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The rural promise

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The rural promise

How does a manager deal with a market where Iodex is used not only to ease sore muscles but also as sandwich filling, Horlicks is fed to buffaloes and hair dye is used to paint them? Believe it or not, these are only some of the innovative uses products are put to in rural markets, which are now appearing on the radar of corporates that find little left to sell in the urban ones.

This and more was the subject of the seminar on `Challenges of Rural Marketing in the 21st Century' organised by The Rural Network, an alliance of rural marketing (RM) organisations, in Bangalore last week. It had long been the lament of R. V. Rajan, Chairman and Managing Director, Anugrah Madison Advertising Pvt Ltd, one of the partners in the Network, that companies paid only lip service to RM. But this year he is upbeat. There are more companies expressing interest, more firms dedicating teams and some money to the rural markets and more open-mindedness about re-learning marketing lessons. Though large-scale RM is a long way away, a beginning has been made.

The new rural

One issue that the seminar threw up was that rural India was not so rural after all. At least, many of the clichés one associates with `rural' — largely poor, illiterate, gullible, agrarian — don't hold good anymore. While 75 per cent of the rural population is engaged in agriculture and contributes half of the total rural income, the remaining 25 per cent non-farm rural sector contributes the other half, which makes it richer. This also means that the monsoon doesn't exert the same kind of influence it used to on buying habits earlier. There are the developed rural areas, the developing rural and the under-developed rural.

A potential goldmine

MART, the specialist rural marketing and rural development consultancy has found that 53 per cent of FMCG sales lie in the rural areas, as do 59 per cent of consumer durable sales, said its head Pradeep Kashyap at the seminar. Of two million BSNL mobile connections, 50 per cent went to small towns and villages, of 20 million Rediffmail subscriptions, 60 per cent came from small towns, so did half the transactions on Rediff's shopping site.

According to a study by Chennai-based Francis Kanoi Marketing Planning Services Pvt Ltd, the rural market for FMCG is Rs 65,000 crore, for durables Rs 5,000 crore, for tractors and agri-inputs Rs 45,000 crore and two- and four-wheelers, Rs 8,000 crore. In total, a whopping Rs 1,23,000 crore. This could be doubled if corporates understood the rural buying behaviour and got their distribution and pricing right, he said.

Rural India buys small packs, as they are perceived as value for money. There is brand stickiness, where a consumer buys a brand out of habit and not really by choice. Brands rarely fight for market share, they just have to be visible in the right place. Even expensive brands, such as Close-Up, Marie biscuits and Clinic shampoo are doing well because of deep distribution, pointed out Kashyap. And many brands are doing well without much advertising support — Ghadi, a big detergent brand in North India, is an example.

Mostly myth

Companies harbour a lot of myths too about the rural market. It is a diverse population spread across a vast country, speaking different languages, with different levels of literacy (and now, new literacy, conferred by TV) and composed of big landlords, traders, small farmers, marginal farmers, labourers and artisans.

Disposable income is not low. Per capita annual income in rural areas is Rs 9,481; in urban, Rs 19,407, but remember, in the rural areas, hardly anybody pays home rent, spends money on drinking water or on primary health care, so the disposable surplus is really high, said Kashyap. And the number of middle-class households is 15.6 million in rural areas, and 16.4 million in urban, which is not such a big difference.

It's also not true that individuals decide about purchases, it's a collective decision though the influencer, decision-maker, buyer are often different, so marketers would do well to address themselves to several levels.

Media reach

According to N. D. Badrinath, Vice-President, TNS India, rural India can be a "happening" place. Why wouldn't it, if a rich farmer in Karnataka's Mandya district buys a vacuum cleaner just because one of his peers did, or a trucker in Kolar district found it necessary to explain the finer points of F1 racing to his friends? Or if a sugar co-operative in Maharashtra's Kolhapur district asked Hero, TVS and Kinetic to stage a competitive demonstration so that they could order 400 mopeds?

