS

states in different phases and drew on both domestic and external fundings1. The National Agricultural Technology Project2 (NATP), which had been launched to introduce major changes in research and extension in agriculture also had a component that was specially directed towards alleviating the plight of the women in farm households. A major thrust was put on technological empowerment of rural women through skill development for which training programmes were conducted.

It addresses the dual issues of the farm technology used by women and diversification of women’s incomes through the promotion of entrepreneurial activities among them. While the first component is a reaction to the emerging concern about the drudgery involved in the farm work performed by women (Wasinik, 2005; Punia, 1991; Mathur, 2000), the second objective focuses on diversification of agriculture and the strengthening of its value addition and its linkages with the wider economy.

Many of the activities that have been recognised as being suitable for women are traditional in nature and have been existing before the implementation of public programmes in the form of women’s indigenous practices. The publicly-funded Krishi Vigyan Kendras (KVKs) and sometimes other organizations including non-governmental organizations (NGOs) provide training either for initiation or the refreshment of entrepreneurship, wherever found necessary. These activities include various forms of food processing and in particular, the preservation of fruits and vegetables, making of pickles, badi and papad (both made from pulses), and some variations of kitchen gardening for horticultural products. Dairy is another activity that women have engaged in since times immemorial. Even within these traditional activities, the extension agencies have sometimes added new technological inputs and promoted improved practices. Some activities like bee-keeping and fishery were traditional but not necessarily in the domain of the beneficiary group under consideration whether as social groups (caste) or as gender, but were introduced as innovative measures with upgraded technology. New food products like the making of dalia (a wheat product), masalas (spice products) and khoya (a milk product) have entered the increasing list of women’s activities in tandem with the people’s dietary diversifications taking place in current times. Several crafts such as the making of incense sticks (agarbattis), herbal shampoos, wooden toys or decorative articles out of sea-shells, soap-making, candle-making and quilt-making were being promoted. Newer products have emerged that offering ecological and productivity benefits such as vermin-compost. Certain traditional items like potatoes, brinjals and animal feeds are now being produced by using eco-friendly methods.

While the NATP list of enterprises promoted among women includes activities such as the making of dolls, soft toys, blankets and textile items, the focus in the present study is on agro-based enterprises, that is, enterprises that either draw on inputs derived cheaply from nature or from the surrounding agricultural activities, or those that find an easy market as inputs in agriculture. These enterprises enjoy intrinsic advantage by virtue of their geographical location and can, hence be identified as agglomerations within the rural economy. Many of the inputs used by the enterprises are accessible virtually free of cost and nearly all enterprises draw on some inputs that are easily accessible. They are obtained

RuRAL WoMEN ENTREPRENEuRS IN INDIA 383

commercially at a low cost from local markets, procured from the neighbouring farms or raised on people’s own farms. In some cases, the raw materials are found freely in the village commons. For instance, dairy activities can obtain feed from agro- by-products, food processing activities use inputs from people’s own farms or even from forests, and bee-keeping enjoys a synergy with the neighbouring farms and the natural environment. Vermins and dung used for vermin-composting and materials like leaves and reed for craft are usually easily accessible from common lands and forests, and the production of jute and coir items is based on locally raised agro-products.

II. DATA

The information used is drawn from a number of primary surveys conducted by different Agro-Economic Research Centres (AERC, 2007-08) as a ‘Coordinated Research Project’ of the Ministry of Agriculture, Government of India. The survey was designed and coordinated by the author at the of Institute of Economic Growth, Delhi. The Centres had contacted the regional organisations called KVKs and the State Agricultural universities, and based on their discussions with the officials and scientists in authority, the activities of women entrepreneurship commonly undertaken in the area along with the specific regions that appeared to be intense in such activities are identified. Three to six activities of common enterprise have been selected for study in each region. Lists of trained entrepreneurs have been given drawn on the basis of attendances in training programmes. Similarly, lists of non-trained entrepreneurs have also been by the KVKs and the participating NGOs. From the frames provided by the above lists, samples were drawn by using a simple random sampling procedure. In certain cases, where training was not common or not considered necessary, the sample comprised mostly or entirely non-trained entrepreneurs and in cases of new activities for which training became essential, there was no way of sampling non-trained entrepreneurs. The investigators then solicited various forms of objective and subjective information on the enterprises, the entrepreneurs, and their households. The survey was conducted between 2004 and 2005 referring to a period between 2001 and 2004, depending on the period of existence of the enterprises, and the regional results were compiled into individual reports. The Coordinator had the job of collating the survey results in a comparative view.

