You are on page 1of 10

Of view

point of view is my way of helping young marketers and sales managers.

I am always encouraged to watch young marketers and sales professionals tapping into perspectives through my articles and getting some helpful insights

Article Serial: MN250808

All my white papers are free to download and are available for reference. Reproduction of any kind requires my consent. The following article is copyright protected. For any permission, please contact me at:

M Nanda

Page 1

Rural Marketing & CSR

Of view

According to market figures, the year 2011 holds higher growth potential both in rural and urban geographies. Competition is immense in urban markets as many global players have entered the market. While in rural, competition is still limited, but business initiation is far tougher as compared to urban markets. The growth this year is estimated to be 50% in rural and 25% in urban areas as compared to last year. These figures have had a steady climb from similar projections last year. As nearly 70% of Indian population lives in the villages and rural areas, this segment cannot be ignored by any brand. Since last decade or so, majority of companies in FMCG, Auto, Consumer Durables have been vying to go rural, and there has been a lot of buzz around Bottom of Pyramid markets and its scope. The au natural fact being - many organizations have burnt their fingers (and pockets, too ! ) while trying to do so. Although, a few managed to set up business in semi-rural areas, but succeeding in rural markets is still a distant dream for many. Only a select few have really understood the needs of this very different market and have adapted accordingly to build a strong establishment, both in terms of product marketing and distribution, for these markets.

Bottom of Pyramid / Rural marketing and sales is a deep dive effort.

It is far different from what we urban and new age marketers currently do. Nevertheless, it holds the potential which is vast both in terms of revenue and stability of business. The core of this segment is about satisfying basic needs such as food, clothes, and shelter. Because there isnt any other aspect to it (like new technology, frequent upgrades, new tastes, etc), this segment is extremely difficult to market to. More so, establishing a sales and distribution network is a mammoth task and requires patience as well as astute understanding of geographies, and markets addressing this segment etc

M Nanda

Page 2

Of view
I have prepared a checklist for marketers (and sales managers) who are trying to tap the potential in this segment.

A. Sales team recruitment, training and identification of markets

This is a segment where no contact data is available. Stores open and (also) shutdown with no news and reason known, even to distributors operating in these localities. For any sales process, four important steps are 1. Selection of prospects, 2. Filtering and Engaging, 3. Acquisition, 4. Establishing a relationship. In rural and bop sales, step 1 of Selection of prospects (retail stores) is the most crucial and time consuming. This is attributed to the fact that in this segment geographies are scattered and physical contact with rural retailers and partners takes both time and effort. This first step thus becomes the most tedious. Similar is the effort in establishing a relationship, due to vast spread in geographies (for a sales rep to repeatedly cover and establish rapport) Only intelligent hard work by the respective sales team, in rural localities can help establish a credible distribution network. Sales team thus forms an integral part of any successful endeavor in such markets. Some important points to note are: 1. Selection of sales team ideally youth working (or residing) in these areas should be given priority, as their understanding of this market is market much better, especially for its essential constituents like channel (retail stores and their location) and buying behavior. They should be guided by managers who have experience in both rural and urban markets, so M Nanda
Page 3

that the best of both practices is put forth and implemented.

Of view

The rural community and some consumers (satisfied clients) can also be also utilized as long arm sales force. Alternatively, they should definitely be used as the word of mouth brigade or part time brand and product advocates amongst their fellow citizens. 2. Geography Training & awareness familiarity with routes, market pockets, retailer and distributor locations. This is where previous experience in these geographies will play an important role. Recruiting even the best talent without having reliable geographical retail coverage knowledge will be most futile as excessive time will be bled in understanding market locations and finding small retailers (hidden in residential pocket dwellings) 3. Identification -- of market pockets, location of all retailers and constantly populating the list (this includes micro and window stores operating out of rural residences / house fronts in residential pockets ) 4. Beat Plans for each sales individual no of localities and no of shops to be covered per day. This again has to be a rehearsed exercise that only an experienced manager (in this segment and locality) can or has self performed and then decide for his team. This plan and exercise also needs to be syncronised with the beat plans of distributors sales staff. If managed effectively, this is the quickest way to succeed in these pockets. 5. Reporting format and structure including communication on reporting cycles for all sales staff (and the distributors too). It is extremely important that this information needs to be captured on a daily basis and put in a required format. 6. Collect data (dont estimate) -- Estimating number of stores and business revenue is definitely the worst thing to do in such markets. No two rural pockets are the same. Estimates can go wrong and devising business plans on such estimates can be detrimental, especially in terms of management expectation. 7. Data Entry It is advised that data entry should be separately looked into and sales team should not be wasting time on it. This is so because, data in such markets would be of micro nature and will require effort and time to input. Additionally, because of the nature of such markets sales teams majority time is spend in travelling. A separate hand should be used to input data and report. This data should be available to the marketing team to analyse consumption patterns per pocket, per locality, per village and to then effectively measuring product successes, evaluating packaging acceptance and failures, etc M Nanda
Page 4

8. Brand Values communication and its inculcation with the sales team. Sales team has to be aware and proud of what their brand stands for.

