The great rural goldrush
Friday, August 5, 2005
A COMPANY wanted to market its toothpaste in rural areas. The minty, foaming product didn’t find favour with the paan-/tobacco-chewing populace. Moreover, they questioned, when the company said sweet stuff was supposed to be bad for teeth, why was the paste sweet? The rural communications specialist the company took on did a trial project by getting the same market to sample a version of the toothpaste with less mint, less sugar, less foam and instead of a tube, put it into a box this time to address complaints of wastage. It worked well, but the company chickened out from taking it further as it was chary of the effect on its established brand image.
Thus went another great idea down the drain. This is a typical failing among many others – companies that get into rural marketing often don’t have the spunk, the commitment, the patience, the foresight or the willingness to part with money but think of it as a magic treasure chest that will supply them with the lolly. Well, no show, folks, it takes all this and a lot more doggedness for tangible results, said all those who spoke at a seminar on rural marketing organised by the Rural Marketing Agencies Association of India (RMAAI) and Ad Club Madras.
Rajkumar Jha, National Creative Director, O&M Outreach, who recounted the toothpaste story mentioned above, believes that while marketers may profile people in terms of geography, culture, occupation or community, they all ultimately are consumers. In a presentation on the melting rural-urban divide, he said there is nothing called rural or urban and that consumer behaviour is defined by how people act when they buy.
For many products, the consumer is similar, urban or rural, but it is other factors such as affordability, that change. Also, he pointed out, many rural stereotypes were not true. To illustrate, he said that much of the Hindi that passed for Bhojpuri in many Hindi films is not to be found anywhere except in the film studios of Mumbai. Also, movies that purport to reflect a rural atmosphere, such as Lagaan, make a hash of their attempts in buttressing that – the film had 16 people from the same village wearing dhotis in 11 regional styles; all characters wore an amulet, meant to reinforce rusticity; though it was set in Gujarat, the language used was “spoken nowhere” and homes contained a tulsi plant stand, which was a practice prevalent in the coastal areas of Andhra Pradesh and Orissa, he said.
There were rural consumers in urban areas, like those who came into big cities to find work, and vice versa, Jha said, adding that it was mentality and not locality that mattered. Also, with growing urbanisation, rural consumers were becoming aspirational and companies had to find a way to cater to that while keeping availability, pricing and quality in mind, he said. In this connection, he added that names which were aspirational would work better rather than supposedly pan-Indian names which were mostly Hindi.
He mentioned the need for communication tailored to the experience and expectation of target audiences. In urban areas, for instance, a shampoo may connote bounce and beauty, and a toothpaste may imply confidence and girlfriends but in not so sophisticated markets, marketers are better off being straightforward about the products’ purpose, he said.
He emphasised the need for cost-effective and scalable media activity to inform, educate and create an identity for the brand. Painting walls with an advertisement is common to towns, cities and villages, shop fronts and shutters serve as ad space in all these areas, the Dubai and Singapore shopping festivals were the city equivalents of the village haats (periodic markets), so what’s so rural about all this, he questioned. The difference, he said, lay in creating a unique media mix with content suitable to the target market. “Rural communication is not an ATM,” he said, adding that companies had to invest in it for a better harvest, take stock of mindsets, awareness and familiarity and then go about it rather than have their eye on sales from the very beginning.
In his keynote address, Pradeep Kashyap, Managing Director, MART (Marketing and Research Team), said the rural market presented as many advantages as it did challenges to the marketer.
# Brands rarely vie for attention because a shop in a rural area usually wouldn’t have place for too many SKUs (stock-keeping units)
# They can build a strong rural base without much advertising support (like Chik and Ghadi, the shampoo and detergent brands). This could be due to product design and benefits as well as due to self-sustaining distribution/marketing models
# Expensive brands too can do well – contrary to popular belief, rural consumers believe in value for money and do not buy cheap products (Close up toothpaste, Marie and Tiger biscuits and Clinic shampoo are doing well due to deep distribution)
# Disposable surplus is not low in rural markets because the people there don’t usually pay rent or spend much on food as grain and vegetables are from their own fields/homes. The number of middle-class households (those having annual income of Rs 45,000-2.15 lakh) are almost equal at 15.6 million in rural areas and 16.4 million in urban areas.
# Another opportunity lies in making effective use of the infrastructure: 3.8 lakh public distribution shops, 1.38 lakh post offices, 42,000 haats, 32,000 bank branches, 25,000 melas (exhibitions) and 7,000 mandis (agricultural markets).
The rural market poses challenges of penetration and of increasing rural income, which will lead to market growth. Large-format rural retail stores such as DSCL Hariyali and Warnabazar, as well as IT initiatives like ITC”s e-choupal will help make inroads into rural markets, Kashyap said. As the bottom of the pyramid constantly aspires to more and subsequently earns more, it would make sense for companies to capture this segment and breed brand loyalty which they could capitalise on once the lower segments progressed to the higher reaches of the pyramid.
Corporates need to hire professionals from rural management institutes such as Institute of Rural Management Anand and Xavier Institute of Management, Bhubaneswar, organise rural sensitisation training for managers and explore new distribution models, he said.
Self-sustaining and low-cost distribution and brand building moves came in for much discussion in the seminar. Involving local youth to participate in these ventures was seen as a viable model. Kashyap mentioned Colgate’s experiment involving volunteers trained under the Nehru Yuvak Kendra Sangathan. On behalf of the company, MART hired 500 rural promoters at a stipend of Rs 1,800 per month to promote and distribute its products at haats and other village shops in the vicinity. The margins made on the sales would go to the promoter too. This not only served the purpose of distribution and penetration for the companies but ensured high credibility and good rapport with the local consumers as the promoters were local people. As against a typical rural marketing operation involving vans which cost Rs 3,000 per day, this model cost the company less than Rs 3,000 per month, he said.
R. V. Rajan, Chairman and Managing Director, Anugrah Madison Advertising, said that in his experience, he had found that the database built up by companies in their pilot projects was hardly put to use, an observation other speakers agreed with. While some thought the quality of data was “stupid”, others said companies did not know how to mine the data. Also, the data had a decay period, so the interval between collection and utilisation had to be drastically narrowed, they pointed out.
Rajan also touched upon the issue of measuring the success of a rural marketing initiative. Referring to his agency’s work for Shriram Transport Finance, where lorry drivers aspiring to own vehicles were personally invited to a marketing programme, he said an event’s success should be judged on the quality of the crowd and not on its strength in numbers. A good rural marketing programme had to ensure word-of-mouth publicity was generated, he added.
Another issue discussed with much fervour was the lack of access to knowledge. Institutions offering courses in rural marketing and management were few and far between and in others, the subject was offered as an elective, which assured no one would opt for it, said an aggrieved delegate. He also lamented that management schools were not keen on utilising specialists in rural communication, such as executives of pesticide or fertiliser companies. The issue of creating a demand for rural management courses also came up.
With 742 million people and market in FMCG and durables exceeding the size of the urban market (along with agri-inputs and two-/four-wheelers, the market size is Rs 1.23 lakh crore), it is a potential goldmine corporate India’s citizens are sitting on. Whether the gods will bless them depends on how willing they are to help themselves.
Story found here.
Source: The Hindu Business Line