With the Modi Government at the Centre, there is a buoyancy seen in the market. The expectation of ‘achche din’ extends beyond urban areas, with the rural hinterlands also expecting positive fallout of the progressive outlook.
The growing clout of rural India in purchasing power is not new news. It’s a fact that is well-recognised amongst marketers. For starters, here’s what Harish Manwani, Chairman, Hindustan Unilever said at their AGM in 2012: “By 2025, the Indian rural market is expected to grow more than tenfold.”
A study by Kinetic in 2012, Moving World India, estimated the size of India’s rural market at nearly Rs 25,162 billion. But we are talking of 70% rural population of the total, 56% of which contributes to overall consumption. During the 2009-10 to 2011-12 period, per capita monthly rural consumption grew by 19% against urban India’s 17% in the same period, according to a report by CRISIL based on data from the National Sample Survey Organisation (NSSO).
Much of these numbers are and will be the gradual result of several government schemes for rural development. Dalveer Singh, Leader of Group M’s Dialogue Factory lists some of these schemes: “The National Rural Employment Guarantee Scheme (NREGS) has led to more income at the grass roots level leading to less migration of the working class. The Pradhan Mantri Gram Sadak Yojana has taken care of several dark markets which were earlier difficult to reach.” With a new, pro-development Prime Minister now, we are hoping for even better numbers than Manwani has predicted.
Keshav Chandorkar, National Head-Rural, psLIVE takes a longer shot by saying, “The current size of FMCG in the rural market is around Rs 88,000 crore and is expected to grow to Rs 106,000 crore by the end of 2040.”
Who is this changing consumer?
With an increase in disposable income of the rural consumer, there has been an increasing want for better products. Pravin Kulkarni, General Manager-Marketing, Parle Products reveals, “We are seeing a demand for premium categories (in rural markets) which shows that aspiration levels have gone up. People who migrate to urban areas return with brand awareness.”
In fact, a 2011-12 study by the Boston Consulting Group found that consumers from Tier-4 towns are spending more on premium products as against their urban peers. These consumers moved up the value chain during 37% purchase occasions as against 31% in metros. Sanjiv Puri, Divisional Chief Executive, ITD, ITC Limited notes, “Interestingly, we are seeing robust growth across categories from skin care to snacks.”
Then there is the tale of the purchasing power, which is what retail sectors of rising economies always cheer for, as it has a direct connection to independent buying decisions. Ankit Patidar, Vice President-Marketing, Shakti Pumps explains, “When purchasing power increases, a farmer is not influenced by the money lenders or shop keepers and can decide what he wants to buy.”
Talking to the rural consumer
The rural consumer’s wants may be in line with those of the urban consumer, but ways to reach out to the rural consumer need to be customized depending on region, language, culture and occupation; and every marketer worth his salt would know how diverse two Indians can be even if they’re a few kilometres apart.
Dalveer Singh explains how a message about the same product varies as the end consumer varies. “When I talk to a sarpanch, the message is different from what is received by a worker or a school teacher.” Another challenge that he mentions is breaking the mindset walls.
Sometimes, tested direct marketing techniques of cities fall flat in the interiors. Chandorkar of psLIVE says, “We need to explain to them why a particular product is better than the other option available in the market. They may be aware of a product, but most likely aren’t aware of how to use it. From around 2001 to 2005, although Fair & Lovely had the largest market-share in its category, HUL realized that people didn’t know how to use it. They would apply it only a day before an important event! Then an entire campaign was designed to communicate that you don’t get results in a day, but need to use it for four to five weeks.”
The traditional mix, therefore, doesn’t always work for the rural market, feels Dwivedi of the Dainik Bhaskar Group. “There is a certain equation that metro media planners tend to follow wherein they consider Television as the largest visible medium followed by Radio and Print and then probably Digital. In the case of rural, these patterns slightly differ. While Television continues to remain a big influencer, the spends change in the favour of Print and Radio once you go rural.”
Puri of ITC adds, “Experience has shown that interactive activities in haats, melas and branded vans enable a high level of engagement with the rural audience.”