The rural scenario

Introduction:

In 2005, Hindustan Lever Limited had a contribution of Rs. 5,000 crore from the rural
market that was a whopping 50 percent of its total sales turnover. Another large corporate
house LG Electronics that had a total turnover of Rs. 4500 crore had a share of 55 percent
from the rural and semi-urban market. With such kind of contribution from the rural India,
corporate houses perceived great opportunity in the rural markets and tapped the
countryside to enlarge their market share.

Rural marketing is the much talked about subject for the business establishments –
especially the FMCG and the consumer durable industry. A large number of companies have
made a big headway by focusing themselves on rural markets. It proved to be an
opportunity rather than a problem for the marketers to concentrate on rural markets and
the poor. Many of them who had earlier ignored this segment due to lot of investment
requirements and low returns have again started foraying into it and targeted the rural
masses. They attempted all the feasible approaches to sell the products to the rural
consumers that met their lifestyles and living standards. Several large companies like HLL,
ITC, Coca-Cola, LG, Britannia, Philips, Colgate-Palmolive etc., penetrated aggressively into
the rural markets and spent heavily in the rural areas. Some of them even invested money
to create separate sales and marketing teams exclusively for rural markets. They also
appointed specialist agencies who could advise them on rural marketing.

But all said and done, how far were the companies successful in offering their products to
the rural consumers? This remains a big question for the management of these corporate
houses. Most of the products purchased by the rural masses were at times used for some
unusual purposes other than what they were basically made or manufactured for. Like the
Godrej hair dye is used by the rural consumers for applying on their buffaloes to make them
look immaculate black before displaying in the market for sale. Of course, if viewed
optimistically, this in one way gave scope for the companies to market their product in an
innovative way and also push up the sales figures further. But what about the fundamental
purpose for which it was manufactured? There is no correlation between the kind of usage
of the product and the application of the marketer's strategies. It is a disproportionate to
the extensive research that a company usually does before entering a new market or
launching a new product and the outcome it expects. This also gives scope to raise a query
to the marketer whether he had properly assessed his marketing strategies and the basic
requirements of the customers before planning his strategies. The company needs to
analyze this aspect before it proceeds further with dumping the products on rural
consumers and thinks of capturing the rural market in a big way by any means.

The Rural Market Scenario:

The rural markets offered a huge potential to the business houses because of their
enormous spread and rising consumer demands. Around the world, over 4 billion people
survived in rural areas that came to more than 60 percent of the total population. In India
also, the ratio of rural to urban population was slightly higher than the world's ratio with 70
percent of them living in rural areas. They domiciled in nearly 6,27,000 villages spread over
3.2 million sq. km. This growing affluence along with good monsoon and the increased
agriculture output, increased the total disposable income of rural consumers to 58 percent
with two-third of middle income households being in the rural market. About 40 percent of
the graduates coming out of Indian Universities were from rural areas. As they are eager to
earn more and live better, their aspirations are similar to the urban youth. It is predicted by
industry analysts that by 2009 – 10, the urban households are projected to grow by 4
percent while rural households are expected to grow by 11 percent. If the rural income rose
by 1%, then the buying power would correspondingly increase by about Rs. 10,000 crore.
The colour televisions, refrigerators, air-conditioners and microwaves have become a
household sight in villages and small townships that was long thought of as a luxury and
domain of urbanites.

However, rural India had its own set of problems like illiteracy, early childhood marriages,
lack of access to birth control measures, poverty etc., that were interdependent on each
other. There are also large numbers of daily wage earners and most of the people depended
on vagaries of monsoon. Inadequate infrastructure like non-availability of gas supply,
frequent power cuts, improper sanitary conditions, inaccessible areas were the other
common sight of rural areas. 

