We know what potential our rural markets hold for marketers, but which brands have truly managed to crack the code and turn the villager into an aware loyalist? Henna Achhpal and Saloni Dutta find out how brand managers manage the bumpy ride…
In our country of delightful extremes, we are currently witnessing two ends of the retail market behave in contradicting ways. While the suave, shorts-and wayfarers wearing slicker in Bengaluru is experiencing brand fatigue about his choices, the newly confident denim-wearer in Hunsur, just over three hours away, is beginning to flaunt his brand awareness. The ‘marketing potential in rural India’ has been a pet topic of many magazines of our ilk besides being well-documented in PPTs of multinational firms. But how many brands have cracked the code yet… and what does it take to do it? Here’s our attempt to deconstruct India’s numerous emerging markets and what they’re doing to reach out to the new consumer.
The numbers of hope
A study by Kinetic in 2012, Moving World India, estimated the size of India’s rural market at nearly Rs 25,162 billion. But we are talking of 70% rural population of the total, 56% of which contributes to overall consumption. During the 2009-10 to 2011-12 period, per capita monthly rural consumption grew by 19% against urban India’s 17% in the same period, according to a report by CRISIL based on data from the National Sample Survey Organisation (NSSO).
For starters, here’s what Hindustan Unilever Chairman Harish Manwani said at their AGM in 2012: “By 2025, the Indian rural market is expected to grow more than tenfold.”
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Much of these numbers are and will be the gradual result of several government schemes for rural development. Dalveer Singh, Leader of Group M’s Dialogue Factory lists some of these schemes: “The National Rural Employment Guarantee Scheme (NREGS) has led to more income at the grass roots level leading to less migration of the working class. The Pradhan Mantri Gram Sadak Yojana has taken care of several dark markets which were earlier difficult to reach.” With a new, pro-development Prime Minister now, we are hoping for even better numbers than Manwani has predicted.
Keshav Chandorkar, National Head-Rural, psLIVE takes a longer shot by saying, “The current size of FMCG in the rural market is around Rs 88,000 crore and is expected to grow to 1,06,000 crore by the end of 2040.”
Who is this changing consumer?
If the theoretical reality of numbers seems too dry, the story of how rural consumers are bringing in lifestyle changes has much juice in it. With an increase in disposable income of the rural consumer, there has been an increasing want for better products. Pravin Kulkarni, General Manager-Marketing, Parle Products reveals, “We are seeing a demand for premium categories (in rural markets) which shows that aspiration levels have gone up. People who migrate to urban areas return with brand awareness.” For instance, once a modest middleclass social influencer from a Nashik or Trichy goes to Mumbai or Bengaluru, he returns home only to view the same city brands with more respect and his choices impact his family’s too.
In fact, a 2011-12 study by the Boston Consulting Group found that consumers from Tier-4 towns are spending more on premium products as against their urban peers. These consumers moved up the value chain during 37% purchase occasions as against 31% in metros. Sanjiv Puri, Divisional Chief Executive, ITD, ITC Limited notes, “Interestingly, we are seeing robust growth across categories from skin care to snacks.”
Then there is the tale of the purchasing power, which is what retail sectors of rising economies always cheer for, as it has a direct connection to independent buying decisions. Ankit Patidar, Vice President-Marketing, Shakti Pumps explains, “When purchasing power increases, a farmer is not influenced by the money lenders or shop keepers and can decide what he wants to buy.”
Salil Dalal, President-RURBAN Division, Pidilite Industries concurs, “There is a lot more confidence in the rural consumer. They are willing to understand and try new products but are discerning too... and continue to seek value.” Pradeep Dwivedi, Chief Corporate Sales and Marketing Officer, Dainik Bhaskar Group makes an important point about sensibilities. He says, “Incomes were rising even in the late 90s till early 2000s, but there was a clear lag in the consumption equation because the mentality of the Indian agriculture-led rural sector was about saving for a future risk.” There has been an important shift in attitudes from saving to spending.
Vikram Malhotra, Vice President-Marketing and Sales, JK Tyre feels the rural consumer’s demands are nothing less than those of the urban consumer. “Rural markets don’t believe in cheap prices, they want good products. His needs are the same as he wants quality and a value proposition,” he tells us.
Sanjeev Patel, CEO of Tata Communications Payment Solutions Ltd., agrees, “There is an increasing convergence between urban and rural consumers - especially with the young consumers who have almost the same aspirations.” Avinash Oza, Business Head-Rural, DDB MudraMax adds, “Women are asking for saree styles they have seen in Bollywood movies.”
Talking to the rural consumer
The rural consumer’s wants may be in line with those of the urban consumer but ways to reach out to the rural consumer need to be customized depending on region, language, culture and occupation; and every marketer worth his salt would know how diverse two Indians can be even if they’re a few kilometres apart.
Dalveer Singh explains how a message about the same product varies as the end consumer varies. “When I talk to a sarpanch, the message is different from what is received by a worker or a school teacher.” Another challenge that he mentions is breaking the mindset walls. Giving an instance of marketing safe drinking water in Andhra Pradesh, Singh recalls, “We were trying to sell packaged water at Rs 4 for a can of 20 litres. These were people who had water available in their backyard through a well or hand pump; but it wasn’t truly fit for drinking. They believed that if their parents have consumed the same water, they can too. Our biggest challenge was convincing them to pay for safer drinking water.”
