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International Journal of Multidisciplinary Research Vol.1 Issue 7, November 2011, ISSN 2231 5780

COMPETITIVE AND INNOVATIVE MARKETING STRATEGIES FOR TAPPING VAST RURAL POTENTIAL IN INDIA
DR. KAVALDEEP DIXIT*
*Professor & Vice-Principal, International School of Informatics & Management, Jaipur, Rajasthan, India.

ABSTRACT Rural India is on the threshold of momentous change. With a population of 790 million 50% of Indias income contribution comes from it. Nearly 100 million people have evolved out of poverty in the last 10 years. Rural India will be a market worth USD 500-600 billion by 2020, according to McKinsey report. Rural consumption levels are also anticipated to equal current urban levels by 2017. The economy is vibrant, incomes are rising; and the habits, preferences and attitudes are changing rapidly. In view of the large investments made by the government in rural infrastructure pushing income and demand level, the prospects are seen bright for rural India. With empowerment of rural people with education, employment, higher purchasing power, better media exposure, better connectivity with outside world, they provide a massive unexplored pool of consumers. To be successful in the rural market, companies will have to be innovative and sensitive while devising marketing strategies. Traditional urban marketing strategies will have to be localized as per the demands of the rural market. The current paper attempts to discuss the challenges and opportunities in rural markets. It also covers the innovative marketing strategies adopted by key marketers to enhance their brand visibility, goodwill and sales in the mystic rural markets of India. KEYWORDS: Consumers Expectations, 4As, Awareness, Availability, Affordability, Acceptability.

About three-fourth of the total population resides in the rural areas and hence, the development of the nation is inter-linked with the development of the rural population. Mahatma Gandhi in the year 1926 had once said Indias way is not Europe. India is not Calcutta and Bombay. India lives in her several hundreds of villages. Some of the companies such as Hindustan Lever, Coca-Cola, LG Electronics, Britannia, Philips and Colgate Palmolive have spearheaded the tapping of Indian rural market.

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INTRODUCTION

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International Journal of Multidisciplinary Research Vol.1 Issue 7, November 2011, ISSN 2231 5780

The forces of change- ushered in by liberalization and globalization, through media, telecommunications, the information age and increased education have transformed the roles played by traditional influencers in villages as well as led to the birth of new ones. The rural market in India brings in bigger revenues in the country, as the rural regions comprise of the maximum consumers in this country. The rural market in Indian economy generates almost more than half of the country's income. Rural marketing in Indian economy can be classified under two broad categories. These are: The market for consumer goods that comprise of both durable and non-durable goods The market for agricultural inputs that include fertilizers, pesticides, seeds, and so on. Focus of current paper is on rural marketing which involves an urban to rural activity and is characterized by various peculiarities in terms of nature of market, products and processes. The rural scene is transforming at an accelerating pace. Organizations aiming to achieve success in the rural market have to research the developments in rural territories. In tapping rural markets, 4As- availability, affordability, awareness and acceptability have to be used as marketing framework in place of the conventional 4 Ps. The 4 As model presents marketing mix elements from the customers perspective and defines the rural consumers expectations and the role of the organization in delivering the desired results. REVIEW OF LITERATURE The concept of Rural Marketing in India Economy has always played an influential role in the lives of people. In India, leaving out a few metropolitan cities, all the districts and industrial townships are connected with rural markets. Prof. C.K. Prahlad (2007) enumerates that the future lies with those companies who see the poor as their customers. He further explains that what is needed is a better approach to help the poor, an approach that involves partnering with them to innovate and achieve sustainable win-win scenarios where the poor are actively engaged and, at the same time, the companies providing products and services to them are profitable. R.V. Badi and N.V.Badi (2004) are of the opinion that Rural market development in India will help the process of activating factors of production leading to higher rate of economic growth, dispersal of economic activities, development of rural and tribal areas, employment opportunities, improvement of living standards of rural masses by empowerment and their active involvement in the process of growth. Indias rural market is a gold mine, but largely remains untapped by the Indian corporate sector. During recent times, some companies and organizations have implemented innovative projects to tap the rural market and deliver value added services to the doorsteps of the rural people through Internet-based marketing initiatives. Suvadip Chakraborty, (2010). According to Dilip Bobb (2010) Better prices, enhanced connectivity, proper rural schemes, new crops and technology are among a host of factors which have changed the face of rural India and brought urban life styles and aspirations. Today India is unrecognizable from what it was a decade ago. Awadesh Kumar Singh & Satyaprakash Pandey (2005) feel Indian rural market can be called a sleeping giant