The activities of the sample women entrepreneurs along with the districts of residence are presented in Table 1. The region level sample sizes are constrained by the presence of agro-based enterprises in the regions. The total sample size adds up to 1104. The individual investigator only reported their sample averages of various attributes of interest for each activity in the survey along with the sample sizes. The Coordinator had no access to the unit level data but only the averages of the samples relating to each group, adding up to 78 observations, are reported by the investigators. This is the data for the meta-analysis but the sample sizes were used as weights in calculating the statistics. For analytical convenience, the enterprises are classified into four broad groups, namely Primary Production (PP), Food Processing (FP), New and Eco-friendly products (NEC) and Crafts (CRF). The


sample regions represent a wide vista of geographical and economic conditions ranging from coastal (Andhra Pradesh), desert (Rajasthan) to hilly (uttarakhand and Himachal Pradesh) terrains. Some of these regions are relatively well endowed such as the fertile tracts in Bihar and uttar Pradesh, and the northern, more prosperous and industrial towns of Punjab and Haryana. Assam, on the other hand, is deficient in infrastructure and its agriculture is vulnerable to floods, droughts, and erosion, while there is an acute shortage of rural employment in Andhra Pradesh, where women in large proportions are involved as farm labourers.

Table 1Details of Enterprises Surveyed

State Districts ActivitiesPunjab Gurdaspur,

AmritsarDairy (PP), Bee-keeping (PP), Papad and -badi making (FP), Pickles (FP)

Assam Jorhat, Golaghat

Livestock (PP), Bee-keeping (PP), Fruit and vegetable processing (FP)

Rajasthan udaipur, Chittorgarh

Vermi-composting (NEC), Improved animal feed (NEC), Fruit- and vegetable preservation (FP), Nursery raising (PP), Papad-making (FP)

Haryana Hissar Dairy (PP), Vermin-composting (NEC), Pickle-making (FP)Himachal Pradesh

Kangra, Bilaspur

Dairy (PP), Bee-keeping (PP), Vermi-culture (NEC), Potato production using bio-pesticide (NEC), Diversified farming (PP), Fisheries (PP).

uttar Pradesh

Sultanpur Agarbatti-making (CRF), Blanket-making (CRF), Spice processing (FP), Dalia-making (FP), Milk processing (FP), Basket-making (CRF)

Andhra Pradesh

East Godavari, Srikakulam, Visakhapatnam

Coir products (CRF), Jute handicrafts (CRF), Leaf plates (CRF)

Bihar Banka, Bhagalpur, Munger

Preservation of fruits and vegetables (FP), Preparation of jam and jelly (FP), Preparation of potato chips, Badi and papad making (FP), Preparation of pickles and murabba (fruit preserve) (FP)

Source: Based on survey results.

III. ISSUES SURROUNDING MARKETING AND ORGANISATION OF RURAL ENTERPRISES

Marketing plays a vital role in determining the success of an enterprise. It is basically a method to connect the producer with the customer. The two terminals are not only located at a physical distance, but in many cases, each of the two is unaware of the other’s existence, and often even of his or her own potential role in the relation. Thus, demand and supply, the two pillars of the market, are usually incomplete without each other and in a dynamic situation, are invariably in a persistent state of evolution. Marketing, therefore, not only fills up the information asymmetry that each of the two terminal agents encounters but also completes at any point of time the process of demand and supply formation by helping build up the customer’s mind-set and the producer’s capability.

In the Indian rural situation, market formation is severely hampered by the basic structure of the sector wherein nucleated settlements of relatively small size lie scattered in large numbers so that the disposal of rural products at the village level is not viable on a regular


basis. A common method of marketing of rural products is through weekly or periodic markets, usually termed as haats. An alternative to these markets is to carry the products to a common market or mandi usually catering to a large number of villages. However, except in the case of items of daily use, such markets often have limited potential for absorbing the products of the women entrepreneurs, especially the processed food and the craft items, the demand for which is elastic to income levels. Many of these products may also have a market only in cities (Singh, 1994). These complications imply that marketing signifies more than a mere fulfilment of local needs and also involves the identification of urban customers, apprising them of the products, understanding their wants, and transporting the items to outlets where these customers can access them. Thus, the bi-directional flow of information and the physical transportation of the products assume high importance in the marketing function.

