RURAL MARKETING: ROCKET SCIENCE OR A DESI FORMULA?

June 27th, 2012 | Posted by vrittivaani in Articles and Opinions - (3 Comments)

What makes the dhoti-clad villager—sipping cutting chai on a chaupaal—an indispensable golden opportunity for the corporate giants? Why are suave city-based marketing personals struggling to formulate strategies to woo and tap such villages when they do not even fully understand their language?

The answer lies in the sheer market size of rural India. A 2011 news report in the Financial Express based on a study by Rural Marketing Association of India (RMAI) highlighted that the rural market accounts for over two-thirds of India’s population, 56% of its income and 33% of its savings. Further, rural India equals 12.2% of the global population and is therefore the world’s single largest high-potential market. It accounts for 53% and 59% of FMCG and durables sales in India, respectively. However, the key concern that confronts every marketer today is reaching the scattered landscape of six lakh villages or a population that is thrice as large as urban India.

A hidden opportunity: Haats or rural hypermarkets?

Weekly markets called haats are strategically located to cover a cluster of villages. They have become the epicentre of economic and social exchange in rural India and in doing so, provide a readymade solution to the problem mentioned above. In a report by RMAI, ‘Haats as marketing hubs,’ published in Financial Express in 2011, some interesting facts about rural India’s shopping patterns were revealed. India’s 43,000 haats generate annual sales of Rs 50,000 crore. Almost 98% of villagers regularly visit haats, while 75% of them are estimated to frequent a specific haat each week. Haats cater to anything between 21–57 villages and host footfall ranging between 5,600 to 12,000 visitors a day, depending upon its size. Anywhere between 327 and 545 stalls may be found in a haat. Two-fifths of total attendees are women.

Haats perfectly sync with villagers’ psyche of making a value-for-money purchase out of a variety of offerings. They offer a touch-and-feel experience of products and drive sales by word of mouth. The favourability of these factors for companies, along with brand awareness, low selling overheads, majority cash sales and redistribution opportunity have prompted telecom majors Nokia and Motorola to augment sales through village haats. Tata Shaktee, which offers roof sheets, has witnessed a 25% rise in sales after they devised a pilot project in 100 haats which comprised setting up direct selling stalls. Similarly, Tata Agrico has rural haats to thank for a significant expansion in their market share from 30–40%.

Festive melas and road-shows

The eponymous Kumbh Mela has become a favoured destination for MNC FMCG behemoths like Colgate-Palmolive that distributes free tubes of herbal toothpaste or for Hindustan Lever that markets its Lifebuoy soap. Similarly, Samsung’s road-show for its ‘Dream Home’ campaign constituted trips across 48 small towns in 100 days were aimed at augmenting brand awareness for its electronic offerings.

The road ahead

It’s high time that marketers evolved their notions regarding the emerging rural class in villages. From being aspirants of roti, kapda and makaan, to becoming brand and value conscious buyers, the rural consumer market is seeing sea-change. By communicating with consumers at the venues they frequent, marketers can hope to make their fortunes in markets beyond metros.

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Rural marketing offers limitless opportunities for innovation

December 1st, 2011 | Posted by vrittivaani in Articles and Opinions - (0 Comments)

Take a dive into an intense rural marketing session with the Rural Marketing Guru- Mr. Pradeep Kashyap, founder, MART, a consulting practice on emerging markets specialising in understanding of ‘base of the pyramid’ markets.

Can you explain what you do and what your organisation MART is all about?

I have worked with the corporate sector for 20 years. I eventually recognized my strength in the marketing area and observed that its application was completely missing in the social and developmental sector. Initially nobody believed that you needed marketing in the social sector. This led me to establish MART as an organization in 1993. It became a partnership in 2003. At MART we follow the philosophy of a ‘social heart’ and a ‘business mind’.

Where does rural marketing fit into the grand scheme of things today?

Rural marketing has already arrived in the world of business and is one of the single largest segments of activity. Previously, we faced the challenge of making the corporate world accept the importance of rural marketing. However, today companies are taking pains to tap into unexplored sections of the Indian society.

What changes have you observed in rural markets over the past two decades?

A visible microfinance movement is the one major change in the rural sector, which has helped empower rural women. The second major change is that women have been given 30% reservation in village panchayats. Improvement in road connectivity is the third major change in villages. While the first 50 years of independence saw only 40% road connectivity between villages, an additional 30% road construction has happened over the past ten years. Education has increased in villages. Finally, technology and media reach in villages has also experienced a dramatic rise.

How are companies responding to this?

Although global companies are not yet ready to reach out to Indian rural markets, local companies have started various schemes to tap the market. For example, because electricity is one of the major problems faced in rural India, local companies such as Jolly TV in Uttar Pradesh are producing televisions which run on rechargeable battery systems. Such innovations help rural consumers use products even during electricity cuts, thus expanding the scope of marketing in rural areas.

How does rural marketing help in empowering women in villages?

In most cases, rural women do not work, and even if they do, they are involved in seasonal activity making for low income. Through MART, we help these women gain bargaining power so that they can get appropriate prices for their produce. The first step towards this objective is to organise the women into collectives by identifying definite clusters based on the products they make, the consumers for the products, etc. This helps them aggregate their produce. Also, we teach them value addition by helping them understand the importance of drying, cleaning, sorting and packaging their products. All these aspects ultimately provide them access to wider markets.

If a young management graduate were to join the rural marketing profession today, what kind of a work scope is he looking at?

Rural marketing is the single largest sector today in terms of population it impacts. It caters to roughly 800 million people in India. The opportunity in the field is great and companies across the world are beginning to understand it. While the urban market deals majorly with a replacement policy, where old branded products are continuously replaced with new branded products, the rural market is still untapped. There is no penetration of any sort of brands into these markets. This offers great scope to companies.

