UNDERSTANDING THE RURAL MARKETS

“To get rich sell to the poor”- pradeep kashyap

An Overview

The Indian rural market with its vast size and demand base offers great opportunities to marketers. Two-thirds of countries consumers live in rural areas and almost half of the national income is generated here. It is only natural that rural markets form an important part of the total market of India. Our nation is classified in around 450 districts, and approximately 630000 villages, which can be sorted in different parameters such as literacy levels, accessibility, income levels, penetration, distances from nearest towns, etc.

Few Facts

70 % of India's population lives in 627000 villages in rural areas. According to the NCAER study, there are almost twice as many 'lower middle income' households in rural areas as in the urban areas.

• At the highest income level there are 2.3 million urban households as against 1.6 million households in rural areas.
  
• Middle and high-income households in rural India are expected to grow from 80 million to 111 million by 2007.
  
• In urban India, the same is expected to grow from 46 million to 59 million. Thus, the absolute size of rural India is expected to be double that of urban India.

Opportunity

The above figures are a clear indication that the rural markets offer the great potential to help the India Inc which has reached the plateau of their business curve in urban India to bank upon the volume-driven growth.

The Indian rural market with its vast size and demand base offers a huge opportunity that MNCs cannot afford to ignore. With 128 million households, the rural population is nearly three times the urban.

As a result of the growing affluence, fuelled by good monsoons and the increase in agricultural output to 200 million tonnes from 176 million tonnes in 1991, rural India has a large consuming class with 41 per cent of India's middle-class and 58 per cent of the total disposable income.

The importance of the rural market for some FMCG and durable marketers is underlined by the fact that the rural market accounts for close to 70 per cent of toilet-soap users and 38 per cent of all two-wheeler purchased.

The rural market accounts for half the total market for TV sets, fans, pressure cookers, bicycles, washing soap, blades, tea, salt and toothpowder, What is more, the rural market for FMCG products is growing much faster than the urban counterpart.

Features of Indian Rural Markets

• Large and Scattered market: The rural market of India is large and scattered in the sense that it consists of over 63 crore consumers from 5,70,000 villages spread throughout the country.

• Major income from agriculture: Nearly 60 % of the rural income is from agriculture. Hence rural prosperity is tied with agricultural prosperity.

• Large population: Almost 70% Indians still live in the rural markets.

• Growing purchasing power:With the increasing levels of income and so many reforms by the government and huge agricultural production the purchasing power of the rural mass has grown substantially the number of middle class in Rural till 2008 was 27.4 million and in the urban markets was29.5 million.

• Increasing aspiration levels:With the advent of television and FM radio information is flowing in the rural markets. The rural consumer also wants to be like the households shown in the television serials.

• Life style changes:Rural people have become very conscious about their outfits; they respond to fashion, they want to be like the urban consumers. Branded FMCG accounts for 80% of rural sales

• Remoteness is no longer a problem:With the infrastructural reforms by government almost 60% of rural villages have proper roads and connectivity and the figure is increasing day by day.

• In addition, an estimated induction of Rs 140 billion in the rural sector through the government's rural development schemes in the Seventh Plan and about Rs 300 billion in the Eighth Plan is also believed to have significantly contributed to the rapid growth in demand. The high incomes combined with low cost of living in the villages have meant more money to spend. And with the market providing them options, tastes are also changing.

Problems in the Booming Rural Marketing

Although the rural market does offer a vast untapped potential, it should also be recognized that it is not that easy to operate in rural market because of several problems. Rural marketing is thus a time consuming affair and requires considerable investments in terms of evolving appropriate strategies with a view to tackle the problems.

The major problems faced are:

• Underdeveloped People and Underdeveloped Markets: The number of people below poverty line has not decreased in any appreciable manner. Thus underdeveloped people and consequently underdeveloped market by and large characterize the rural markets. Vast majorities of the rural people are tradition bound, fatalistic and believe in old customs, traditions, habits, taboos and practices.

• Media for Rural Communication: Among the mass media at some point of time in the late 50's and 60's radio was considered to be a potential medium for communication to the rural people. Another mass media is television and cinemas. Statistics indicate that the rural areas account for hardly 2000 to 3500 mobile theatres, which is far less when compared to the number of villages.