The paradigm shift:

In most of the rural areas in different parts of the country, there is considerable awareness
on various latest products that are available in the market. This has been possible due to
the penetration of cable and satellite channels that have brought down the world at the
finger tips of the common man. The media influenced the mindset of the rural consumer to
such an extent that people who had money started purchasing the products unmindful of
the costs, just to satisfy their needs as well as their ego. But, the growth of rural market
could be attributed to many other reasons that in one way increased the sales as well as the
profits of the companies. Some of the important causes for the growth of rural markets are
– 

* The rise in disposable income of the rural families

* The economic boom
* Timely rains
* Rural population involved themselves in business other than agriculture
* Increase white-collar jobs in nearby towns
* Commercialization of agriculture
* Saturation of the urban markets
* Media penetration in rural areas (particularly satellite channels)
* Globalization
* Economic liberalization
* Revolution in the Information Technology
* Women empowerment
* Improving infrastructure

However, there was a significant role of the corporate enterprises simultaneously in the
development of rural market. Their timely intervention into the rural areas, their
appropriate planning, their perception and identification about the growth of rural markets
and the use of marketing strategies all have equally contributed for the progress of rural
markets. Even though corporate houses were hedged with so many problems in the rural
areas, they saw a galore of opportunities in the rural market and converted all the
pessimistic characteristics of the rural market into affirmative attributes. They satisfied
themselves with the availability of limited infrastructure, saw a sign of prosperity rather
than fear during the entry of competitors into the rural markets, showed excitement at the
availability of satellite channels in the rural households, visualized their cash bells ringing
with the increase in purchasing power of the rural masses that came equivalent to their
urban counterparts. They traced a constant rise in the demand for those products that were
once confined mostly to the urban houses. But, blame it on the kind of awareness created
by the companies – people started using the products for other purposes as seen earlier.

In many villages, one can see today the alternate use of the products other than for their
actual purpose. People in the state of Bihar feed the cattle with Horlicks as a health drink to
fatten them! Similarly, people in Punjab use washing machine not for washing clothes but to
make frothy lassi in huge quantities! Animals are rubbed with Iodex on their skins to relieve
them from muscular pains after a day's hard work. Paints meant for houses are used on the
horns of cattle for easy identification and theft prevention! The weavers in North India wear
condoms on their fingers as gloves to weave fine threads while its lubrication allows them
fine control on threads and protect their sensitive fingers! If companies felt happy with their
increased sales and profits through this means and thought that they captured the rural
markets, then it is time for them to review their marketing strategies. They should
understand that these results do not coincide with the application of the marketing tools and
the technical expertise that are generally used to satisfy the customers as well as the
company objectives. The implications of 4 Ps of marketing mix or the use of 4 As for
successful rural marketing have produced wrong results.

All companies usually claim that they provide the right product at the right place at right
price with right kind of promotion. Then why was a right product accepted by the rural
consumer used for different purpose? Why did he afford to spend either much or less on the
product that has not derived him the kind of benefit as claimed by the manufacturer? Why
did the place of offer differ than to where and to whom it actually was supposed to be
available? Why the right promotion has created wrong awareness in the minds of the target
customers?

There was something missing in the marketing strategies of the companies while serving
the rural markets. Otherwise, the results should have been more astonishing where the
sales turnover or the balance sheet would have shown much more than what is presently
achieved. Though, only few products were used by the consumers in this way, that use
might be the result of the accidental or wrongful application by the rural consumers. The
marketer's planning about the product and the communication with the target customers
should be perfect that produces the desired results.

The Marketer's Plan:

If the marketer truly understands the needs of the rural consumers, he should strive to
provide them with those products and services that would meet their requirements. The
marketer has to focus on his core competencies like the technological expertise to design
the products for the rural masses. Companies like Cavin Care who launched their shampoo
in sachets, Britannia who conveniently packaged its Tiger brand biscuits with low price tag
are the best examples of understanding the rural customer's needs and providing them with
the desired products.

The marketer's basic need is to understand the pulse of the rural masses and serve them
accordingly. The companies need to make proper assessment while marketing for the rural
India. This could most probably happen in one way by changing the profile of their
managers. As most of them are management graduates bred in urban areas and are taught
marketing principles and strategies applicable for the western countries, there is a
mismatch in their thinking and the requirements of the rural consumers. Hence, hiring
professionals who have expertise in rural marketing would go a long way to improve the
situation as they can truly understand the rural traditions and cultures, understand the
feelings of rural people before designing and actually launching the product. It is very
essential for the rural marketer to understand the psychology of their consumers in terms of
their usage habits and shopping behavior along with their emotions and value systems. The
integration of both technological and managerial knowledge would help them to develop the
various marketing strategies for the rural Indian markets. This will further lead to
technologically superior, robust and low cost products that would be in resemblance with
the Indian tradition and culture.

