Does Collaboration Work in Rural Marketing

The journey has began. More and more companies are cashing in on the opportunity being offered by the rural market. The aim to work, develop and explore the potential the rural markets hold and exercise it correctly benefiting the rural sector has become the USP for big as well as small scale industries in the Country, says Salil Dalal, President, Rurban Division, Pidilite Industries
Does Collaboration Work in Rural Marketing

The Diversity of Rural Marketing Approach
Rural Marketing has quite caught the imagination of Corporate India over the past decade. Recently concluded Rural Marketing Awards Event was a great opportunity to interact with Rural Marketers from diverse industries. In the last century, rural marketing including Agri inputs, FMCG and telecom were mastering their rural marketing efforts. But increasingly consumer durables companies and surprisingly even heavy earth moving and engineering companies are doing amazing work to develop the potential of rural markets in their own way. The trend is clear, more and more companies will penetrate deeper into rural though the approach and maturity of marketing processes will vary.

The definition of Rural itself varies from company to company. While seasoned rural marketing professionals have found search for a common definition of rural market quite futile, the most useful definition for Rural or Bottom of Pyramid Markets could be “The markets where an urban approach ceases to yield satisfactory results and a specifically defined approach is required.” This set of markets will be the Rural / BoP (Bottom Of The Pyramid) markets for that company. It could be less than 1 lac population towns for one company, or less than 10 thousand population for others or even the urban slums for the third. It depends on the consumer category, the maturity of the sales and marketing effort of the specific company, and of course, the ambition.

The reasons why rural is important and different for every individual company, is it range from the enormity of opportunity to improving ease of access, to realisation that rural consumption categories are maturing to mirror urban consumption. Many industries are finding that rural growths are not only higher but more stable, also there is lesser competition and first mover advantage for the early entrant.
In summary, in Rural domain, the definition of Rural, the reason to be in rural and the approach or processes for marketing will differ from company to company.

The Common Challenges
Are there any common challenges in the Rural marketing discipline then? Or any commonality at all that can be leveraged or learning derived from?
Firstly the commonality arises from the fact that even the most seasoned company in rural marketing still experiments a lot. The rural markets are extremely diverse, requiring different approaches, as well as the markets are dynamically changing over a period of time. We are all learning and experimenting.

Secondly, considering the higher cost of reaching rural whether for research or awareness generation or product distribution, there is a constant search for economies for lowered cost or increased scale. We want to do more at lesser cost.

Thirdly, for your target segment, in your geography, for your consumer – the rural youth, woman of the house, a farmer, or student, there is definitely another marketer from a different non-compete industry who has successfully targeted them. Same goes for the craftsman – the mason, carpenter, plumber, or even teacher, who can influence your sales. And for the channel – the retailer, and distributor. Someone, from a non-competing industry is successfully is reaching them and marketing to them. You are not alone.

There is a commonality in this diversity that makes Rural Marketing, which makes collaborative marketing such a great idea.

Pidilite Experience
At Pidilite, a vast range of consumer products is produced which mainly serve five different category of customers. 1) Fevicol Division looks mainly after the carpentry adhesives. 2) Wood and wall finishes division with painters, along with foam and footwear adhesives. 3) CP-Maintenance has Consumer Products for household maintenance. 4) Construction Chemicals works with masonry contractors, and architects. 5) Arts and Fabric care division, students and art professionals including handicraft sector become very important consumption categories. Each of these have different but overlapping channels. Its Ply and Hardware Shops, Paint Shops, Cement and Building material dealers, Grocery and Stationary outlets, industrial supply stores and even Auto repair stores… every shop has a different role to play and a different product range to stock.

While in Urban areas upto 1 lac population, the successful approach has been of focus. Every division develops an expertise on a specific product range with users / influencer’s and develops relations with channel partners. Hence a different set of distributors for each division, catering to specific shops. Different sales teams. Different market development teams. Different P&Ls (profit and loss statement). Every new product segment that built up a critical mass was spun off as a separate vertical, to enable better focus.

However, this approach fails as you approach Rural. The per capita sales for markets below 50k, drop down to less than one-third of those above 50k, even when you consider only markets with direct coverage. Separate distributors for each division are not viable. The separate sales person for each division is an unrealistic ask. In fact, it makes sense for the same person who will reach the remote town to call retailers as well as meet users to generate awareness. Something that is a separate role called market development in Urban.

It makes immense sense to have a separate “Rurban Division” to cater to the entire product range, in towns below 50k population. Combined distributors, combined sales and marketing team, combined P&L.

Of course, the challenges are many. Vast product range means huge training and induction effort, even after simplification. The sales person and distributor need to have dual skills of FMCG style distribution (for Grocery and Stationary stores) and a Key Retailer approach (for Paints, Ply and Building material stores). We need different credit approaches for both types of outlets. Short quick sales calls for FMCG( Fast-Moving Consumer Goods ) outlets and develop relations over a long cup of tea with key retailers.

Imagine a 20-35k population town, would be the smallest town for a Urban TSI who is based out of a district headquarters, or a tier II town. In this case, the distributor will have enough on his hands, and will rarely visit a town which is giving him less than 5% of his sales. This town when transferred to Rurban division across all divisions becomes one of the biggest town for the Rurban TSI allowing him to visit 2-4 days a month, drive meetings with end users, and generate awareness and range sales. Combining divisions gives scale to the distributors. A separate distributor in such a town, not only gives better service in this town, but allows surrounding small villages to be catered to directly through vans or transport.