Modern organised firms of a relatively large size usually have their own specialised marketing departments to conduct this function and even make a distinction between marketing and sales. In the case of rural products and enterprises, several constraints inhibit the marketing function. The tiny and often home-based rural enterprises encounter severe diseconomies of scale that also inhibit such specialisation. In this situation, the entrepreneur either depends on his/her own resources or builds up partnerships with other agents for functional specialisation. In the latter case, there are different alternatives. In the current context, the most dominant instance is when the trader, commonly known as the middleman, steps in to bridge the gap between the producer and the customer. A less common but possibly more progressive method is marketing via an organised body with whom a formal contract is made. The middleman and the corporate or parastatal body as the marketing agent represent the demonstrations of formal and informal networks that intermediate in the market. However, aside from the individual-operated direct method and the intermediary method, there have also been instances when the producers have organised themselves into groups for carrying out certain functions and in a limited number of cases, have actually performed the marketing function in a united way. These cases signify cooperative and group marketing.

In a similar but distinct process, the entrepreneurs organized themselves into groups for undertaking certain pre-marketing functions. This was intended to help them overcome the diseconomies of scale in production that accompany the indivisibilities of certain inputs. The women in this case work in groups but in this informal network, they are neither partners nor complete proprietors. They share the common workplace or shed and the common machine whose services they allocate among themselves. Although the purchase of raw materials and marketing of products takes place separately, even these functions facilitate a substantial advantage since the raw materials are delivered at the shed and the products are picked up from the common doorstep of the women entrepreneurs.

In the case of direct marketing, the entrepreneur is either confined to a geographically small market relying on door-to-door sales or supplying to local retailers (the entrepreneur may even have her own outlet). However, it must be realised that all these direct methods


have a limited radius of operation and as a result, lead to severe constraints on the scale of activity. Moreover, this method is costly in terms of entrepreneurial time and though there is some evidence of specialisation by gender among family members, even in such a case, the marketing activity eats into the time slated for the for income-earning activities of family members.

Building partnerships with other agents is nearly unavoidable for the tiny enterprises. A partnership such as that with the middleman is what is described in managerial literature as a ‘strong’ relationship built out of long-standing and frequent interactions between the parties concerned. Trust, predictability, and voice are important components of these relationships in the absence of a legal validity of formal contracts. Strong ties enable the transfer of complex information in either direction, encourage referrals based on trust and knowledge, and ensure that the support extended is not bound by the immediate context as the concerned people know each other and their interests, and interact in an informal and personalised capacity (Larson and Starr, 1993). The problems arising in the course of the exchange are conveyed to the partner and overcome with mutual effort in the presence of ‘voice’. The corresponding ties are, however, likely to be terminated in the case of weak relationships when the parties begin to look for new business partners. Weak ties are devoid of emotional content that requires considerable investment of effort in building relationships. Such ties are likely to be temporary and their manifestations are contract-bound often between unequal partners. Formal contracts in product marketing may be conceptually classified as weak ties. Such actors indulging in more ephemeral and experimental business deals with varied partners are more likely to move in circles other than the entrepreneurs’ own ambits, in contrast to those who invest considerable time and effort in maintaining the specific ties. Hence, they can be a more valuable source of market information that is distributed unevenly throughout society (Coorper, et al., 1995). Contractual partners are likely to have larger networks than the informal contacts, covering larger geographical locations and a greater variety of products. They thus have the potential capability of connecting the producer to consumers dispersed geographically, bring in information about new kinds of wants in the market, and exploit the synergies that exist in marketing multiple products in the larger market.

IV. MARKETING CHANNELS OF THE WOMEN ENTREPRENEURS

More than 70 per cent of the women in the sample reported individual proprietary business as the only organisation of production with homes as the places of operation but among the rest, the practice of forming groups was in vogue. These groups produced goods in the same shed or used the common machine for production. Group operation is found to be prevalent among the food processing and craft activities, mostly in Andhra Pradesh and Bihar. The practice was not reported by the sample entrepreneurs in the northern states of Himachal Pradesh, Punjab, and Haryana. In Andhra Pradesh, the local NGos and the Coir Board helped in the organization, while also providing machines or workplaces, but in most cases the NATP was instrumental in engineering this organisational innovation.