Of view

Product issues on quality, support, return policy etc must be clearly administered to all sales staff so that they dont wait for seniors directives and can take instant decisions. Distributor and retailers in this segment have limited revenues and so they can be demanding at times in situations such as backend scheme timelines, product service, product returns etc 9. Sales plan - Expectations need to be kept realistic. This is a market that will require lots of hard work and sweat. Stable and accountable results will show at least two quarters down the line. 10. Dress Code for all sales staff (brand t-shirts, bags, caps etc) helps spread brand name to all existing retail stores owners and prospective ones too.

B. Distribution Set-up and Systems

The typical rural market segment is a vast distributed settlement and thus distribution set-up can take both time and effort, not to forget initial costs can be high as compared to same volume in urban areas. It will be ideal to identify small distributors and clearly set geographical area of operation (territory) and develop systems so that there isnt any overlapping and territory infringements, otherwise wrong and overlapped estimates will flow out. Apart from the common criteria (like operation scale, financial soundness, past reputation, business volume and growth, warehouse capacity, transportation & distribution means,) employed to choose distributors, in rural and bop areas, following must also be kept in mind: 1. Reach and Manpower A simple criteria that works satisfactorily is twice a week sales reps visit to every retailer. This is so because the consumer buying capacity of this segment is generally on a daily basis, and so retailers, in turn, never stock more than 3 or 4 days inventory. 2. Credit handling capacity It is a known fact that the distributor needs to credit lend material and his ability to handle a specific retailers in area of his operations should be ascertained. Thus the understanding of cash cycle from consumer to retailer and the credit cycle between retailer and distributor is very important. M Nanda
Page 5

3. Computer literacy / IT systems data handling and processing capability. All existing distributors should be helped and given systems training.

Of view

The data that they collect (retailer data) is of definite importance to the marketing and sales management and this is the basis of all sales improvement processes.

4. Communication links in case of a new launch how quickly can the distributor put the message across,

Lastly, in such markets the best way to judge a newly appointed distributor is to ascertain how many new dealers has he been able to add and how many old retailers have been retained. (every quarter data should be checked and this needs to clearly communicated as an essential prerequisite for a new distributor)

C. Product Management

No matter how strong is the companys sales team and distribution structure, an ineffective product line-up can render any amount of planning and hard work futile. Most important is to digest the fact that there is no or very little brand loyalty in this segment. It might sound good for a new product, but that does not qualify to it being a cake walk. For an existing product it is important to maintain brand stickiness or brand likeability. The main thought that should go behind a new product introduction should be its ability to be bought and tried. On the other hand, for an existing brand, consistently delivering value is the key to survival. Following points should be carefully considered, while deciding upon product lineup. 1. Product Portfolio The basis of product management should be need satisfying and basic functionality. This is so because the purchasing power is limited and subject to a need. Basic products which address the core need and revolve around functionality around this need always do well. 2. Sub-Quantity and Packaging The decision on quantity and packaging is the most important part in product management for a rural consumer scenario. Understanding consumption pattern is the key to the success on this front. M Nanda
Page 6

Consumption patterns differ from product to product and a generalization is very hard to arrive at. Yet, assumptions can be made for typical family size and basis this consumption patter can be ascertained. Examples of successful product quantity tweaking are

Of view

5 slice bread packaging; Rs 5 biscuit packs, Bathing soap at Rs10, Washing powder sachets Buying price is the basic road block for this segment. Also, previous purchase price forms some sort of a price rule, and breaking that is a challenge. Introducing new products at higher costs is often a challenge, until unless backed by a very convincing communication. To have a clear understanding, consider two cases Say, bread in packaging of 5 slices is available for 4 rupees. Any new introduction on packaging might see roadblocks from consumer. To illustrate this consider the following example New Case Pack 1 Bread in packaging of 16 slices for 11 rupees New Case Pack 2 Bread in packaging of 7 slices for 5 rupees The bop and rural segment would definitely look for the 5 rupee packaging, as it is close to their normal expenditure on bread. The 11 rupee packaging would end up being a non starter due to the mental blockage on daily expenditure being doubled (although it being a very good bargain)

3. Low cost packaging expensive and over frill packaging is what a marketer should avoid to lower costs. This though is not limited to perishable food items packing. In their case a pack that makes the product last long can help. A great example is zip pouch based packaging for food stuff. 4. Reusable packs can definitely be a hit, in whichever category they are possible. Also in such cases durability of container / holder would form the key criterion. 5. Refill pack promotions (importantly, care should be taken to introduce Refill Packs clubbed and timed with a storage container / holder (jar packs) 6. Bundle packaging this apart from its normal advantages to the consumer, can be an excellent re-launch pad for a firm not doing well in one category. Additionally, it is a great way to do a post launch re-jig in product packaging for quicker trials by consumers.