Rurban division works like a sales, distribution and marketing channel through which different divisions channelise their rural efforts. Divisions provide their marketing programmes, and Rurban division takes decisions on what programmes to put on priority. Complexities of product range, sales policies and promotions are simplified, and focus is to give time to salesperson to spend more time on generating demand.

While a single TSI for entire product range sometimes seems daunting, it actually allows him to focus on what’s important for his territory. At the same time, it solves some problems too. E.g. in Urban areas 3 TSIs from 3 different divisions visit say a paint and hardware store, and there is no unified story or programme possible. In Rurban areas, the shop categories are not that clear. A general store will also sell stationary. A Paint and hardware store will also stock ply and pipes. A common Loyalty programme called Bandhan across categories helps tie up the relationship and gives a single picture. In Urban it requires coordination between different marketing programmes to include in the “user meeting docket” across divisions.

Consumer awareness programmes like Haats, Melas and even product seeding drives benefit from scale as we take multiple products to consumers, together, bringing down cost of reach for each individual division. Distribution Expansion programmes run through third party vans also become viable, as they take products for Stationary, Hardware, Cement and General and kirana into one van / bike and do seeding and demos.
All in all, the Pidilite Experiment with Collaboration between divisions, called Rurban, has been a more than reasonable success.

Collaboration across Companies
Collaboration has worked even amongst companies, but has not been tried enough. For instance, ITC Echoupal and Pidilite work together for reaching Pidilite products to Rural Haats with ITC products and other external brands.

Yet the examples of collaboration between companies are far and few in between. As most heads of Rural marketing agencies told me, the number of reasons for failure of collaboration are many.

•Firstly, why collaborations fail when one partner feels that the other is getting / will get more benefit than him / her. There is lack of agreement at strategic level on cost and benefit alignment.

•Collaborations require both companies to have the same target consumer. E.g. the same shop category, or channel, or the same consumer segment (e.g. housewives in 5k pop villages).

•Even before collaborations start, there is the issue of priority of geography. Both companies need to agree on where to pilot and roll out

Even if all three are fine, there is always the issue of operational decisions which may or may not favour both brands.

While there are many reasons to make such ventures a failure, there is only one reason required to ensure success. That is that the leaders at the top of the organisations are aligned to make it a success.

Collaboration – Possible Models
With many more marketers wanting to go rural, and with costs per reach already higher than urban, and increasing every year, it’s a foregone conclusion that innovative collaboration is the need of the hour. With non-compete companies identified, and common priority markets worked out for starters, its possible to create collaboration amongst Co-partners.

There are multiple models possible.

•Share a Taxi

There are certain marketing programmes that are often used. Like Haats and Melas. Instead of going alone, why not create a brief along with your partnering firm and then approach an agency for a joint programme with agreed metrics. The Agency will give a lesser cost than if it had approached you separately, as it reduces its costs of acquisition of business as well as operational costs of going into the markets. Costs of operationalising on ground could also be rationalised. E.g. Van could be common, driver and supervisor cost is halved. Common Haat stalls.

•Thumb a Ride

There are some companies who are already running excellent scaled up versions of their marketing programmes. E.g. Consumer marketing by large FMCG companies, Farmer marketing by Seeds and fertiliser companies. If you can convince them to take you along and share the cost, it’s a win-win. It works for both of you. The information given helps farmers decide on their crop and to increase yield.

•Car Pool
There are companies who have same target segment, and are strong in certain markets that are complementary to your strong geographies. E.g. You are into Water purifiers, and want to strengthen your programme in another market where a non-compete consumer durables firm operates. A programme of joint promotion, where you run a trade discount on your product to all those dealers who are lead purchasers of the co-partner, and the brand reciprocates by a similar discount in your strong markets. Thus giving you both opportunities to drive traction in weak markets.
This thought can even be extended to sharing distribution, and sharing other go to market costs.

This is different from thumbing a ride. It requires a quid pro quo. Both should have cars and common need.

•Taxi Aggregators (The Latest but a game changing Business Model)
Business models of aggregators like Ola and Uber rely on a simple strategy. They know that there are cabbies out there with spare capacity, who do not know where the customers are. And customers do not know where the cabbies with spare capacities are. They are simply putting these two together. Every Agency who develops a program for a client, who says that it’s too expensive is like a cabbie with spare capacity. They can do little more (take on one more client) and bring cost of operation down. They need to aggregate the demand.

There is an opportunity to create such “media properties” rather than waiting for clients to give a brief. For years, the research firms have been creating syndicated researches which are more cost effective and viable than individual studies. Why not Syndicated Marketing Activities?

Most Rural Marketers insist on owning a car, or hiring a cab. Rising costs will either make you rely more on public transport (move to ATL from BTL funds) which may or may not get you to your rural destination, or will make you take that extra step to find an collaborative alternative outside your organisation, with like minded passengers.

Rural Collaboration can happen! In Sales, promotions, Marketing, Research and even in distribution. It only takes an adventurous marketer to look out for the opportunities away from the beaten path.

Author: Salil Dalal, President, Rurban Division, Pidilite Industries

The Changing Face of Rural India