Stating that rural India was seen as a media-dark place, he said the yardsticks applied to study urban India could provide pointers to rural India too: demographic profiles in the readership survey data, estimates of number of readers of different publications for each demographic segment, audience size for TV channels, radio stations, cinemas, haats, melas, number of users of FMCG or consumer durables, where buyers are concentrated, where they are not, where they buy, and so on.

To home in on pockets of wealth, he advocated the benefits of identifying and studying socio-cultural regions. Talk to the rural yuppie, he said, explaining that males in the 15-34 age group in SEC R1 and R2 are the decision makers of the next few years in households with high purchasing power. They are mobile and exposed to the winds of change from outside their villages.

The seminar also recommended exploiting the existing infrastructure in villages to the hilt for brand building: 70 per cent of R1, R2 and R3 can be reached through mass media, post offices and postal stationery could be used, so could the weekly melas, mandis and haats; marketers could explore tie-ups with the public distribution system and bank branches, direct mail could be sent to opinion leaders, and word-of-mouth publicity could be built through local service providers such as retailers, barbers and tea-shop and dhaba owners.

Many speakers pointed out that statistics showed rural India was moving rapidly from poverty to prosperity. In this context, marketing consultant Rama Bijapurkar said rural India was morphing and leapfrogging beyond agriculture and that marketers need to adopt new mental models to view these audiences. There is a mixture of many stages of development, so a "zero-base, macro-consumer look at new rural India" was necessary.

Needs blood and sweat

Kartik Raina, Chief Operating Officer of Dalmia Consumer Care, which successfully marketed its Vardaan tobacco-free bidis in rural areas, said the problem was that "many people who worked in rural marketing actually worked!" RM is all about execution, not ideas. Sadly, all RM programmes begin and end with cost, with no talk of the results, he said, adding that RM was all about building a business. RM is a marriage, not a flirtation; execution time has to be 80 per cent, idea time 20 per cent, if you don't have the guts, don't do it, have the skin of an elephant and the heart of an evangelist, was his advice.

The empowerment mantra

TTK Prestige's K. G. George, head of the retail business, spoke about how the company achieved some success in retrieving market share in the South by tying up with women's self-help groups and NGOs in Andhra Pradesh to market its pressure cookers. The company is still perfecting a replicable model to adopt in other States whereby it can empower the rural people by providing them with some money and itself achieve its business goals. A cooker brand exclusively for the rural areas is on the drawing board.

On the role of IT in RM, J. Ravindra Kumar, head of research in ITC's International Business Division, spoke of how the eChoupal initiative gave farmers the power of scale and better bargaining power when it came to selling their produce and buying agri-inputs. It de-linked information from transaction and bestowed the freedom of choice on the farmers, he said, adding that it led to higher income from higher yields, better quality and lower transaction costs.

Distribution dilemma

Distribution, considered a great challenge, posed a big problem, said V. Swaminathan, Managing Director, Suhita Ethnic Marketing Services. When it comes to demand, there is a big mismatch between the rural consumer's expectations and the viability of a local retail point. In the supply aspect, company policy conflicts with making a product available closer to a rural consumer. It was cheaper for a rural/semi-urban consumer to buy durables in a city because the margins given to a big retailer there were better than those given to a distributor closer to home, he said. Also, converting a big dealer into a distributor was fraught with problems as the former was tuned to improving volumes and getting incentives on that basis whereas they should be based on parameters such as reach and distribution to new outlets and markets, he said.

Urban-rural divide

On communicating to the rural consumer, brand domain specialist and marketing expert Harish Bijoor said advertising was easy, but that RM was "donkey's work." It was unfair that the urban-educated community of marketing managers ruled the rural majority in marketing terms; it is "urban hegemony." He also questioned the utility of market research — how would extrapolation of results from a small study work in a country as diverse as India?

Communication gaps

Anugrah's Rajan emphasised the need for a specific, rural communication programme. RM is not just van operations, he said, adding that an integrated RM programme using mass media and below-the-line activities was necessary. He told Catalyst that though an RM programme did not cost much, corporates' compulsions of having to report profits every quarter put paid to any such good intentions. Rural audiences did not understand fast-paced, gimmicky, hi-tech commercials; regional brands were much more savvy at marketing to rural audiences — their ads reflected the rural ethos and corporates would do well to take a leaf out of their book, he said. He, however, acknowledged that some companies, such as Coca-Cola had got it right in its Thanda Matlab Coca-Cola ads — they were a hit with both the rural and urban markets.