Table 2 Summary Indicators: Economic, Organizational

Primary Production

(P)

Food Processing

(FP)

New/ Eco-friendly (NEC)

Crafts (CRF) All Activities

Economic Performance

Sales (Rs. 000) 37.8 59.6 22.6 23.2 39.9

Profit (Rs. 000) 24.5 14.5 8.5 11.3 17.3

No Group Production reported (%)

90.1(439)

35.6(78)

86.9(199)

35.5(60)

70.3(776)

Marketing channel (%)

Cooperative 12.3 (60)

0 (0)

0 (0)

0 (0)

5.4 (60)

Contractual 16.8(82)

0(0)

0(0)

71.0(120)

18.3(202)

Traders 54.6(266)

31.1(68)

26.2(60)

62.1(105)

45.2(499)

Direct sales 54.4(265)

68.9(151)

73.8(169)

55.6(94)

72.4(679)

unsold/Home use 27.3(133)

28.3(62)

70.7(162)

20.7(35)

35.5(392)

Market feature

Brand 24.6(120)

0(0)

0(0)

71.0(120)

21.7(240)

Melas/Exhibition 7.4(36)

20.1(44)

0(0)

23.7(40)

10.9(120)

Competition 58.9(287)

73.5(161)

13.1(30)

23.1(39)

38.9(430)

Note: Figures are % reporting members but there are overlaps. Total sizes of sub-samples are 487, 219, 229, and 169 for P, FP, NEC and CRF, respectively. Figures in parentheses are the actual numbers. Total number of enterprises=1104.

Source: Author’s calculation.

A product is marketed by the entrepreneurs through various means. These methods signify the dominant role of specific channels or agents in plugging the physical and informational distance between the seller and the buyer. While the entrepreneurs producing a specific commodity are geographically clustered and often share similar organizational behaviour and marketing practices, an entrepreneur rarely relies on a single marketing channel. owing to the multiplicity of marketing practices, the shares of the marketing methods adopted for the enterprise group do not add up to one (see Table 2). Not all the production is successfully marketed but such instances are usually reported as the utilisation of a useful product in entrepreneur’s own household. This is most common for the NEC group, for which market formation is far from complete. The products have ecological and social values about which the potential users lack awareness. In any case, self-use can be alternatively considered analogously to direct sales (to oneself).


1. Direct Selling

Direct sales to customers, apart from self-use, is the most important vehicle as reported by 72 per cent of the entrepreneurs in the sample, and by all the enterprises. In some cases, as for instance, for livestock products in Assam, the products are sold in local haats, while in many other cases there are reports that the women travelled to distant places to meet the customers at fairs or exhibitions. However, these trips were generally organized by the promoter of the programme. The positive aspect of this avenue of marketing is that the entire margin is retained by the producer. However, the entrepreneur’s limited resources in terms of time and capital severely curb the size of the market, thereby reflecting on the scale of activity that this type of marketing allows. on the whole, this form of marketing is expensive in terms of identifying the market and ensuring access to it, besides which it is also fraught with uncertainty, and both these factors tend to limit sales. Further, this is an inappropriate method of marketing for products of a non-essential nature that may have a demand in distant and urban locations.

0102030405060

Dairy PRM FP NEC CRFEnterprise

Assured

Trader

Direct

Rs.

000

Figure 1Average Profit and Market Channels

Source: Author’s computation.