M Nanda

Page 7

7. Handling Fake Brands As education level is low, this segment is plagued by multiple fake brands, very similar in packaging and design to the original

Of view

leading product and brand. Feedback and checks are very important to curb this menace.

D. Brand Decisions and Corporate Social Responsibility

Inevitably, in rural marketing, product packaging and brand symbols are very important. This is so because even the uneducated can remember and recognize brand logos and thus brands. At times, even the brand statement is recognized and easily recalled by rural population. Ignorance on aspects of quality makes this segment not to recognize brand values especially on ingredients and technology (and hence quality), so all a marketer can expect is brand identification and some brand attraction, but not brand loyalty. Another, very critical aspect is communication, and in rural and bop segments, use of local language works wonders. This gives the product, an instant recognition and key features advertised on packaging and pop/pos can help ease the job of a retailer who otherwise has to push products, especially new ones. Product features and advantages etc in local language will help establish product and ultimately the brand. In a long term perspective, CSR team can definitely help rope in some brand loyalty, subject to quality of real work done in this segment. But CSR should not be taken or used as means of doing so. It should be about enhancing the lives and helping this segment rather than gaining some cheap mileage. Rural people are tradition bound, they practice what has been preached for years by village elders and this holds true for many decisions they make. This segment shows no urgency for buying just about any product and category except for food items. Also, this segment is driven by emotion and emotional appeal. This emotional attachment is what needs to be sought through campaigns and CSR initiatives. This segment lives in a very open society and their lives are connected to each other, with members even outside their families, in the community, in the neighbourhood through a social bondage. The entire society gives importance to village elders, government officers especially healthcare officers and workers. The NGO community that works within this segment is also respected. M Nanda
Page 8

The CSR team needs to look at these aspects and necessarily needs to rope in these pillars of importance. Connecting with those who connect the community is important.

Of view

Doctors, NGO staff, Government officials, village elders thus, should be part of every CSR initiative. Understanding the quality of life and then trying to bring a change is what the CSR initiative should be about. Health, sanitation, basic amenities, quality of food, education, employment etc are prime needs and CSR initiatives should be drawn towards these needs. All successful CSR campaigns will help the brands image and will help in successful and positive boost. This will also help in building brand recognition and in the long run also boost sales.

Some successful CSR Initiatives in rural areas

1. Village health clinics, 2. Free medicines, 3. Doctor sponsorship, 4. Exhibitions on health care and sanitation education and guidance, 5. Rural employment either self absorb, or train to be employable, 6. Skill set training farming, carpentry, masonry, plumbing etc, 7. Education schools set-up, funding, sponsorships, scholarships, adult literacy etc, 8. Basic Amenities Food at subsidy, clean water, bore wells, water tanks etc, 9. Farming education, 10. Equipment education and purchase help, equipment rental, 11. Owning a school, post office, water tank, health clinic and maintaining it, 12. Micro finance education and guidance, 13. Go direct training, guidance and contacts (to buy raw materials and sell directly to consumer, avoiding middlemen)

M Nanda

Page 9

Of view
Effective Marketing Communication & Advertising

It is important to first understand the economics of advertising in this market. An experienced marketing manager would clearly understand the budgets required to tap this market segment. Although BTL activities are most promising in brand canvassing yet the total budget required can get high and timelines can get longer. On the other while using mass media, message clarity and value it engulfs is critical. Nevertheless, I have mentioned various product and brand canvassing forms that are available and can be effectively utilized in this segment 1. Wall painting advertisements one of the oldest and still most popular and effective method. This is a cost effective method and helps in brand recall and 2. Mini Hoardings Tree Boards , Bus Boards, 3. TV & Celebrity Feature 4. Cinema & Radio Advertising 5. Folk Communication Stories, Nautanki, Incidents 6. POP / POS 7. Trial Samples 8. Opinion Leaders 9. Local Brand Ambassadors 10. NGO based communications 11. Village Haats, Wholesale Markets 12. Mobile vans 13. Customer to customer marketing 14. Display and Sell 15. Rural Fairs, Festival Fairs, 16. Finance and installment campaigns

M Nanda

Page 10