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International Journal of Multidisciplinary Research Vol.1 Issue 7, November 2011, ISSN 2231 5780

since it holds vast untapped potential and Rural market environment has changed along with the rural consumer who has become conscious regarding quality and price. CHALLENGES 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. Rural markets remain untapped because of three Ds-Distance, Diversity and Dispersion according to D.K. Bose, Vice President, O&M Rural. In words of MART Managing Director, Pradeep Kashyap-Reaching your product to remote locations spread over 600,000 villages and that too with poor infrastructure-roads, telecommunication etc. and lower levels of literacy are a few hinges that come in the way of marketers to reach the rural market. Clearly the main challenge that one faces while dealing with rural marketing is the basic understanding of the rural consumer who is very different from his urban counterpart. Distribution remains a large problem marketers face today when it comes to going rural. Other challenges in rural marketing, are the campaigns which have to be tailor made for each product category and each of the regions where the campaign is to be executed. Therefore a thorough knowledge of the nuances of language, dialects and familiarity with prevailing customs in the regions that marketer wants to work for is essential. The fact of the matter remains that when compared to the Indian urban society, which is turning into a consumerism society; the rural consumer will always remain driven by his needs first and will therefore be cost conscious and thrifty in his spending habits. The melting of the urban - rural divide will take a while, this is not for want of the availability of the means but for want of the rural consumer's mindset to change; which has its own logic, which is driven by tradition, custom and values that are difficult to shed. Poor infrastructure, poor media penetration, poor shop availability and poor literacy rate are other major impediments in tapping rural India. OPPORTUNITIES Rural India accounts for 70 per cent of Indias population, 56 per cent of national income, 64 per cent of total expenditure and a third of total savings. Rural India has about 6,38,365 villages spread over 32 lakh sq. km . Rural demand in FMCG, automobile and retail is growing at a faster pace than anticipated due to rise in its consumption patterns which is creating demand and margins for Indian Inc. even as meltdown is getting deeper, says a Study Paper of The Associated Chambers of Commerce and Industry of India (ASSOCHAM) `The Rise of Rural India. The 80 Page Study of ASSOCHAM adds that FMCG market in India is currently estimated at Rs.200,000 crore. Most of FMCG companies are upbeat about their prospects in rural India as it is contributing a substantial portion to their revenues. Majority of FMCG firms have been recording higher growth rate and sales of their product in rural areas as compared to urban markets.
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International Journal of Multidisciplinary Research Vol.1 Issue 7, November 2011, ISSN 2231 5780