2. Marketing with Assured Sales

Given other things, entrepreneurs would like to minimise or eliminate the uncertainty that surrounds the salability and realisable price of the products they undertake to produce. The cooperative method is one such method used by the respondents in the sample, which helps in achieving this. In this case, the producers can not only retain the margin but also gainfully invest it to strengthen their sales network and production capability. The united character of this form of marketing organisation also endows the producer with a bargaining strength that individual-based methods cannot bring. However, the cooperative model has been found to be used in the samples only in Punjab and that too only for dairy. This can possibly be attributed to the nature of the market, which is characterised by the presence of a number of small producers in the area, the availability of a ready market at a reasonably short distance, and a perishable product which is nonetheless in great demand. The cooperative in Punjab has been found to be extremely progressive and active, and has successfully achieved accreditation and a brand name, and regularly supports members by


providing them access to information on best practices, supplying improved animal feed, and facilitating the installation of important equipment such as weighing machines for the use of producers.. It is also able to compete effectively in the market and there have been very few complaints from the members. Thus the selling cost, which is treated here as an overhead because there is nearly no differentiation or competition among the individual producers, is incurred by the cooperative even while the benefits from the cost are shared among its women members. However, due to the limited ambit of its operation and competition from other cooperatives, the method has a limitation of scale though this has not been binding for entrepreneurs who have their own and more relevant constraints on scale originating from their managerial abilities and household responsibilities. A similar organization has been in operation in the neighbouring state Haryana, where the women have formed an SHG and arranged for their own collection centre. While not enjoying the same advantages as their counterparts in Punjab, these women too enjoy the benefits of a relatively superior marketing system.

A second intermediary that can assure sales is a corporate body that ties up for a fixed period with the entrepreneurs, undertaking to provide technology and possibly inputs with the promise of buy-back. This is a powerful model but unfortunately it is not so widely prevalent, with only 20 per cent of the entrepreneurs reporting the practice. The practice is also confined to bee-keeping in Himachal Pradesh, wherein a large national company markets the honey across the country under its brand name, and in Andhra Pradesh, where a parastatal body (the Coir Board) has agreed to buy the handicraft products for distribution through their outlets. In Andhra Pradesh, the local NGos also support the marketing of the products through assured purchase. This method has the significant advantage of reducing uncertainty for the producers as also of facilitating access to important know-how and market information. In general, such marketing bodies have their own sales networks with an outreach that is larger than that any of the other agents encountered, and also enjoy access to a wide spectrum of information that aids in the marketing process. In addition, these marketing bodies are also associated with various types of products, and their average selling cost is reduced because of the advantage of an existing infrastructure and their acquired experiences. While these agents enjoy a closer proximity to the customer by virtue of their general marketing experience, their interaction with the producer may be relatively costly in view of the intense information asymmetry. They are required to deal with a large mass of producers scattered in a rural sector with limited infrastructural and informational facilities. often these producers lack education, awareness, and even access to civic amenities. Further, there is a distinct lack of trust among the producers and the process of conveying information about the relevant and actionable needs of the market in the given context is not easy. These obstructions need to be acknowledged at a time when organised firms lay great emphasis on reliable and flexible supply chains by adopting a just-in-time strategy. Moreover, the State bodies that perform the task partly as their social obligations are reluctant actors in view of the possible effects of such a system on their balance sheet apart from the administrative burden that it entails. Above all, the State, which is committed to social capital formation,


may not be the most competent player in a competitive market as marketing is not its strength. Nevertheless, this method has an advantage because of its potential to link the customer with the largest dimension of the market and to bring in new ideas and technology for both product development and human capital formation. Even though the unorganised and natural ambience of this type of marketing offers production advantages, the cost of marketing these products cannot be overlooked and possibly accounts for some resentment among the producers on account of the low prices paid and the limited penetration of such organised bodies. However, these limitations notwithstanding, among all the three methods of marketing, assured marketing offers the highest magnitude of sales and profit as well as the value for time. The cost per unit is relatively high owing to the obvious demand for quality to create the brand value (see Figure 2).

Assured Tender DirectMarket Channel

Profit

25.0

20.0

15.0

10.0

5.0

0.0

Rs.0

00

0

20

40

60 SalesRs

. 000

Assured Tender Direct

Market Channel

0.01.02.03.04.05.06.0

Direct Trader Assured

Market channel

Ratio

Return/Cost

51015202530

Direct Trader AssuredMarket channel

Rs.P

erda

y

Value for Time3540

0

Figure 2

A Comparison of Market Channels


3. Marketing through Middlemen

The middleman is the most common and perhaps most maligned agent of marketing in rural areas. In the present case, more than half of the sample entrepreneurs reported selling through the traders, and this share is relatively high for primary products, and in the case of crafts, the importance of selling through middlemen far exceeds that of direct selling. In fact, in contrast to cooperative and contractual marketing and similar to direct selling, this medium is uniformly exploited by all the four types of enterprises. The traders do not provide any written contract but constitute a fairly well assured medium of marketing to distant places. These traders are either local residents or are dwellers in cities where they supply the goods. In either case, they have a close relationship with both ends, provide information of what the market desires, bring important feedbacks in the absence of formal regulations and standards, and possibly