What are the most challenging aspects of working in rural marketing?

Firstly, most of us are still victims to an urban mindset. We tend to not understand the mindset of the rural consumer. Secondly, even if companies reach close to understanding rural consumers, they face great difficulty in finding distribution options to the rural sections. Finally, 50% of the rural markets are still media-dark sections of the society. The people living in these areas do not have access to televisions or newspapers. This makes the consumer unaware of what new innovative things the world has to offer.

As the country undergoes urbanisation, will rural marketing become irrelevant over time?

When we got our independence, the census survey claimed that 84% of the country’s population was living in rural areas. In the 1991-2001 census the number came down to 74% and the recent 2011 census marks it at 68%. Despite all the big talk about urbanisation, 62% of the country’s population will still be living in villages by 2021. It is also a myth that the country is urbanising rapidly. In most metropolitan cities, population growth is slowing down. While Delhi saw a population growth of 32% in the 2001 census, the growth came down to 20% in 2011. Most people who migrate prefer to shift to smaller cities since there are more growth options there.

How will the proposed Foreign Direct Investment in Retail change rural marketing?

According to the draft policy, big retailers cannot enter towns and villages where the population is less than 5 lakhs. Since most of the rural population lives in small clusters, FDI will have zero impact on the 800 million people in rural markets.

For youngsters looking to join rural marketing, what are the three big opportunities waiting to be tapped?

Firstly, for the next 10 years, the rural segment is going to literally drive the Indian markets. That translates to great opportunity. Secondly, there is not enough knowledge generation within rural marketing today. As educated young graduates enter rural marketing, the amount of knowledge of various practices inside the discipline will increase. Finally, and most importantly, rural marketing offers limitless opportunities to youngsters in terms of innovation in rural distribution, promotion and so on. It is a virgin market which will provide youngsters an opportunity to innovate.

Source: Pagal Guy

Related posts:

‘Opportunity’ via ‘Shortcoming’

Flavors of rural advertising

Fake brands in the race to win the rural markets of India

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Presence in rural markets: no longer a choice but a necessity

September 15th, 2011 | Posted by vrittivaani in Articles and Opinions - (4 Comments)

Villages in India are no longer an abstraction, but fashionable in marketing terms. The footfalls in the villages are getting louder and louder as companies scramble to woo the rural consumers. What has made the rural consumers so attractive to companies now? After all, the 122-million village households were not created overnight.

The answer is simple. The urban market is getting saturated while villagers are flush with ‘disposable income’ thanks to generous harvests in the recent years. The estimated potential in rural markets is about three times that of the European market. This certainly defines the potential volume of business that can be generated in rural Indian markets.

Here are a few insights which may drift your attention to India’s hinterlands:

  • 72 % of the Indian population resides in villages. This is a fact which is a universal fact, but its important to realise that most companies still focus only on the remaining 28 % of the population
  • The number of middle and higher income families ( having Rs. 70,000 plus annual income) in rural (21 million ) and urban (24.2 million) is nearly the same.
  • With the sustained rise in agri product price and NREGA spending, there is being a significant increase in the average disposable income of the rural consumers.
  • India has perhaps the largest potential rural market in the world. It has as many as 47,000 haats, compared 35,000 super markets in the US.
  • Of the total FMCG’s demand in India, nearly 53 percent comes from the rural market. For consumer durables, the figure is 59 percent.
  • Of the million who have signed up for Rediffmail, 60 percent are from small towns. Of the lakhs who transact on Rediff online shopping site, 50 percent are from small towns.
  • There are 95 million youth mobile subscribers in rural India. This number is expected to grow beyond 150 million by 2012.
  • Close to 50 per cent of LIC’s policy holders are from rural areas. Needless to mention, the total rural population offers a huge potential for insurers.

It’s certain that rural markets in India have a lot to explore.. Altough the market is promising, there have been several challenges involved in understanding and delivering what the market demands. It has been observed that companies who have taken the pain of understanding the market have reaped maximum benefits out of it.  One such classic example is of the e-commerce industry which seems have received an outstanding response from the non-metros and villages of India. Know more about e-commerce boom in rural India in are upcoming post.

Image (Source)

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Duality of Bharat and India

July 29th, 2011 | Posted by vrittivaani in Articles and Opinions - (2 Comments)

From cities that never sleep to quaint, quiet peaceful villages, India and Bharat are the quintessential ‘two sides of the same coin’. With over 1.2 billion people in India, a majority of who stay in the rural areas it just goes to show the potential the rural market possesses and the need for marketing to rural folk.

In the rural areas, due to little or no western influence, way of life there is a very traditional. It is a simple life that the ‘aam aadmi’ or the common man leads. They are very careful about where they spend their money and use it wisely. They are generally very content and satisfied with what they have.

In the cities, however, it is a totally different scenario. With a larger amount of western influence there is a great number of people who love living the high life. An increased disposable income also helps their case. People in the city generally like to have good things and flaunt them. They are constantly up to date with the latest trends and enjoy being in the limelight.

While marketers and advertisers have virtually conquered the urban landscape, it is the rural one that is the next frontier. It is, possibly, the one that will be most challenging and will yield the highest results. Time and effort needs to be spent in actively engaging with the rural audience. It is due to the method of marketing that the rural audience will be educated when it comes to a specific  brand or product or even a company for that matter. Rural being so different from urban needs a greater level of dedication. Marketing of goods and services to the rural market in the same manner that is done for the urban audience might not always work. New and alternative methods need to be adopted to successfully market products to the rural masses. In the end it is the influence and the methods used to market products and services to the rural audience that will help a brand or company reach out to and tap the rural market.

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