The ASSOCHAM President, Mr. Sajjan Jindal said, FMCG sector in rural areas is expected to grow by 40% as against 25% in urban areas. The factors such as rising rural incomes, healthy agriculture growth, boost in demand, rising consumerism across India, better penetration of FMCG products in the rural market contributes to high growth and rapid expansion of FMCG industry in rural India. According to Hyundai, car company Almost 50 per cent of the 220 million households in rural India are potential car buyers due to the agricultural subsidies extended by the government and also due to increase in productivity of agri-based products, thus presenting an attractive market for hi-technology products The study on Rural Retail says that rural retail market constitutes around 40 per cent of the total size of the retail market of India. According to ASSOCHAM, the size of retail market in India is $280 billion. So the size of rural retail market works out to be $112 billion which is Rs. 5,00,000 crore and is growing around 10 per cent of the size of Indian GDP. This is expected to double in next 4-5 years because of potential factor. RURAL MARKETING MIX STRATEGIES (4A APPROACH) Marketers need to research the rural market thoroughly and then customize the marketing mix for the rural market. Rigorous marketing research efforts and investment need to be undertaken to understand the distinct needs of mystic rural market. ACCEPTABILITY (PRODUCT MIX STRATEGIES) Product is the most vital element in the marketing-mix planning which begins with formulating an offering to satisfy the demand of the target consumer. A fair amount of research is required to understand the latent needs and desires of rural customers and provide suitable products. Rural requirements may be quite different from the urban ones. Godrej hair dye which grooms hair of urban people is used by rural consumers to color their buffaloes deep black, Horlicks a vitamin, calcium fortified health drink for the urban consumer is used in Bihar villages as a health beverage for cattles, Paints which adorns the walls of urban homes is used for coloring the horns of cattle for easy identification, Iodex the pain reliever balm of urban consumer after a stressful day is used to relieve muscular pain of cattle after a days hard work. The peculiarities of rural markets have compelled marketers to innovate and differentiate their offering in these areas as imitations or extensions of urban products will not work there. Rural consumers are costconscious hence, the products have to be designed in a way to appeal to their mind, heart and pocket. An in-depth study of rural markets is the prerequisite to understand the needs, wants and aspirations of rural consumers followed by creating or reengineering a product specifically for them. The rural consumers appreciate the value equation more closely than their urban counterparts. Stripped down versions of the urban products with rural specific requirements, without frills, low priced without compromising on the quality are more likely to succeed in the rural markets.

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International Journal of Multidisciplinary Research Vol.1 Issue 7, November 2011, ISSN 2231 5780

Philips launched their Free Power Radio priced at Rs. 995, which required neither batteries nor electricity for operation. With a one-minute winding of the spring like, the winding in a mechanical wristwatch the consumer has access to 30 minutes of listening time. Research indicated that in rural India, an average household expenditure on batteries for a radio set was Rs. 1000 and the strategic pricing of Free Power radio will save money on battery costs, the radio will pay for itself in one year and the consumer will manage to save more than Rs. 1,000 every year thereafter. Packaging is defining paradigm shift in rural marketing. Velvette Shampoo, pioneered concept of sachets and helped develop rural market not only for shampoos but also for other packaged goods category. Use of easy to recognize and remember symbols like, muscle man for MRF, lightening for Rin, Elephant for Gemini Tea and Tortoise mosquito coils help the rural consumers to identify brands at the time of purchase. Rural consumers prefer brands for need based consumption preferably having a refill option. The products must also be useful and customer-friendly. It must also be rugged and durable. Therefore, while designing a product, the organization needs to consider that the product suits the rural culture, solves their problems, fits their pocket and comes with a recycle, reusable and recycling options. Value consciousness is a big driver for the rural market and consumers are well aware of the equation of price, quality and brand image. AFFORDABILITY (PRICE MIX STRATEGIES) An aggressive cost restructuring is required in case of rural market and re-designing of products for the rural market should be done in a manner to maintain low cost of the products. Pricing strategy in case of rural consumer should be done keeping in mind the source of income as the consumers are daily wage earners or farmers who get major income during harvest season. Rural population has limited access to institutional finance so solution lies in low unit packs at low price points or equated monthly installments offered by market. Chennai-based personal care products manufacturer, CavinKare Pvt. Ltd., succeeded in popularizing its regional shampoo brand Chik in South India in the 1980s by offering it in small sachets of 8 ml, priced at 50 paise (half a rupee), which was lowest in the market compared to 8 ml sachets of leading shampoo brands priced at Rs. 2.50 per sachet. While a 100 ml bottle of shampoo of other players was priced between Rs. 40 and Rs. 50 Chik brand was priced at Rs. 17 for 100 ml. As a result of this pricing strategy Chik emerged the largest player in th e shampoo category in the rural market. This affordable pricing also helped in converting the shampoo non-users who were otherwise, using bath soaps to wash their hair into users. AWARENESS (COMMUNICATION MIX STRATEGIES) About 40% of the population is illiterate while 50% of the population lives in media dark areas.There are 16 languages and 432 dialects. To achieve success brands will have to build an association with the rural people which is possible by utilizing the various rural folk media to

