Want To Test Your Marketing Skills- Try The Other India!!
Posted in Marketing & Strategy Articles, Total Reads: 2400
, Published on 14 December 2012
Identifying customer needs and wants and fulfilling those in the best possible way is rationale behind marketing strategies. Since rural customers are very different from urban customers in terms of their product requirements or usage, the marketing strategies employed for urban customers may not necessarily yield results for rural customers. Unlike urban economy which is rapidly moving towards being a cashless economy, the Indian rural economy is still predominantly a cash economy. Location patterns are highly scattered with few villages being densely populated and many others sparsely. Understanding the rural economy consumption patterns are very essential for a company that wants to tap into 70% of Indian population residing in villages.
Some of the key differentiating factors of rural markets are:
Seasonal income patterns for most rural customers driven by seasonality of agriculture. Also for other occupations, income is daily or weekly rather than monthly. This necessarily means that the number of shopping or grocery trips of rural customers will be much more frequent and the shopping volumes will be much less compared to their urban counterparts.
There is a scarcity of media and other information sharing platforms like online platforms in rural India. Word of mouth and opinion leaders play the most crucial role in deciding the success of brand. Hence in rural markets personal selling or direct selling is the most successful method. A very good example of this is Project Shakti of HUL which employs rural women to visit rural households in order to directly sell HUL products.
Rural customers have been found to be very much habit driven i.ethey are very slow to adopt new brands or to switch brands. This translates into a very high entry barrier for new players and also very high customer loyalty for established players.
In order to handle the above mentioned aspects of rural market, an important stream of marketing called “Rural Marketing” is gradually gaining importance. Volume (~70 % of population), increasing purchasing power, rising aspirations and growing rural economy with improved infrastructure is making rural marketing all the more important for companies. Rural marketing involves use of different channels to reach people like village fairs, nukkadnatikas (road theatre), boat branding, mobile vans and wall paintings.
Till now only few companies like HUL, Philips, Emami have actually been successful in penetrating rural India. HUL's unique initiative “Khushiyon ki Doli” is an inexpensive medium of multi-brand activation reaching out to as many as 25 million rural consumers staying in media dark villages. Similarly Philips has developed separate set of low cost health care products and reasonably priced solutions for cervical cancer, cardiology, mother and child care segments exclusively for rural customers. Emami has widened its distribution network to reach customers residing in remote villages of India.
The sheer size of Indian rural market carrying 70% of 1.2 billion Indian population makes it a highly alluring market for companies. `
Increased Purchasing Power
With economic reforms, green revolution, white revolution, improving infrastructure and increasing level of minimum support or procurement prices; purchasing power of rural customers has gradually increased. Their buying behavior has undergone a major change with consumption shifting from local products to branded products. In many products rural market has overtaken urban market in growth rate like soaps, detergent powders, analgesics etc.
Reducing dependence on agriculture
The dependence of rural customers’ consumption on agriculture is gradually reducing and more people are moving towards non-farm activities. This is also bringing down the seasonality of demands; which is a major hurdle in viability of operating in rural markets.
Challenges in Rural Marketing
Despite the growth seen over the last decade, there still stand some major challenges in implementing rural marketing.
Transportation infrastructure is extremely poor in rural India. More than 50 % of villages still do not have any pucca roads. Movement of goods from urban distribution centers to rural selling locations is not easy task given the poor condition of roads. This results in long and highly variable lead times; which drastically increases supply chain costs of the company.
Given the highly variable demand in villages and poor transportation infrastructure, it is necessary for companies to maintain warehousing or storage facilities to service rural consumers. But due to infrastructure constraints like inadequate power supply, frequent power surges, non-availability of necessary equipment; companies have to suffer lot of wastages.
Given the low literacy rates and limited internet penetration in rural India, it is very difficult to communicate with people through channels like digital media, print media etc. Equally difficult is to understand their needs as they are not able to identify and convey their needs in proper manner. Educating them about the products like personal hygiene products, medicines etc.is an uphill task for a company.
There are more than six lakh villages in India; but the population and size distribution is highly scattered. More than 60% of villages are with population of less than 1000 people and a lot many villages are too small to be economically viable for a company. The highly scattered pattern makes transportation and distribution even more costly for companies.
Inadequate banking and credit facilities
The viability of rural markets to companies is also hampered by the lack of adequate banking and credit facilities. The rural retailers need financial support in order to run their business ; for instance to hold enough stock of products , to extend credit to customers or to build better shelf spaces in order to increase brands’ visibility. Rural customers’ consumption also stand curtailed due to inadequate access to sources of fund.
Tapping the rural market
In order to tap the high potential rural market, certain ground preparations are necessary for marketers. This involves:
Need Assessment Maps
For a marketer it is essential to first identify and assess the needs of its customers before introducing a product. Need assessment maps help in understanding the need-gap that the product will fulfill. They also help to identify issues related to product’s accessibility, adoptability and affordability.
These diagrams help to gather data on income patterns and expenditure flows of rural customers. Since most of the rural customers still predominantly depend on agriculture, harvest seasons are marked by higher incomes compared to other seasons.
Village markets are heterogeneous in nature. There are several communities who have distinctive requirements. Social Maps help to identify different community profiles and their social and buying behavior.
These help in identifying the suitable resources in villages like storage facilities, facilities’ ownership, community resources etc.
Some companies have already made a head start using the above mentioned tools. For instance-
Godrej & Boyce came up with a breakthrough and innovative cooling solution for rural India - Godrej Chotukool, a low cost, low power, noise-free and easy-to-maintain product that not only brought comfort and convenience to owners but also helped in supplementing income of small entrepreneurs like florists, milk vendors, small sellers of cool drinks etc. This product not only helped these small entrepreneurs in reducing their wastage but also brought down their daily transportation costs of procuring materials.
Understanding the need assessment maps, many companies came up small unit packing of their products like Chik Re 1 /- shampoo, Red label Rs 3/- pack , Surf Rs 2/- pack and so on.
The 4Ps of rural marketing needs a redesign in order to appeal rural customers. Product strategies like small size packs,redesigned products (e.g Godrej Chotukool can withstand power fluctuations, high battery backup & sturdiness of Nokia 1100); Pricing strategies like low cost products, refill packaging; Promotion strategies like using opinion leaders to drive the brand name in market and Placement strategies like using village fairs, nukkad natikas, village haaths for placement of products are very critical in penetrating rural markets.
With the urban markets already moving towards saturation, the next target of marketers is definitely going to be rural India. Economic reforms have brought about significant changes in rural economy. Rural India with its sheer size presents a vast untapped opportunity. The rural markets of India are alluring and challenging both at the same time. In order to be successful in these markets, it is essential to understand the customers’ profile, the villages’ structure and design the right products to appeal rural customers. It is equally important to overcome infrastructure challenges in collaboration with other parties like rural retailers, other players and government. Infact rural markets are crucibles for innovation in business model of companies.