Challenges and opportunities: How brands can

succeed in rural India

Amit Bhandare
Source: WARC Exclusive, Spotlight India, August 2021
Downloaded from WARC

Amit Bhandare lists the challenges of rural marketing in India and what brands can do to acquire a
regional reach and relationship.

The pandemic gave rural households a sense of purpose and made them more proactive about
aspirational buying.
Premium products like packaged foods, surface cleaners and grooming items found greater
acceptance in rural regions.
The second wave strengthened rural market fundamentals with good monsoons, crop harvests
and minimum support prices.

This article is part of a Spotlight series on rural marketing in India. Read more

Why it matters
Companies wanting to profit from rural India must be open to introspection and innovation across levels because
merely reaching out to rural prospects will not suffice, and to succeed, they have to drive transformational
strategies, achieve breakthroughs in new geographies, and improve supply chain efficiencies.

Takeaways
Detailed market surveys are necessary to identify promising clusters with enough demand to generate
profits.
Rural marketers can tap haats or bazaars as a hub and spoke model for an accessible and addressable
market.
 Develop indirect channels to augment the existing dealer network as a cost-effective product distribution
strategy.

Rural marketing in India has always been a formidable challenge for most brands on two key counts: the sheer
magnitude of the rural populace (0.93 billion comprising 69% of India’s total population) and the extreme regional
diversity that renders any form of standard communication discernibly ineffective in conveying key messages to
the target audience.

Contrary to popular perception, the COVID-19 pandemic has ushered in a sense of purpose among rural
households, making them more conscious about the need for lifestyle changes and proactive about aspirational
buying. The numbers amply convey this twist in the rural consumption narrative.

Rural bazaars have eclipsed urban markets both in value (11.6% against 10.2%) and volume (4.4% against
3.3%) terms. Notably, FMCG volumes witnessed impressive growth largely led by a rural push. Interestingly,
during the second wave of the pandemic, FMCG buys picked up in areas marked by poor healthcare facilities,
greatly helped by the fewer COVID restraints on social mobility compared to the urban pockets.

Sanitisers topped personal care and hygiene sales, tapping 44 million rural households from June 2020 to May
2021, ahead of the 42.6 million urban buyers. For sellers, the affordable price pack strategy paid dividends.

The unbranded-to-branded consumer switch was also more pronounced during the pandemic, with premium
products like packaged foods, surface cleaners and grooming items finding greater acceptance in rural regions.
Rural demand for soap and insecticide was 1.3 times higher than urban demand. Sales of talcum powder and
hair dye rose 26% and 12% respectively.

Conversely, both categories suffered a YoY decline in urban zones, thanks to the work-from-home diktats of the
stringent lockdowns.

All in all, the second wave ended up strengthening rural market fundamentals, amid other conducive factors like
good monsoons, adequate water levels across reservoirs from last year’s decent rainfall, higher crop harvests,
better minimum support prices, and growing non-farm incomes. As we moved from the first wave to the second,
farmers had comparatively better cash flows in hand and government support is now more proactive.

Although the rural sentiment is upbeat, there are a few holdups that continue to make the rural market more
elusive than meets the eye, such as a unique environment of high spread and low population density (269 / sq
km as against 3,689 / sq km). Out of India's 624,000 villages, 100,000 comprise 50% of the rural population and
command 60% of its wealth.

The rural sector is a predominantly agrarian economy plagued by a recurrent crisis. The largely seasonal
income stream for households falls short of meeting the growing expenditure needs throughout the year. The
vagaries of the weather and the variability of incomes adversely affect the common consumer’s purchasing
power, besides hampering the propensity to take loans and advances.

Despite the nationalisation drive and the Priority Sector Lending (PSL) initiative, only about 25%-30% of India’s
rural credit needs are met. Lack of adequate financial literacy and discipline are one of the biggest deterrents to
any meaningful reform in this largely overlooked marketplace, which has its own set of barriers.