compete to sustain their key-supplier status (and the seller’s market share as well) in their own market as well as to acquire new customers. Due to their unorganised way of operation and personalised rather than professional involvement, the market remains constrained to certain limits as determined by the trader’s abilities. often, their monopsonistic practices inhibit the women from accessing the services of other competing agents. While their reach is not as wide as in the formal tie-up system, the flow of information in this method of marketing is also restricted as compared to a more competitive or a more organised situation. The middleman takes advantage of the information gaps facing both the producer and the buyer, and possibly this adds on to the margin. There are reported complaints of low prices being fetched as compared to any information on market prices and exploitation by the traders. However, the validity of such an argument cannot be tested and at best can be only case-specific. In the case of new products with limited demand, the comparison of the profit earned by marketing through traders with that from the only alternative of direct sales (see Figure 1) possibly demonstrates the positive role of the trader. The markets for the products differ as also does the quality of products. After all, the cost of marketing includes not only storage and transport but also items such as promotion and brand (trust) build up, feedbacks and market surveys, technology transfer and reserves against the uncertainties of the market, and all these remain largely unaccounted for and often latent in the event of marketing through intermediaries. In the absence of modern devices such as management softwares, electronic data processing, patents and structured records, the informal and word-of-mouth based operations of village traders could be more expensive than the organised agents. The entrepreneurs also reported having received raw material support and ready credit from the traders, and in select cases, the traders also provided machinery like their organised counterparts. Thus, the extent to which the middleman’s margin constitutes exploitation and the extent to which it can be said to be economically beneficial remains unresolved in this study.

V. ASSESSING THE PERFORMANCE OF MARKETING

The designing of a comprehensive metric for the systematic measurement of marketing performance is not a simple affair. Marketing is a function with long-term implications. It is a bundled but orderly process with multi-stage functions ranging from the creation of new customers (Drucker, 1970) to the attainment of the ultimate commercial result that may be measured as profit. The significance of the marketing function does not simply lie in the physical bridging of the gap between the buyer and the seller but in the smelling of ‘discontinuities’ and ‘redefinitions’ (Mulky, 2008) in the market. The marketing of rural products synthesises several elements into one, including the creation of demand for the rural products among new clientele, carving out a special place in a market crowded by superior, machine-made, synthetic and advertised products from the organised sector, and retention of the seller’s position.

Earning profit, measured as the difference between revenue and cost, is the ultimate objective of the producer, and profit is the indicator of an enterprise’s commercial viability. Given that the entrepreneurs have little information on the market and even less bargaining


power, they are largely expected to be price takers so that the sales would be given mostly by marketing performance and extraneous factors. The cost depends not only on the scale but also on technology and cost of the time. The enterprises surveyed are small units run by individual women, who combine the business with household chores and farm work. While the merit of the entrepreneurship is to yield value to the surplus or under-evaluated time resources of the women, the women themselves are likely to treat the time invested as an important cost. Since the production is based mostly on freely available raw materials, indigenous or refreshed skill, and simple equipment, the cost of production would include dominantly hired labour, depreciation, and limited raw material needs.

Profit= Sales (1- Cost per unit) (1)

From equation 1, it appears that sales constitute a powerful instrument for improving profits. The choice of technology based on natural raw materials, women’s traditional strengths and constraints, and the infrastructural limitation, make the cost per unit rather rigid though skill acquisition through training could help to bring down the cost. Thus, marketing efficiency is an important factor in determining the sales and thereby the profit. The ability to realise the market potential depends on the time and resources invested by the entrepreneurs and their skill. Besides, Figure 3 demonstrates that entrepreneurial profit depends on the development of the state, with Punjab and Haryana being the leading states, and Bihar and Rajasthan the lagging ones.