The marketers may also consider depending more on traditional media when marketing for
rural consumers. This unconventional method acts as an effective way to create awareness
as mass media is unreliable as it is too glamorous and interpersonal for the rural market.
Uses of skits, magic shows, and education by NGOs are some of the most preferred
traditional media which the marketers can usually use as it goes well with the tastes of the
rural consumers.

Conclusion:

The rural India that has lot of money with it definitely offers a great potential for the
companies where the chances of outnumbering the urban areas in all aspects are very high.
But only those companies would survive at these places and win over the rural consumers
who can spend time and money on understanding the needs of them and come up with
innovative ideas.

The companies should also strive to give more focus to the rural market in order to make it
a market leader. This can happen only with the firm commitment of the top management
and extension of full support to the marketing personnel by each and every department of
the organization.

References:

1. www.rediff.com/money/2005/jun/02inter.htm
2. http://www.indiauntouched.com/blog/archives/2004/12/rural_poverty_o.html
3. www.rediff.com/money/2005/jun/02inter.htm

Cookie goes rural

The country’s largest baker wants people in villages and small towns to eat its cookies.
Britannia Industries, which lords it over 40 per cent of the Rs 204-crore cookie market with
Good Day and sells gift packs of premium Danish Cookies through modern trade, has come
out with Britannia Cookies priced at Rs 5 for a pack of 10.

This is the first time that a baker has attempted this. Britannia has a firm eye on this
uncontested territory with a proposition of nutrition and smaller pack size. In the biscuit
market, rural India is spoilt for choice with a host of local as well as national players vying
for a share of the consumer’s wallet. The biscuit market is estimated at Rs 8,300 crore;
Britannia leads the pack with a share of 38 per cent.
A calculated push into the rural and semi-urban areas, say experts, is Britannia’s way to
lead the market. As rivalries in the markets, urban as well as rural, are intense, it needs to
identify newer and newer markets and segments to hold on to its share of the market. An
equity analyst from India Infoline says: "Biscuits and cookies form the largest segment of
processed foods and everyone will fight for a share of the pie."

McCann Executive Chairman Prasoon Joshi crafted the communication with the tagline of
Tan ko lage, man ko chuye, which means that the product benefits the body’s constitution
and endears itself to the eater. Says Britannia Industries Category Director (delight &
lifestyle) Shalini Degan: "For socio-economic categories B and C, nutrition from the food
they eat is more critical than a dose of energy or taste. They travel long distances in less
comfortable environments, so a product like this could be a staple like a bottle of water.
With elaichi (cardamom) and butter, cookies do have great taste; but that is secondary to
them being a wholesome go-between." The TVC starring actor Dipti Naval portrays how
Britannia Cookies can slip in between missed meals.

Degan points out that Britannia was able to blend the qualities of a cookie (makes for a
softer bite than brittle biscuits) with the pricing of biscuits through some low-cost
production processes. The prices may be low, but, say investment analysts, Britannia is
unlikely to lose out on profit margins. "Smaller pack sizes and no-frill ingredients can lower
input costs. This makes lower-priced products fetch similar margins as urban products in
larger packets," says one. Parle Products, for example, has competed with Britannia neck
and neck by the dint of its flagship product, Parle G, which is a low-priced glucose biscuit. It
has fetched Parle volumes and now even value. So much so, its sales are said to have
overtaken Britannia’s.

With Britannia Cookies, Degan feels Britannia’s rural portfolio is complete. "Along with Tiger
(glucose biscuit) and the Rs-5 packs of our other variants, Cookies is in line with our
portfolio approach," she says. To reach its message to the target audience, it is employing
vans for distribution and communication. Tie-ups with vernacular print media to coincide
with festivals are also on the cards. It is also pushing its sales staff to double the time they
spend in the market by not just talking to retailers but also consumers who come to shop at
those stores.

The company is also on a distribution overdrive that will permeate canteens, bus stations
and railway platforms in both urban and rural areas. A lower priced cookie does not mean
that urban markets will be given a miss. "We might not retail at stores in posh localities, but
in a grocery store in Dharavi, for example, Britannia Cookies would be available," says
Degan. For now, consumers in north and west India, where the company has done well with
Good Day, will get to sink their teeth in Britannia Cookies.