The size of the dividend from rural markets is growing bigger than many businesses initially expected. More and more companies are tapping these far-flung markets than at any other time in the history and for good reason. Thanks to the better infrastructure, growing rural incomes and customer aspirations. The confluence of these forces is changing the rules of the game.
As the rural becomes an attractive opportunity, companies are expanding to these areas across India to tap a new breed of customer who is getting richer and willing to shell out money on different commodities. However, despite improvements in rural business environment, not all the companies have tasted success. The main challenge exists in establishing effective sales and distribution network in rural areas.
Clearly, just ‘being there’ will not serve the purpose – companies now need to adopt transformational strategies to win over the rural customer.
Is rural-urban divide blurring?
Some marketers believe that the rural-urban divide is blurring and the traditional idea of rural marketing (haats, mobile vans, etc) is no longer applicable. They say that the rising income levels, exposure to media, growing aspirations, e-commerce penetration, among others have changed the face of rural, hence the era of specialists in rural markets should come to an end.
This may be true if you drive through more developed states with far better infrastructure, road connectivity, better transport and higher incomes through non-agricultural jobs.
While many others carry the view that rural includes semi-urban or peri-urban and for them rural is showing far better results than urban due to less competition, reasonable rentals and low cost of operations.
Let’s now look at the flip side too. There is also an extremely underdeveloped rural India with low GDP, poor infrastructure – but have highly-aspired consumer segment. Let’s dig deeper. This under-developed rural has 55 percent more income and 64 percent more expenditure than developed rural. Lots of gains, lots of pain, not everyone’s cup of tea!
Implications for marketers
So, it is widely understood that the rising aspiration of rural consumers is at par with their urban counterparts. But are the players capturing rural aware of the nuances of this market and that consumer are demanding a different treatment altogether.
Here are the changing rules which marketers need to focus on while designing the marketing and communication strategy for rural consumers.
Rural markets demand patience
Many corporates who want to go rural are not willing to invest in the long-term. Rural marketing is an expensive affair and unless you are willing to invest in the long-run you can’t successfully build your brand.
George Angelo, executive director – sales, Dabur India, says, “Marketing cost in rural is almost double when compared to urban markets. Marketers should first reasonably calculate their expected per capita sales and then should work backward.”
He reveals how the FMCG companies addressed the rural opportunity. He further claims that 45 percent of Dabur’s sales come from rural markets while the industry average is 34 percent.
Opinion leader matters a lot
“Any communication that is routed through opinion leaders gets transmitted fast,” believes Ashwani Arora, Sr VP – Research, Market Xcel Data Matrix. Hence, marketers should look for endorsement by such leaders,” he adds. For instance, Dabur turned to opinion leaders, such as healthcare workers, to generate awareness and increase the penetration in categories such as Chywanprash and baby oil.
Look beyond farmers
Marketers are still confined to view the rural consumer as either a farmer or an agricultural laborer, which restricts their target audience. In fact, there are other groups of consumers with different needs and behavior, having significant purchasing power, says Arora.
Digital marketing to engage youth
The digital revolution has gripped the nation with almost every person having mobile phone or a smartphone. With 520 million smartphone users by 2020 and 1,145 million broadband users, digital marketing will be an effective medium to connect with customers. This will help marketers engage with the customers about their products and services, collect the feedback and provide the opportunity to identify their behaviour and innovate accordingly.
While non-traditional media including mobile vans, events and road shows are still relevant, digital platforms will be the nucleus of communication.
Rural is not a second-rung opportunity
Companies should not look down rural as a second preferred market after the urban market is saturated. They should instead look at them as primary markets, suggests Harish Bijoor, CEO, Harish Bijoor Consults. Marketers who wish to tap the rural segment should first define rural market, understand the consumer, innovate, and price the product effectively.
Stop believing in the myths of rural marketing
Marketers should change their perception about rural and they should stop believing in the myths of marketing that many marketers have been making us believe over all these decades.
"Rural is not a large homogenous mass of popular presumptions, one size doesn’t fit all," says Gurpreet Wasi, Principal Consultant, IMRB. While marketers assert that engaging rural consumers at haats and melas remain one of the easiest ways to tap rural consumers, but with the changing rural scenario many people actually don’t visit such places, reveals Wasi. “The traditional approach of tapping rural consumer is not enough,” she says. While per capita income in rural India growing faster than it is in urban India, the product penetration remains low – offers scope for marketers.
Rural has changed dramatically, and new rural marketing is far more complex and exciting than urban.
Word-of-mouth marketing matters
Since most brands have a relatively short history in rural India, word-of-mouth plays a much stronger role in acquiring rural customers than it does in urban markets.
Cookie cutter model will not work
The basic strategy to tap the rural customer demands a different approach altogether. Alpana Parida, president, DY Works states that there are fundamental differences between urban and rural consumer. Marketers need to identify them to customise their strategy for these markets.
“Rural and urban consumer is not same with a time lag. The drivers, aspirations, motivations, preferences are entirely different,” she says.
She shares the example of Chinese goods which have succeeded in rural market. “Rural consumer needs innovative products that are specific to them. Hence, marketers can’t copy-paste their urban marketing strategies for rural customer,” she shares.
Industry has to design business models which will deliver inclusive growth; creates opportunities for manufacturing and service sectors. For instance, contract farming and farm-to-town distribution models have benefitted many corporates. Programmes like HUL’s e-Shakti and ITC’s e-Chaupal that have been designed to empower rural women, educate farmers have gained traction in rural.
Clearly, rural markets – with almost half of upper income Indians – present a big opportunity for marketers. When a large mass of a whopping 180 million households starts moving, even though at gradual speed, it makes a big opportunity for marketers.
Marketers need to revise their rural marketing strategy to sustain for long-run in the hinterland.