In the last article, we read about understanding the mindset of rural consumers and getting a dedicated task force as the steps the next steps in the evolution of an effective rural strategy. ‘Ensuring availability’ is the next step to succeed in rural markets.
In most of the reports on rural marketing, you will read that the biggest challenge in rural India is distribution. The humongous task of physically reaching your product to 6,00,000 plus villages; located in every nook and corner of the country, and thousands of them without motorable roads.
However, distribution is not as much a nightmare as it is made out to be. Looking at the present goals of marketing companies in rural India, many pundits on rural marketing will bear me out. We all know that sachet packs of well-known brands are available in the smallest of retail outlets and in the remotest of villages. How has this come about? Not because the companies have a distribution network reaching all such villages. It happens because of the aspirations raised by television commercials, which the rural consumer has access to directly or indirectly, making him or her demand particular brands from the local shopkeeper. In turn, the shopkeeper buys the required quantities from the nearest feeder markets, which he or she visits regularly for replenishing supplies.
This means that if initially you ensure distribution of FMCG products to feeder markets which are located in towns/villages with 10,000 to 15,000 people, you would have taken the first step in reaching your brand to the rural folks. Such towns have busy shopping areas with a number of groceries and provision stores stocking a variety of brands with multiple SKUs. Such towns are frequented by people from nearby villages for daily necessities.
Similarly, studies indicate that a rural consumer prefers to shop for his durables like TV, automobiles, appliances etc. in the nearest big town or city. The rural consumer firmly believes that he/she will get a better choice of shops, brands, prices and guarantee for services from such places. If you target taking your distribution chain to towns with population of 50,000 plus, you have done your job of putting your brands within the reach of the rural consumer.
Reaching down the line
Please ensure that you have exhausted the bigger markets before you plan to reach down the line. You must start thinking about the last mile connectivity (like HUL has done with its Project Shakthi or Shakthiman). There is a lot of talk about the importance of small towns with a population of 20,000 and above. There are about 1,900 towns in India with population between 20,000 and 1,00,000 which are growing fast. Such towns with a growing middle class with aspirations akin to urbanites provide good opportunities to marketers for a wide variety of products. This is a fact which marketers should take advantage of.
Please also remember that companies which enter a village with their brands first have the early mover advantage. Their brands get established firmly in the minds of rural folks of the village. During my exploratory visits to the villages in Tamil Nadu for Philips Consumer Electronics Division in 1997, I found whole villages having BPL or Onida or Videocon television sets. (This was much before LG and Samsung had made serious inroads into rural markets). Obviously, these brands were the first to enter the particular villages and gained popularity through word of mouth advertising.
More and more companies are looking at haats/shandies as opportunity areas for selling their brands. Haats offer opportunities for sampling, demonstration, and sale of products to target consumers from several villages at one point; and to that extent makes your marketing effort cost effective. But do please check out whether people who patronise such haats regularly are the kind of people who will buy your brands. If there is a mismatch your efforts would be wasted. There is a difference between the role of haats in states with developed rural areas (Punjab, Haryana, Tamil Nadu) and developing states like Bihar, Orissa etc. Haats are still relevant in developing rural markets and provide a good opportunity to market a wide variety of products. However, in the developed markets Haats are losing their importance because most brands now reach into the village shops.
Rural distribution: New developments
In the last couple of decades, apart from the traditional forms, a number of initiatives aimed at physically reaching the products and services to the rural consumers, have been seen in the marketplace.
The two most talked about initiatives are Project Shakti from HUL and E-Choupal from ITC. Project Shakti has taken the route of self help groups, by appointing identified women (Shakthi Amma) from SHGs as local dealers of HUL products; providing them with suitable micro enterprise opportunity which in turn helped HUL establish last mile connectivity in villages with population less than 2,000. Today, over 49,000 Shakthi Ammas are helping HUL reach its products in remote rural areas.
In the last couple of years HUL is experimenting with another last mile connectivity concept called Project Shaktiman. Under this scheme HUL hires distributors on bicycles who go around identified villages to distribute selected brands of the company. Over 34,000 Shaktimans are operating in the rural markets, today.
ITC’s E-Choupal was a technology based project, started as a supply chain initiative, which has now become an opportunity for providing market channels for not only base inputs but also consumer products and financial services.
For several decades, Eveready battery company for whom rural markets offer the biggest potential, have been using mobile vans, as a distribution and promotional tool to reach rural customers in remote corners of the country. The company has 94 warehouses, 4,000 distributors and 1,000 vans – the largest company-owned rural van distribution system in the country. Recent years have witnessed the emergence of several modern retail initiatives in rural areas. Many of these like ITC’s Choupal Sagar, DSCL Hariyali Kisan Bazar, Godrej Aadhar, Tata Kisan Sansar started as efforts to sell agri-inputs have now started selling other necessities of the rural folks like FMCG products, consumer durables, textiles, furniture, toys, watches, mobile phones etc. Some of them like ITC’s E-Choupal Sagar have incorporated farmer facilitation centres with services such as sourcing, training, soil testing, health clinic, cafeteria etc. All the modern retail formats have moved from one stop agri-input shop to one stop farmer solution shop.
Marketers are also exploring the possibilities of using the following established networks for reaching their products and services to rural folks:
The Public Distribution System: Out of the total 4,76,000 Public Delivery System (PDS), the number located in rural areas is 3,80,000. This is a huge infrastructure base that could be utilised for the distribution of consumer products by marketers.
Post Offices: 1,38,000 out of 1,55,000 post offices in the country are located in rural areas. Post offices traditionally enjoy high credibility with rural folks and are peopled by committed staff. Post offices offer an excellent opportunity for distributing products and services. A few nationalised banks and insurance companies are already using post offices to market their services.
Cooperative Societies: India has the largest network of cooperatives with more than 5,00,000 cooperatives spread across the length and breadth of the country. With 4,398 primary marketing societies and 2,933 Large Multipurpose Primary Marketing Societies (LAMPS), the cooperatives interface closely with the rural masses. Warna Bazaar in Maharashtra and Farmer Service Cooperative Society (FSCS) are some of the cooperative networks which function like mini supermarkets in rural areas.
Petrol Pumps and Extension Counters: Another opportunity area is the location of 60 percent of 12,000 petrol pumps on highways often close to villages. Indian Oil Company’s Kisan Seva Kendra is one such rural initiative by a corporate.
Non Government Organisations (NGOs): A large number of Non-Government Organisations (NGOs) focus on rural development and income generation activities. These NGO’s facilitate reaching the rural masses through ready infrastructure and grassroots level networking. They offer immense scope for tie-ups for marketers looking to penetrate rural markets. Tata Tea’s Gaon Chalo project is a successful example under which Tata Tea joined hands with 12 NGOs to reach interior markets in Uttar Pradesh. As part of the initiative, Tata Tea has entered into arrangements with NGOs to act as their main distributors at the district level, collecting various Tata Tea products on credit and in turn giving them to rural distributors.
Author: RV Rajan, Former Chairman, Anugrah Madison Advertising
(Extracts from the book `Don`t Flirt with Rural marketing` by R.V.Rajan published by Productivity and Quality Publishing Pvt Ltd, Chennai. The next article will feature Sep 7-: Choosing an agency with specific skills in Rural marketing)