Then, there were a few tectonic shifts largely from the first wave of the pandemic. Prime among them was the
reverse migration, which caused a labour shortage and rise in cost of farming (higher tractor rentals) in labour-
deficit states like Maharashtra and Karnataka. The rural farm wages of migrants who found work in native
places could not compensate for the loss of income. However, the reverse migration during the second wave
was reportedly not as pronounced as the first.

Tap haats as a hub and spoke model

So what is the best way out for rural marketers? Given that establishing a physical connect with villages of
population less than 2,000 is not commercially viable, the haats or bazaars of each of the 75,000 villages
comprise an accessible and addressable market. A typical haat sees a footfall of around 4,000 people, with
more than 50% of rural housewives visiting haats for weekly purchases, given the exorbitant prices charged by
village shops.

Thus, a hub-spoke model seems ideal to tap rural markets. Hubs at high potential geographies can serve
respective spokes with the help of controlled logistics and a presence in 20% of potential territories will achieve
80% of sales.

Think local to drive potent distribution strategy

Effective rural market penetration calls for cost-effective product distribution strategies, ahead of identifying and
enticing target customers. One prudent option is to develop indirect channels to augment the existing dealer
network.

For instance, local residents can be recruited and trained to take on the role of village advisers in charge of
generating leads for dealers on a commission basis. Tata Motors Gram Mitras is a case in point. Another
example is that of banking services firm FINO PayTech which developed a network of self-employed bandhus or
banking correspondents.

Some companies like JioMart have adopted the village entrepreneur model, partnering with local businesses to
digitally enable, empower and engage local kirana stores. These stores transact with their customers on the
JioMart platform, facilitated by a multifunctional POS.

Identifying high-demand clusters

Detailed market surveys are a must to identify promising clusters with enough demand to generate profits. No
wonder that many leading firms use sophisticated technologies towards this effect.

For example, GIS Mapping helps combine and analyse a wealth of information: demographic data, community
wealth data from post offices, bank branches, schools and hospitals, as well as sentiment-specific data on the
values, attitudes and behaviour across different markets.

Build an emotional connect

Given the growing competition in rural markets, it is elementary to build enduring relationships with competent
and agile channel partners.

To bring about a mutually rewarding association, it is important to come up with innovative strategies to retain
them and keep them positively engaged and motivated.

Similarly, it is important to establish an emotional connect with rural consumers given that they base their
purchase decisions on personal bonds and mutual trust, unlike urban buyers who are happy with purely
transactional relationships.

Focus on regional languages and dialects

India speaks 122 major languages and 2,371 dialects, and this linguistic diversity poses one of the biggest
challenges to marketers. Even the same language is spoken differently from region to region across states. It is
very difficult to convey the exact message, given the perpetual risk of some loss in translation.

As states have different preferences for the choice of language, advertisers cannot impose the national
language on the target market. Regional language messaging can help tap the tremendous potential and scope
in many of the under-served markets.

The spread of regional languages across all forms of media – web, electronic and print – has been on the rise.

According to an FICCI-EY report, regional languages will comprise 60% of India’s TV consumption in 2025
– a big leap from 30% in 2019.
In the near future, half of the ads will be made in regional languages, followed by Hindi (47%) and only 3-
4% in English, according to the same report.
Streaming majors Netflix and Amazon Prime Video have sizeable content across all major Indian languages.
Advertising in regional languages is coming of age as the new generation prefers the native expression to
convey emotions and preferences on social media.

It is pertinent to note that most young consumers in regional markets across India can only speak the language –
they don’t have reading and writing proficiency, so the vernacular messages in English script would be a good
option to connect with them.

According to KPMG, the CAGR of the e-commerce user base in local languages, which currently stands at 32%,
is expected to add around 120 million users in the next five years. Corporates – big or small – cannot afford to
ignore how critical the local lingo is in marketing.