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reach them in their own language and in large numbers. Appropriate mix of conventional and non-conventional media-mix like, Television, radio. Audio-visual vans, cinema commercials, wall paintings, intensive door-to-door campaigns, live demonstrations, distribution of samples can be used as an effective media to drive up sales. In rural areas, HUL promoted its products through demonstration Vehicles, rural fairs and festivals. Local entertainment forms like Nautanki (A form of entertainment, comprising of a mix of dance, dramas, skits, etc. by a group of people.) in Uttar Pradesh and Lavani (A popular folk-dance in Maharashtra played by a group of women.) in Maharashtra were extensively used to advertise the companys products. HUL also used mobile folklore for promoting its products. Folklorists moved from village to village on a bicycle spreading awareness about companys brands. Haats, melas and mandis can also be used to communicate the message to vast multitude of rural population. Colgate- Palmolive distributed free tubes of its herbal toothpaste in the Kumbh Mela festival, where millions of people assemble for over a one month span. Word of mouth communication strategy works better in rural markets as these markets are characterized by limited reach by mass media and scattered consumer group. Word of mouth communication is not only cost effective but also provides more credible and favorable information from a satisfied customer or opinion leader which is valued by the rural folks. Asian paints launched its Utsav range during the pre Diwali season. Salesmen selected the opinion leaders in villages and painted the village post office, library or the house of the pardhaan to demonstrate that paint does not peel off. Wall Paintings are quite effective in catching attention of rural consumers. The concept of colorful wall paintings highlighting the brand has been successfully utilized by Pepsi and Cocacola to promote its soft drinks through strong visual appeal. Customisation and Regionalisation of the promotional message is required in Rural India. Regionalisation of advertising campaigns by many leading multinational companies indicates a healthy trend for the advertising business as well. Progressive organizations like, ITC, TARAhaat, Wipro, etc. are harnessing full potential offered by the technology by taking proactive steps to use IT tools for rural marketing. Organizations can make use of product demonstration to communicate about product benefits to villagers. Demonstration may be- Method demonstration like, on launch of Dalda (vanaspati Ghee brand) the company people fried pakodas on street corners to convince people that it can be used for frying. The other is result demonstration like, when LPG was introduced for cooking, to prove its safety result demonstration was utilized. Integrated campaigns which are low in cost, scalable, offer multiple contacts, are interactive in nature, aid in enhancing brand penetration and frequency of usage are required to be developed for the rural market.

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International Journal of Multidisciplinary Research Vol.1 Issue 7, November 2011, ISSN 2231 5780