A regression method is employed to examine the possible effect of the marketing practices

Figure 3Average Profit of Women Enterprises State Wise

0

50000

100000

. States

Punj

ab

Har

yana

Utta

rakh

and

Him

acha

lPra

desh

And

hra

Prad

esh

Ass

am

Utta

r Pra

desh

Biha

r

Raja

sthan

Prof

it


on entrepreneurial profit. Pooled data from the regions3 is used. For this purpose, other different factors are accounted for. The most important variables from the entrepreneur’s point of view are investment in terms of expenses on inputs (ICoST) and the time spent (ETIME) by the women that cannot be valued by market prices. These variables are measured by the cost of the inputs paid for and the daily hours of work. Skill development is captured by a dummy variable representing training acquired (TRAIN). The development status of the state that may affect sales is also represented by state-specific dummy variables with Andhra


Pradesh as the base. The variable NoGRouP represents the absence of group production as an organisation dummy. The marketing channels are also represented by dummy variables. Two channels are taken as variables, namely MASSuRED standing from assured sales via a cooperative, contract or self-help group, and MTRADER standing for sales by traders. Each of these variables represents cases wherein the entrepreneurs have reported marketing via these channels. When both the variables take a value of zero, the entrepreneurs resort to direct sales or self-use. ETIME, ICOST, and TRAIN have the expected positive and significant effects, with monetary investment having a meagre marginal effect of 12 paise consistent with the fact that the enterprises involved very little by way of input cost. The practice of group production is possibly a gainful development as the variable NoGRouP has a negative effect. The coefficient is, however, insignificant. Among the states, Punjab and Haryana have an advantage over others. Assured marketing MASSuRED does not have an advantage over direct methods but marketing through the trader does.

Table 3Regression of Entrepreneurial Profit on Market Channels

Variable Coefficient t-statistics

CoNSTANT 17,751 8.23

ICoST 0.12 20.9

ETIME 2.438 5.92

TRAIN 1,700 1.94

NoGRouP -50.3 -0.014

MASSuRED -17,362 -11.311

MTRADER 10,688 10.44

uTTAR PRADESH -32,257 -11.44

RAJASTHAN 23,014 -9.28

PuNJAB 48,212 19.24

HARYANA 9,413 2.91

HIMACHAL PRADESH -9,795 -4.49

BIHAR -26,491 -8.74

ASSAM -23,445 -9.98

Notes: Unit for measuring profits is rupees; Adjusted R-bar Square=0.78 and N=1086

Source: Author’s calculation.

V. CONCLUDING REMARKS

Marketing poses a key challenge for the success of local resource- and skill- intensive agro-based enterprises promoted among rural women. The nature of the rural sector vis-à-vis the larger market in the national economy creates serious roadblocks for the marketing function. The study shows the widespread prevalence of direct sales, the emergence of new methods of production and marketing organisation, and a narrow coverage of the assured methods of marketing. While marketing that is addressed simply to local needs through the direct selling of products could help the producer retain margins, this method imposes severe


limitations on the outreach of the enterprise, is costly in terms of the entrepreneurial time consumed, and is totally inappropriate in the case of many products for which the rural women have the requisite skill but are not able to exploit the demand. Such an approach can only be short-sighted and leads to duality in the economy. Marketing today is a complex function that necessitates the growth of a scientific discipline with its own specialization. Moreover, it is also an effective engine of economic development with its ability to attract much-needed entrepreneurial, managerial, and informational strengths in the sectors facing disadvantages.

The choice between the informal networks traditionally dominated by middlemen and the newly emerging contractual tie-ups with large corporate bodies is a complex issue that needs to be examined further. Both have their advantages and limitations, and their own implications for the sales and profitability of enterprises. While it is difficult to make the choice, it appears that neither method can succeed in isolation and needs to be reinforced through synergy and competition from the other. The success of the entrepreneurship programme thus depends on various factors such as public support in marketing, corporate responsibility towards human capital formation, and exploitation of the strengths and expertise of the traditional middlemen through appropriate regulation, training and modernisation.

Notes1. Agreements with the Royal Danish Government (1982-87), with the Government of Netherlands (1989-

93) and with uNDP (1998) on Support for Food security and the Central Sector Scheme of Women in Agriculture of theVIII th Plan are the main initiative in the direction.

2. The World Bank assisted NATP was implemented between 1998 to 2005.

3. Data on only eight states are used for the regression analysis. uttarakhand had to be excluded on account of inadequate coverage of the data reported.

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