Going forward, marketing plans and priorities will need to be formulated according to the post-COVID evolution
of the rural dynamic. Although the rural market share of most consumer companies continues to hover in the
range of 35%-40%, the following pointers will help design effective marketing strategies:

Notwithstanding the fact that rural sales normally call for about 4%-6% in incremental channel costs,
leading consumer-facing marketers should exploit underutilised budgets, given the conventional and
continued dominance of below-the-line (BTL) channels as opposed to above-the-line (ATL) spends.
 Endorsement of marketing messages from key influencers like healthcare practitioners, school and college
teachers, activists, reformers, and village headmen is a critical success factor. These individuals are
trusted community leaders and their word of mouth would go a long way towards building brand equity.
Agile corporates first rank the stakeholders in terms of their community influence, as well as their zeal and
zest to become ambassadors, and then go about employing inventive promotion tactics. A case in point is
the Asian Paints’ tactic of painting the walls of popular sarpanches (headmen) – an innovative and cost-
effective advertisement that is ideal for a pastoral setting.
Closely linked to the above point of word of mouth influence is the need for companies to be extra-vigilant
about after-sales service. Unlike urban pockets, a post-sale instance of product malfunction, flaw or
inherent damage could be a virtual show-stopper. A promise once broken is likely to stay broken, so any
marketing proposition should be backed by proactive validation through after-sales service.
The keyword for rural marketing is “solve”, not “sell”. It is a prudent strategy to first find out the problems
and challenges facing rural inhabitants, and then go about resolving them in a sustainable way. This effort
will help build enduring consumer trust in product, which in turn will pave the way for brand loyalty.
Needless to say, communication will be an integral part of this proactive exercise. It is important to unfold
the value proposition of the product in simple language. Thorough knowledge of the product, how it
addresses their needs, how it upgrades their lifestyle, how it fulfils their aspirations, will enthuse the locals
to invest in it. Generous use of video content will prove more effective than verbal messaging, as the visual
description will appeal more to the sensibilities of the target audience. A faster call to action can thus be
initiated.
Another potent strategy is a localised recruitment campaign for building the needful service infrastructure in
the target markets. Rather than deploy corporate sales staff, helpful and capable locals can be hired to
provide basic support services to rural consumers at significantly lower cost. For instance, ICICI Bank’s
Branch on Wheels deployed local representatives in vans equipped with a laptop, printer and camera to
help village people with basic banking transactions.

Technology is one key factor that marketers can exploit to the fullest in reaching target markets. They should
proactively tailor tech tools in line with local markets sensibilities rather than wait for the market to adapt to the
technology at the macro level.

Already, we have seen consumer-facing players extend the virtual ordering platforms for the benefit of non-
urban retailers and several mobile-based platforms for capability development have come up for the upskilling of
rural sales teams.

Given that a huge trust deficit and poor network access prevent the agriculture workforce from reaping the
rewards of technology, agritech startups can proactively build a robust and holistic tech enablement ecosystem
for the farming sector as a whole. Technology can also set right the flawed digital infrastructure and skills by
strengthening data pools through linguistic and digital literacy initiatives.

Many tech innovation case studies are reflective of the sunrise possibilities in this space.

Rivigo transformed trucking and delivery in India by adapting digital systems, as well as upgrading the physical
construction of trucks.

Among other measurable benefits, it introduced the “relay as a service” concept in trucking, which allows drivers
to relay trailers from hub to hub, allowing them to stay in close proximity to their homes (and enjoy quality time
with family), while enabling the company to manage thousands of trucks on the move without disruptions that
were earlier caused by the non-availability of drivers.
Consequently, Rivigo increased truck efficiency and dramatically reduced turnaround times across the key
sectors of e-commerce, pharmaceutical, automotive, cold chain and FMCG sectors. Putting the Internet of
Things (IoT) technology to admirably productive use, it connected truckers with one another and their managers
in real time through an array of intelligent sensors.

It also enabled on-the-go tracking of crucial parameters like tyre pressure, vertical load and temperature, which
ensured timely repairs and minimised driver downtimes.