• Many Languages and Dialects: The number of languages and dialects vary widely from state to state, region to region and probably from district to district. The messages have to be delivered in the local languages and dialects change within 50 to 100 Kms.. Even though the number of recognized languages is only 16, the dialects are estimated to be around 850.

• Dispersed Market: Rural areas are scattered and it is next to impossible to ensure the availability of a brand all over the country. Seven Indian states account for 76% of the country's rural retail outlets, the total number of which is placed at around 3.7 million. Advertising in such a highly heterogeneous market, which is widely spread, is very expensive.

• Low Per Capita Income: Even though about 33-35% of gross domestic product is generated in the rural areas it is shared by 74% of the population. Hence the per capita incomes are low compared to the urban areas.

• Low Levels of Literacy: The literacy rate is low in rural areas as compared to urban areas. This again leads to problem of communication for promotion purposes. Print medium becomes ineffective and to an extent irrelevant in rural areas since its reach is poor and so is the level of literacy.

• Prevalence of spurious brands and seasonal demand: For any branded product there are a multitude of 'local variants', which are cheaper, and, therefore, more desirable to villagers. Demand is at the peak during the time of agricultural produce.

• Different way of thinking: There is a vast difference in the lifestyles of the people. The kind of choices of brands that an urban customer enjoys is different from the choices available to the rural customer. The rural customer usually has 2 or 3 brands to choose from whereas the urban one has multiple choices. The difference is also in the way of thinking. The rural customer has a fairly simple thinking as compared to the urban counterpart.

Hence one needs to be very careful while entering the rural markets. There have been some companies which have entered the rural markets with successful models which have proved to be very successful like ITC’s e-choupal, HUL’s project shakti; Mahindra’s subh labh. There has been a recent growth in targeting the rural markets but one should not take rural people for granted; illiteracy does not mean that they are fools. Rural consumer is more careful and seeks full information about the product before buying it. Rural consumer behavior is very complex as compared to the urban and the companies need to be really careful while studying it, every detail needs to be accounted to.

Rural markets are still highly untapped and if the companies target them well they can reap huge profits.

“The future lies with those companies who see the poor as their customers “

Successful Mantra in Rural “Business Mind, Social Heart”

thoughts of a young marketer

STRATEGIC MARKETING

Marketing in modern corporate world has become more and more important. With cut throat competition the market place is no more geographically defined it has become a global village. We have overcome the geographic barriers in terms of several things including intellectual mindset of the customers, product, market place, etc. products which are being developed by the companies have to be of a larger appeal and the globe as whole has to e considered as a market. To take a look as to how strategic marketing can help the nations lets have a look as to what it is and how it works.

Strategic marketing is aimed at marketing to the people in an altogether different manner, it means coming up with marketing plans which are platform based in the sense that they do not only sell one product but benefit the organization as whole. Strategic marketing does not mean as mentioned earlier selling a product but selling a thought, it means selling an organization as a whole example; TATA NANO is a strategic product it is not selling a car it is all about creation of an all new market and generation of new ideas giving market a new confidence about the new segment. Marketing NANO did not mean market of a new product it was marketing of a thought, marketing of a person, marketing of a company and then at last marketing of a product to the masses. The biggest challenge these days is to make a product which appeals to the masses and masses of masses, the best way to market is to generate the interest of people in a particular thought not a product, once the interest is generated the product will be bought by the public on its own. This was the method used by the; i-series of Steve Jobs of Apple computers, the i-phone, i-pod were based on these lines.

What I want to communicate is that the consumer of the 21^st century wants ease of access, he wants information rather than the product. Marketers should first differentiate to the smallest level and then integrate as a whole, that’s the reason why telecom companies should focus on communication rather than connectivity, automobile companies should on transportation rather than mobility. Transportation of humans physically from one place to another is the service provided by automobile companies, and communication is the mode provided by the telecom companies, what if the basic services of these companies are integrated, this leads to tele-transportation; the vehicle of the humans for future. These are the challenges which one as a marketer needs to focus on as a strategic marketer.

Working on these lines can create wonders and lead to the development of market disruptive products; marketing should be integrated with strategy for success of a company, it’s a thought which In my opinion is worth considering. Please feedback as to how it can be further improved…

 

 

  THOUGHTS OF A YOUNG MARKETER

These are a few strategies which I had developed for specific companies which if implemented by the companies will lead to some benefit to the companies for sure. This is only 1/100^th of the list I have many strategies for different companies on telecom, retail and many more and I have also developed various advertisements for different companies, have a pool of such stuff.

