Posted in Marketing & Strategy Articles, Total Reads: 24070
, Published on 05 December 2012
India constitutes 12.2% of world’s consumers. About 70% of this figure lives in rural area which forms an untapped market of 850 million consumers. This large consumer base,which is fundamentally distinct from its urban counterpart, has forced marketers to brain storm new strategies to occupy this larger share of Indian market pie because this market segment is tricky to crack. The ways, companies sale their products in urban market, have to be changed completely for selling the same products in rural market.
Big FMCGs like HUL, ITC, Coca Cola, Tata tea etc. have already started trying their hands in this market segment which raised their sales revenues more than their expectations. Getting inspired by those big firms now every company want to sale its products in rural market also. Even now a day they are more concerned about occupying rural market than urban market. The reasons are clear: huge availability of consumers which are untouched by many firms hence less competition; first mover advantage available in this brand new market and rural market is comparatively safe during recession.
Before going to the marketing strategies for rural market let’s try to understand the market first and then we will develop a model for doing business in Indian rural areas.There are some key features which discriminate rural market from its urban counterpart:
Variation in consumption pattern
Consumption linked to harvest
State wise variation of income level
Inadequate fixes income (daily wages)
Low population density
Heterogeneous population composition
Low awareness of brands
Low literacy rate
Media dark region
Less electricity connections
Irregular power supply
Poor transportation facilities (it is tough to access the market)
If we talk at individual level then we will find that due to psychological apprehensions rural consumer is more loyal to regional brands and more engaged to used-brands - do not change brands frequently. Rural consumer understands symbols and colors better. Nirma is known as the ‘pila’ powder and surf as the ‘nila’ powder.He evaluates the product by touch and feel.He gets more satisfaction after touching it.
Purchase process is also different - influencer, decider, buyer, payer are generally different persons in case of rural market. Local political and religious leaders generally perform the role of influencer. The eldest person of the family plays an important role in the decision making process.Demand generation is done by women and children. Bread earner of the family is payer. Therefore all the persons are needed to be addressed for the selling process.Though advertising the product makes a difference but still mouth publicity by known users, educated village youth or renowned person of the community make product more reliable.
In case of urban market consumer respond to the advertisement individually while in case of rural market generally company gets group responses. Though rural consumer is hesitant, do not speak easily to outsiders but devotes time to sales person. Such difference makes them unique and different from their urban counterparts and hence it is essential that the marketers too adopt different strategies to cater to their needs.
Paradigm shift in marketing strategies
Traditionally, marketing strategy in has revolved around the dominant framework of the 4Ps(Kotler, 1999) – product, price, place, and promotion. In the 21st century this framework has been deemed inadequate(Kotler, 2003). Two of the most prominent alternative paradigm existing in the marketing literature is that of the 4Cs – Customer value, Customer costs, Customer convenience, and Customer communication (Kotler, 2003) and the 4As – Awareness, Availability, Affordability and Acceptability. Although both purport to be more customer centric, however the second one is more pertinent to the rural consumers. Rural consumers make tradeoffs to survive, where they simply cannot consume what is not affordable, and where convenience is not as valued as it is by the urban consumers. Many marketers have adopted the 4A’s strategy to cater to the requirements of the rural population.
Rural consumer is not much aware about brands. They rely more on local brands. To develop reliability factor in them towards new brands it is necessary to publicize the brand awareness by NGOs working actively in the region. This can be done through mouth publicity by any known resident of the same village also. E-Chaupal program of ITC is helping it in making brand image. Illiteracy makes them unable to read basic text about the brand identification. It is easy to sale spurious products in rural market. RC Cola and Hello chips, copy of Pepsi and Lays respectively are getting sold widely. Therefore packaging plays an important role. It is better to give short name of the product in local language. Pictorial representation on packaging will also help.
Due to poor access to rural markets, poor infrastructure and irregular or no power supply to rural areas it is a difficult task for firms to make products available all the time in the reach of the rural consumers. Therefore Tata tea has started selling its tea through new channel of distribution.It decided to partner with NGOs, which have greatest reach to the rural people, acting as the first tier and followed by 2 other tiers from villages. Rural youth become Mobile Rural Distributor at level 2 and Small Rural Retailer become tier 3. HUL’s Shakti Amma and Shaktimaan projects are on the same lines. Firms cannot stick to any one supply chain model. They have to be flexible to use all possible means of transport according to the terrain’s requirement to achieve maximum operational efficiency. Trucks, auto rickshaws, cycle rickshaws and hand carts to even camel carts in Rajasthan and mules in the hilly areas can be used to deliver products to the market.
A product which caters to the need or want of consumers and is within paying capacity of the consumer can be sold in rural market. Keeping this in mind LG launched its first low price T.V in rural market -Sampoorna(at Re 3000) and Cineplus(at Re 4900), Nokia developed cell phones at affordable prices for its rural consumers. FMCG companies came up with sachets and small packs because in rural market low price pack is preferred rather than economy pack. They started selling shampoo sachets priced at Re 1 or Re 2, Pepsodent toothpaste at Re 5, Lifebuoy soap in 50 grams pack at Re 2, Surf-excel sachet at Re 1.50, Fair & Lovely Cream at Re 5. Most of the FMCG products are in the range of Re 1 to 10. There is no need to provide sophisticated packaging but value packs need to be provided.
Firms have to understand rural customers’ need. Automotive, salt, FMCG, telecom, insurance, soft drinks, cigarettes, TV, fans, pressure cooker, washing soaps, tea, blades, tooth powder are the goods and services which are excelling in the rural market. Rural consumers prefer utility oriented products. At the same time product should be compatible with the infrastructure available in rural areas. Coca-Cola’s Parivartan program provided low-cost iceboxes as families could not depend on refrigerators due to regular power cuts.
Advertising strategies in rural market
Rural society is mostly agrarian society. Rural people can be easily contacted by a rural salesperson in afternoon which generally comes under their leisure time. Since most of the rural people live in joint families therefore almost all the family members especially demand generators of that household can be contacted directly. This will also build face-to-face relationship between salesperson and customers.
It is easier to get group response in rural market, if they are demonstrated well about a product. At the same time due to less electronic entertainment devices they are fond of folk theatre, puppetry shows, melas etc. This can be an opportunity to address the rural mass and increase the awareness about particular product. LIC and BBLIL (KadakChhap Tea) both have used this strategy to market their product. Outcomes of this strategy even can further improved by inducing trials. Utsav range of Asian paints was launched by painting Panch’s house or any public building to demonstrate the quality of the product. Wall painting has been effective, economical and long lasting way of advertising in rural market.
Considering all the opportunities and challenges available in the rural market, Go Rural is the slogan of marketing gurus. Though lots of hurdles are there in this path still firms find it easy to vie for a share of the already divided urban pie but it should not be done at the cost of reducing product’s features. Changing consumption pattern and improvement in rural infrastructure promise a bright future for the firms who intend to Go Rural.