Posted in Marketing & Strategy Articles, Total Reads: 5496
, Published on 09 January 2012
“Improving the lives of billions of people at the bottom of the economic pyramid is a noble endeavour. It can also be a lucrative one.” C.K. Prahlad.
The phrase “bottom of the pyramid” referring to the poorest socio-economic group, was used first by U.S. president Franklin D. Roosevelt in one of his radio addresses in 1932, wherein he emphasized on tapping the indispensable and forgotten units of economic power and discontinue visualizing them as victims but as value-demanding consumers. Now, almost eight decades later, when the world has witnessed accelerated growth on the economic fronts and social needs have changed, catering to the aforementioned section is still something being highly looked forward to even by the biggest market players.
Indian economy, at the same time, with the vast size and heterogeneous demand base of its rural market provides a big opportunity to any manufacturing firm. After all, two thirds of country’s consumers live in the backcountry and almost half of the national income is generated in the hinterlands. India, rich with about 6.3 lakh villages has a huge rural market, which can be segmented according to literacy levels, accessibility, distribution networks, income levels, market penetration, distances from nearest towns etc.
Following are few factors that are accountable for the upcoming paradigms of rural marketing:
Increase in purchasing power and disposable income:Projects from the private companies and the rural employment initiatives by the governmental like NREGA (National Rural Employment Guarantee) schemes have given the rural population an opportunity to meet their daily needs. The loan waver in the agriculture sector and an increasing demand for labour in the urban areas, has given a boost to the income levels in the rural sectors. Consequent lifestyle up grade has added a new spectrum.
Accessibility of market: Improvement in the road systems linking the villages has led to a systematic product distribution system. Earlier, there was a “trickle down “of the stocks observed to the buyers in the interior villages.These days, companies use delivery cum promotion vans that travel 8-10 haats/markets daily as a part of direct contact with villagers.
Competition in the urban market: The urban markets have got extremely saturated with the presence of all big players. This is very much evident in the automobile market. Motorcycles and scooters often find more acceptances in rural market as compared to urban market, since there is more proliferation of brands in the latter markets.
Reduction of risk during recession: It has been observed that the companies which cater to both urban and rural markets tackle the recession in a better way. The demand for goods in the urban market often follows a cyclic whereas in the rural market it is steady.
The companies are bound to tailor the strategies depending on various factors to appeal to the rural market. For example, Hindustan Unilever Limited came out with the concept of “Shakti Ammas” (female social entrepreneurs)which was an innovative way of marketing products. This much needed transition can be weighed according to the 4 A’s model (Availability, Affordability, Acceptability and Awareness).
Availability deals with making the product reach the consumers. For this purpose a highly integrated extensive distribution network is necessary and in rural context, the company incurs higher cost towards the logistics as compared to urban areas. In case of Shakti campaign, the local Shakti Amma’s are selected based on their popularity which allows faster access to products.
Affordability involves pricing the product in such a manner that the people are attracted and at the same time it covers all the cost incurred.
Acceptability encompasses issues how the product or service could be made more acceptable to the rural consumers by incorporating attractive features. For example, Eveready came out with Jeevan-Sathi torches, with features like durable design and long life to make it more acceptable.
Awareness is linked to the issues of promotion of product in rural areas. The promotion needs to be adapted to the village environment, the local language and means of communication used. The best places to promote could be the frequently visited local haats and melas, the local festivals. Agricultural cycles require a major consideration too.
Classifications of rural customers:
Affluent group: These include cash rich farmers who have affordability but not form a demand base large enough for marketing firms to depend on.
Middle class: This segment is an user of manufactured goods.
Poor: The largest segment which Purchasing power is less but they receive the grants from government and reap the benefits of many such schemes and may move towards the middle class.
Challenges in rural marketing:
Different profiles of the consumers: Due to dispersion of geographical areas and uneven land fertility, rural people have disparate socioeconomic background, which ultimately affects the rural market
Regional diversity:To make tailor made campaigns, a thoroughknowledge of the nuances of language, dialects andfamiliarity with prevailing customs in the regions is essential.
Seasonal market: The rural customer remains driven by his needs first and will therefore be cost conscious and thrifty in his spending habits. Since most of the people depend on agriculture for their livelihood, the failure of monsoon can completely paralyse the purchasing power.
Spurious brands: Cost is an important factor that determines purchasingdecision in rural areas. A lot of spurious brands or look-alikes are available,providing a low cost option to the rural customer.
The psyche of the rural customer is slightly different from that of the urban customers. Hence the advertising has to be done in a way that can make the rural customers connect with the product and feel that it is aligned with the rural lifestyle. The greatest challenge for advertisers andmarketers continues to be in finding the right mix that will have a pan-Indian ruralappeal. Hence, the advertising mix needs to be inclined towards non-conventional yet effective medium like Puppetry, Folk Theatre Song, Wall Painting and promotion in the local haats. Thus, the rural customer can be attracted to the product either on the basis of strong product customisation or an advertising campaign that targets the right customers.
Marketing Mix in the rural markets
The rural market has a tremendous potential to be explored. The companies need to give a special focus on the packaging, as the smash able element will form a direct connect with the customers. However the rural marketing will be successful only if the companies align the product in tandem with the needs and awareness of the rural customers.