R. A. Patankar, Managing Director of Sampark Marketing and Advertising Solutions, another partner in the Rural Network, who specialises in rural advertising and event management, said that folk song-and-dance forms worked well though there was a gradual shift in the way messages were being communicated.

The seminar also took note of other problems that the rural markets faced: the lack of electricity which made it difficult for marketer to build brands or sell consumer durables, the prevalence of spurious brands, the maturity of rural consumers in certain areas which rendered folk forms or specific rural communication anachronistic, a reliable method to evaluate the impact of on-ground brand building events, the ostensible success of such events when they take place which, however, do not translate into sales in the rural outlets but in towns.

The mood, however, was optimistic. The number of delegates outnumbered expectations, and didn't dwindle as the day wore on. A number of corporates, such as Glaxo SmithKline Consumer Healthcare, are eyeing rural markets and negotiating RM programmes. Commitment may take a while but there is the growing realisation, dinned in by all the speakers, that one should be in it for the long haul. It will be interesting to watch the strategies city-slick, urban corporate India adopts to endear itself to rural markets in its quest for greater fortunes.

Network at work

For the Rural Network, the first ever but "informal alliance" of the country's leading rural market organisations, it's time to pat itself on the back. It is getting noticed, as its growing involvement with FICCI shows — last year, the trade body organised a conference on rural marketing in association with it. Its plans for a mega conference this year have crystallised into a Rural Marketing Summit at Mumbai being organised by FICCI this October, where the Network is being billed as the knowledge partner. And the four partners have seen growing demand for advice and training in rural marketing, and are scenting greater business opportunities too.

Says R. V. Rajan, Chairman and Managing Director, Anugrah Madison Advertising Service Pvt Ltd, a partner, "Our second year of existence (2003) saw each partner getting referrals through the others. This proves we've made a dent, and also that corporates are taking rural marketing more seriously than before." The other partners are the Delhi-based MART (headed by Pradeep Kashyap), Pune-based Rural Relations (Pradeep Lokhande) and Mumbai-based Sampark (by R. A. Patankar).

The basic objective of the Rural Network is to get clients who are looking for a national strategy in rural marketing and provide help in executing it across different regions with local expertise. Anugrah, based in Chennai, specialises in rural strategy and communication and has the skills to conduct campaigns in several languages. MART's strengths are rural research, strategy and distribution. It has to its credit many rural marketing projects, including Hindustan Lever's Project Shakti. Rural Relations' forte is rural customer relations management and it has a huge database of opinion leaders in six States. Sampark is engaged in managing rural van operations and other events. In the last two years, the partners have handled assignments from Tata Shaktee (roofing), Monsanto, Colgate-Palmolive and Coromandel Fertilisers.

The Network is also planning an association of firms involved with rural marketing, on the lines of the Advertising Agencies Association of India. These could be advertising agencies, event management companies and vendors of various services. A directory of all these people, including van operators, folk artistes, wall painters and such who can be used to promote products in rural areas, is on the agenda.

Research is a priority. The Network, which has been conducting small research studies, would like to take up big projects. As a pioneer in the field, it is also involved in educating clients and management students about rural marketing. The seminars and workshops it organises are part of this effort. There have been disappointments, too. The Network's plans to start courses in rural marketing in Chennai didn't take off due to poor demand but over time, and with the money the partners salt away whenever they can, it plans to offer a larger course with a diploma and the promise of placement. If corporates took up rural marketing programmes on a large scale, the Network as a unified entity would probably have had more business, composed as it is of organisations from various parts of the country, says Rajan. However, Kashyap of MART does not see it as a disappointment. "It is not a concern that business for the Network must grow right away. The important task is to create awareness of the need for a special rural marketing effort among corporates. Business will follow in its own course," he says.


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