The pandemic has virtually transformed India’s digital connectivity and efficiency at the grassroots level. While
online buying has pervaded India’s Tier 2, 3 and 4 cities, several kirana stores across smaller cities and towns
went online. In fact, digital technology motivated several young graduates and professionals to move back to
their native towns, thereby boosting rural consumption and demand.

The lockdown and the stay-at-home economy also turned many millennials into budding stock market investors.
The simplicity of the digital medium – its flat-fee structure, simple interface and hassle-free account opening
process – helped these young Turks shatter the myths and misconceptions about stock investing from an earlier
era. Consequently, the risk appetites of people in small towns and villages have gone up substantially.

Social networking platforms have leveraged technology in innovative ways. Facebook launched “Facebook
shops”, enabling businesses to directly sell products from the platform. The tie-up with Reliance Jio and the
WhatsApp-enabled local grocery delivery system revolutionised social commerce like never before.

Rural ecosystem players like eSamudaay are creating a network of digital entrepreneurs in Tier 2 and 3 cities
for nurturing a local commerce (L-Commerce) marketplace.

Conclusion
Clearly, the rural opportunity for marketers is fertile and boundless. Yet, there are a few sticky challenges that
call for steely resolve and dogged determination to work around problems where no solution exists.

India’s challenges include:

Poorly developed roads

Fragmented markets
Arbitrariness, scepticism and idiosyncrasies of customers
A glaring lack of skilled salespeople
Under-developed banking and credit facilities

Given the above, the strength of intent will decide the potency of strategies for any company looking to serve
and profit from the rural marketplace.

Unless a company is not open to introspection and innovation across levels – whether product, packaging,
pricing, distribution or operations – a thin line will separate success from failure. Merely reaching out to rural
prospects won’t suffice; companies would have to drive transformational strategies like dedicated divisions for
rural sales, visibility of rural through internal communiques, fraternity-wide conferences and mass media, and
intelligent use of predictive technologies to boost and broaden sales, make breakthroughs into new
geographies, steer disruptive innovation based on customers’ future behaviour, and improve supply chain
efficiencies.
An unflinching focus on hyperlocalisation and establishing a deeper customer connect should drive the show,
especially in a nation of mystifying cultural diversity, where the taste and type of water changes every two miles,
and the tone and idiom of speech every four miles.

The marketing thrust of a brand therefore should be on comprehending customer preferences and leveraging
them to strengthen the regional reach and relationship.

Further reading
Bharat Rising: Reconnecting with the soul of India

Influencer marketing: Looking beyond the metros

Rewriting the sacred tenets of rural marketing in India

Success in rural India requires understanding and a relentless pursuit

How brands can empower India’s farming communities

Networked commerce and the power of India’s kirana

Revenge of the Walking Scarecrow: Seizing the Winds of Change in Rural India

About the author

Amit Bhandare

Amit is a marketing generalist with 14+ yrs of experience of brand building across industries and geographies.

He is an alumnus of Jamnalal Bajaj Institute of Management Studies and is currently studying Social
Psychology.

Read more in this Spotlight series

Post-pandemic challenges and opportunities in rural India
Biprorshee Das

Brand in action: How Parle Agro plans marketing strategy to keep rural India in mind
Nadia Chauhan

The rural ways of buying: An opportunity to reimagine digital

Shraddha Ganesh

After COVID: How to realise the potential of rural markets

Sunny Vohra, Aparna Tandon and Pallavi Patil
Future success: Investing in rural India
Mohit Joshi

COVID-19 and rural India: The challenges and opportunities for marketers
Sharad Varshney

Rural India: Propelling the Indian economy during COVID-19

Neha Chauhan

No magic bullet: Rural marketing in a post-COVID world

Anand Murty

Game changer: Technology and the rural market

Amit Rangra

Challenges and opportunities: How brands can succeed in rural India

Amit Bhandare

Sales, service and social impact: Mitigating COVID’s effect on rural India
Sriharsh Grandhe

Rural marketing in a post-COVID world: Consumer sentiment data

Spotlight data report

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