 

VIRAL MARKETING (a new dimension)

Cell phones have penetrated deeply in the life styles of Indian consumers, the total wireless subscribers in India as on 31^st march 2009 were 344.73 Million.  Still many companies have not taken this route of viral marketing, and the ones which have taken so are either restricted to SMS’s or random calling by IVM’s. What I’m suggesting, is an all new route which will help the companies to have better visibility among the consumers. This will help in re-enforcement and also help the consumers to act in the terms of consumer behavior. Taking an example to understand these things in a better manner lets try and study it in the realms of NESCAFE.

In Earlier days if there was coffee in India it was Nescafe, people had only one thought in their minds when it came to coffee it was Nescafe, but in recent days with coming up of various coffee brands in India Nescafe’s brand image has been diluted in the minds of Indian consumer. Though nestle has been great efforts for the brand to keep it in the top of mind category of the customers still people have various choices that they might consider.

What I propose is that the company should tie up with telecom companies lets say Airtel, which has got 80 million subscribers. Now the legendary Nescafe song “open up” is sent to these 80mn people for free in their cell phones as a ringtone, there is a possibility that they might install it has their default ringtone, as people tend to like things which are for free. Now whenever the phone rings they will hear the song open up, which will lead to brand re-enforcement and talking in the terms of consumer behavior, it might lead them towards an urge to have a cup of coffee. This method will prove to be cheaper as compared to television advertising and also help in having personalized touch with the consumer.

This method can be used by any company to promote its product, and it will prove to be the cheapest way have a personal connect with the consumer and will have a long lasting impact on the mind set of the consumers.

 

 

NEW HEIGHTS OF SELLING (giving different methods to brick and mortar)

Sales has taken a giant leap from brick and mortar to online selling, from mom and pop stores, to super markets, from mass selling to personalized sales. Talking about brick and mortar one expects the consumer to come to the product, though this has taken a giant leap and now brick and mortar shops are easily accessible and personalized, but still there are various avenues which companies have still not explored, to mention one for example lets take up a specific case of virgin mobile in India.

Virgin mobile in India has been since almost 2 years and despite of being a part of the prestigious virgin group of Sir Richard Branson, still the company has not been able to make a deep impact on the minds of Indian consumers despite of market disruptive schemes such as get paid for incoming and out the box advertising, the company still hasn’t got good penetration levels in the Indian market.

Virgin mobile in India has a virtual network it operates on the network of TATA teleservices, it also has kept the infrastructure costs least by not setting up offices in each circles instead it is a company which is running on the distributor network, and all the corporate decisions are centralized, not localized. The company has not opened up retail stores, instead it has put up kiosks in different malls and multiplexes and the high streets of the cities. Now the target market of the company is specifically the youth; one can make that out by giving a look to its advertising. If one is targeting youth specifically then why not move deeper into places where youth throng the most, malls and multiplexes is a good effort by the company, but one major place where youths throng has been missed out by the company.     

It is the college canteen. College canteens in India are places where Indian youth can be seen, in abundance and with spare time, more than any other place in the country. College canteen means graduate colleges, engineering & medical colleges, schools, coaching classes and what not. These college canteens are managed by individuals on yearly tenders. The idea is making the visibility of the product much better among the youth. The college canteen owner can be made the retailer and the phone (dummy handset) can be placed in the display shelf of the canteen where all consumable stuff is displayed. The attention can be grabbed such as imagine in a display shelf one has say ‘a samosa for 5 rs, patties for rs 7, pastery for rs 10 and a cell phone tagged as free’, this will definitely generate more attention and enquiry from the youth for the company as compared to the enquiries generated at present.

It can also be written in the menu board in the middle among the entire things available list, in fact this has opened up a new method to advertise that’s on the menu of the hotels and such places where people take a careful look at the entire list this can give the products better visibility and attention. Again when we refer to the cost element it will be much cheaper as compared to electronic advertising and other means of giving out information to the public, and the best part is that it will be more personalized and have a better appeal.

    

Please give your valuable feedback it will be highly appreciated.