Friday Nov 27

Rural Market Opportunities

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"The future lies with those companies who see the poor as their customers."- C. K. Prahalad

Gone are the days when a rural consumer went to a nearby city to buy any "branded products and services". In the present era, rural markets are critical for every marketer - be it for a branded shampoo or an automobile. Time was when marketers thought van campaigns, cinema commercials and a few wall paintings would suffice to entice rural folks under their folds. But the days have changed now.

Thanks to television!!! Today a customer in a rural area is quite literate about myriad products that are on offer in the market place. The rural markets have acquired significance, as the overall growth of the economy has resulted into substantial increase in the purchasing power of the rural communities.

The price-sensitivity of a consumer in a village is something the marketers should be aware of. Rural income levels are largely determined by the vagaries of monsoon and, hence, the demand there is not an easy horse to ride on. Britannia Industries launched Tiger Biscuits especially for the rural market. It clearly paid dividend. Its share of the glucose biscuit market has increased from 7 per cent to 15 per cent within a very short period.

An important tool to reach out to the rural audience is through effective communication strategies. ``A rural consumer is brand loyal and understands symbols better. This also makes it easy to sell look – alike”. The rural audience has matured enough to understand the communication developed for the urban markets, especially with reference to FMCG products. Television has been a major effective communication system for rural mass and, as a result, companies should identify themselves with their advertisements. Advertisements touching the emotions of the rural folks could drive a quantum jump in sales and it has already shown results previously. The brands have to be made relevant by understanding local needs and customize according to that. Even offering the same product in different regions with different brand names could be adopted as a strategy.

The main four factors influencing demand in rural India are - access, attitude, awareness and affluence. HUL has successfully used this to influence the rural market for its shampoos in sachets. The company had developed a direct access to markets through wholesale channel and created awareness through media, demonstration and on ground contact.

Since marketing is to target the growing segments, the village then becomes a location or a suburb of a district. In addition, the district becomes the basic geographical entity. Since the urban-like populations in the villages are considered as a part of the district, they will represent the dominant part of the market in most of the districts. A districts perspective removes the complexities, heterogeneity, access and targetability that have hindered rural marketing initiatives. The rural marketing requires every element of marketing including product, pricing,  packaging, advertising, and media planning to have the rural customer as the target. This becomes possible when we have districts marketing as a separate entity.

Marketers need to understand the psyche of the rural consumers and then act accordingly. Rural marketing involves more intensive personal selling efforts compared to urban marketing. To effectively tap the rural market, a brand must associate it with the same things the rural folks do. This can be done by utilizing the various rural folk media to reach them in their own language and in large numbers so that the brand can be associated with the myriad rituals, celebrations, festivals, "melas", and other activities where they assemble.

One of the ways could be using company delivery van, which can serve two purposes - it can take the products to the customers in every nook and corner of the market, and it also enables the firm to establish direct contact with them, and thereby facilitate sales promotion.

However, only the bigwigs having hefty investments plans can adopt this channel. The companies with relatively fewer resources can go in for syndicated distribution where a tie-up between non-competitive marketers can be established to facilitate distribution. Periodical "melas" organized are quite popular and provide a very good platform for distribution because people visit them to make several purchases.

“Haats” are another potential low cost distribution channel available to the marketers. Also, every region consisting of several villages is generally served by one satellite town (termed as "Mandis" or Agri-markets) where people prefer to go to buy their durable commodities. If marketing managers use these feeder towns, they will easily be able to cover a large section of the rural population.

Firms must be very careful in choosing the vehicle to be used for communication. Only 16% of the rural population has access to a vernacular newspaper. Therefore, the audio visuals must be planned to convey a right message to the rural folk. The rich, traditional media forms like folk dances, puppet shows, etc., with which the rural consumers are familiar and comfortable, can be used for high impact product campaigns.

One very fine example can be quoted of escorts where they focused on deeper penetration. They did not rely on TV or press advertisements, but rather concentrated on focused approach depending on geographical and market parameters like fares, melas, etc. Looking at the 'kuchha' roads of village, they positioned their bike as tough vehicle. Their advertisements showed Dharmendra riding Escort with the punch line 'Jandar Sawari, Shandar Sawari'. Thus, they achieved whopping sales of 95000 vehicles annually.

ITC is setting up e-Choupals, which offers the farmers all the information, products and services they need to enhance farm productivity, improve farm-gate price realization and cut transaction costs. Farmers can access latest local and global information on weather, scientific farming practices as well as market prices at the village itself through this web portal - all in Hindi. It also facilitates supply of high quality farm inputs as well as purchase of commodities at their doorstep.

Thus, looking at the challenges and the opportunities, which rural markets offer to the marketers, it can be understood that the future is very promising for those who can understand the dynamics of rural markets and exploit them to their best advantage. A radical change in attitudes of marketers towards the vibrant and burgeoning rural markets is called for, so they can successfully impress on the 230 million rural consumers spread over approximately six hundred thousand villages in rural India.


This article was published in the September 2008 edition of Mandi, IIM Indore's marketing magazine.