Sometimes, tested direct marketing techniques of cities fall flat in the interiors. Chandorkar of psLIVE says, “We need to explain to them why a particular product is better than the other option available in the market. They may be aware of a product, but most likely aren’t aware of how to use it. From around 2001 to 2005, although Fair & Lovely had the largest market-share in its category, HUL realized that people didn’t know how to use it. They would apply it only a day before an important event! Then an entire campaign was designed to communicate that you don’t get results in a day, but need to use it for four to five weeks.”
A technique that works, on the other hand, is that of show and tell – i.e., actually demonstrating the uses and benefits of your product. Sanjay Tripathy, Senior Executive Vice President, Head-Marketing, Product, Digital and eCommerce, HDFC agrees: “The rural consumer likes to touch and feel a product before making a purchasing decision. Demonstrations, in the way of activations are undoubtedly the most effective promotional tool and build trust as well.”
Puri of ITC sums it up well, saying, “To connect with the rural consumer, it is important that the message emotes and empathises in a language and lifestyle familiar to them.”
Choice of media – the new possibilities
A remarkable evolution of the Indian villager has been that even though he struggles with electric supply and makes his wife walk a kilometre for water, he owns a cellphone and regards television as his primary entertainment source. The NSSO revealed that about one in every two rural households owns a mobile phone and around 42% of rural households owned a television in 2009-10, up from 26% in 2004-05.
Vikram Mehra, Chief Commercial Officer, Tata Sky is all too happy with the decreasing media darkness. “Radio remains the most powerful and cheapest mass medium but in the past few years, television penetration has gone up tremendously. Currently, over 82 million households own a TV in rural India!” Oza says, “Today we don’t find a media dark village. Every village is media grey thanks to the telecommunication revolution that has bridged the divide.”
Sunil Kataria, COO Sales-Marketing, SAARC, Godrej Consumer Products Limited, says, “DTH has penetrated rural areas, giving TV much better reach than it did earlier. But TV is not the only solution. A medium which is very important right now is using video effectively. It works well in rural, given the proliferation of mobile phones. A lot of radio is consumed via mobile phones which is a big opportunity for marketers and I don’t think many companies have leveraged it, including us.” Singh believes mobile has been the biggest equalizer between the rural and urban population. He says, “Today, the rural consumer has access to the same information as his urban counterpart.”
At the Pitch CMO Summit this year, Hemant Bakshi, Executive Director (Home & Personal Care), Hindustan Unilever had narrated the example of a woman who didn’t have access to TV but managed to watch the Bollywood movie Ghajini, albeit by unofficial means, on her mobile phone. He said, “There are a large number of people connecting in ways not seen before. We need to move fast to catch up with consumers who have moved far ahead of us.”
Shubhodip Pal, CMO, Micromax recounts the time when mobile worked as an effective medium, for, well, selling more mobiles! “When we launched one of our entry level smartphones, Print worked to a certain extent but not as much as SMS marketing simply because of the literacy levels. With SMS, it was very unique because the phone was still a piece of technology for the rural consumer. But when there’s an unread message, the inbox keeps flashing so the person tends to go to a literate third party and asks them to read it out. That was a good learning for us - this year, we are going to go wider and deeper with it,” he says.
The traditional mix, therefore, doesn’t always work for the rural market, feels Dwivedi of the Dainik Bhaskar Group. “There is a certain equation that metro media planners tend to follow wherein they consider Television as the largest visible medium followed by Radio and Print and then probably Digital. In the case of rural, these patterns slightly differ. While Television continues to remain a big influencer, the spends change in the favour of Print and Radio once you go rural.”
Puri of ITC adds, “Experience has shown that interactive activities in haats, melas and branded vans enable a high level of engagement with the rural audience.”
Bumpy ride or smooth road ahead?
Despite the tremendous potential promised by the rural market, a large part of it continues to remain untapped by most marketers. Chandorkar explains, “Out of the six lakh odd villages in India, about 78% have a population below 5,000 and these villages are scattered… because of which distribution becomes very expensive.” Singh says, “The cost of activations and outreach programmes is very high, which is why most marketers fall flat.
Usually, most marketers only consider the districts where their ‘4 Ps’ are taken care of.” He suggests, “The ideal way to target the rural market is by first getting the distribution in place followed by awareness and experiential marketing programmes. Wherever there is a need to develop a market, a marketer needs to opt for activations as seeing is believing for the rural consumer.”
Dalal of Pidilite suggests innovative collaborations as a solution. “We are willing to reach consumers along with players in non-competing categories. For example, our M-Seal range of adhesives used in irrigation pipes is being promoted to farmers along with a brand of pumps which wants to expand in rural. There is a potential of 30-40% savings for each player which can bring the rural cost per contact within reach of brands. To make this a reality, agencies need to be more innovative in creating properties that make sense to brands with a similar target audience.”
There was a time, not long ago, when the urban consumer waited for a relative to return from an international trip to smell and touch brands he only dreamt of, but never owned. Today, numerous choices of the most exotic brands are available at the click of a button. The rural consumer isn’t far from this reality either – and it will only be a matter of time before the market shelves in shops of Hunsur, Sarangpur and Pipariya will reflect what magazine features and research reports have been claiming for long.