AVAILABILITY (DISTRIBUTION MIX STRATEGIES) Melas, haats and fairs have contributed significantly in rural sales. Availability is assured through 47,000 Haats/Periodic markets, 7000 agricultural markets and about 25,000 Melas/Fairs( 90% are religious and only 10% have commercial value) which are being targeted as media channel for brand promotion. Haats are temporary markets which are held periodically( mostly once in a week) at a place where a large number of villagers gather. Thus, many companies have utilized haats as a place for live demonstration of the benefits associated with their products. Melas are similar to Haats except that they are generally, theme-based and held less frequently. It also has a large audience base and can be used to generate large on spot purchases. As per a study conducted by Broadmind of WPP, there are 500 melas in India, which are visited by about 15-20 crore visitors with a purchasing power of about Rs. 500 cr. The famous ones are Kumbh Melas at Haridwar, Ujjain, Allahabad and Nasik, Nehru boat Race of Kerela, Nauchandi of UP and Sonepur mela in Bihar. Mandis also offer great distribution opportunities for tapping farmers in States like Haryana and Punjab, where there are no haats. Around 7,600 mandis, all over India provide an opportunity to interact with about 200 farmers a day. Video van concept started with the political parties who were not getting access on National Channel (Doordarshan) to have contact with the rural masses. The video van is one of the very effective means of reaching out physically to the rural consumers and providing them with touch and feel of product and the brand. A few multinational companies have overcome the cost involved in sales and distribution network by forming distribution alliances with local players. For example, Procter and Gamble collaborated with the Godrej Group to utilize their well established sales and distribution network in the rural market. Recently, SBI and Bhart Airtel entered into a joint venture to provide affordable banking services to the unbanked. Airtels 1.5 million retailers and distributors across India will play a key role in taking these services upcountry. Anand Mour, vice-president, Indiabulls securities says Sharing costs with companies that have different business interest seems feasible to reduce the cost-per-consumer reached. In a bid to viably cover each of Indias 6.38 lakh villages which has population of some 775 million people, Hindustan Unilever has initiated discussions with top telecom and banks & financial services companies to create a joint distribution model. HUL which hopes to have a million outlets by end-2011-up from 5.50 lkh in 2010-has unveiled a blueprint titled Gateway to Rural: Beyond FMCG. Hemant Bakshi, executive director(sales & customer development), HUL says: Since all of us (HUL, banks and mobile service providers) are incurring high costs in the quest to go rural, it makes a lot of sense to partner and work out win-win deals. HUL will play a key role to be an enabler in reaching these markets. Coca-Cola has evolved a hub and spoke distribution model for effectively reaching and serving the rural markets. To ensure full loads the company depot supplies large distributors who act as hubs twice a week, who in turn appoint and supply small distributors once a week. Because of lack of electricity and refrigerators in the rural market, Coca-Cola provides low-cost ice boxes- a tin box for new outlets and thermocol box for seasonal outlets

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International Journal of Multidisciplinary Research Vol.1 Issue 7, November 2011, ISSN 2231 5780

Out of six lakh villages 50% are not connected by motorable road and there are by and large 5 shops in a village. For the 50% villages not connected by road, Unilever devised a win-win model Project Shakti for individual enterprising women and the company. Under the model women residing in rural areas take up dealership for the companys brands and go home to home selling companys brands. Available infrastructure of the post offices, weekly markets, exhibitions, public Distribution System, Co-operative societies and banks can also help in strengthening the existing distribution effort. A vast network of 1.38 lakh rural post offices and 22,000 primary health centres need to be tapped imaginatively for information and promotion. CONCLUSION Topline or bottomline, growths should not be the objective of getting into rural markets. For as of now, all these markets offer is a future opportunity. One cant really make fortunes out of these markets as yet. It is an investment being made, both in terms of efforts and capital, which will take some time before it shows results. Rural marketing, as of now, is all about seeding the markets, creating awareness about brands and promoting a culture for consumption. said Sharat Dhall, one of the person who spent a lot of time in effective implementation of HULs rural initiative, Project Shakti. So the fact remains that the rural market in India has great potential, which is just waiting to be tapped. Progress has been made in this area by some, but there seems to be a long way for marketers to go in order to derive and reap maximum benefits. Moreover, rural India is not so poor as it used to be a decade or so back. Things are sure changing! REFERENCES Awdhesh Kumar Singh and Satya Prakash Pandey, Rural Marketing Indian Perspective, New Age International Publishers, 2005. Balram Dogra and Karminder Ghuman, Rural Marketing Concepts and Practices, Tata McGraw Hill Bobb Dilip, Rural Resurgence Changing Face of Rural India, India Today, February-2010
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Chakraborty Suvadip, e-Rural Marketing Marketing Mastermind, Sept. 2010. FMCG, Retail, Auto, Report, April, 2009 Rural

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