Dr. Vijay Pithadia
Rural markets in India have become an area that corporate just can’t afford to ignore. Seeing as 69% of India resides in villages, it only makes sense that companies expand their marketing strategies to include rural markets as well. Rural marketing is a logical step for any company wanting to increase its profit margin. It is becoming increasingly essential to understand the concept of rural marketing. Many companies have already envisioned this and have made rural marketing an integral part of their promotion strategies. Promotion of brands in rural markets requires the special measures. Due to the social conditions in these areas a lot of challenges need to be overcome to create an effective marketing strategy. It would be useful to study companies that are already trying to reach out to the rural areas, consider the strategies the use, examine the effectiveness of the strategies and find suggestions that could be helpful. Based on observations it is obvious that rural marketing is inevitable for any company wishing to expand its horizons.
According to the census of India, villages with clear surveyed boundaries not having a municipality, corporation or board, with density of population not more than 400sq. km and with at least 75% of the male working population engaged in agriculture and allied activities would qualify as rural. According to this definition there are 6, 38,000 villages in the country. Out of these, only 0.5% has a population above 10,000 and 2% have a population between 5,000 and 10,000. Around 50% have a population less than 200. For FMCG and consumer durable companies, any territory that has more than 20,000 and 50,000 population respectively is a rural market. For them it is the class II and III towns that are rural. According to the census of India 2001, there are more than 4,000 towns in the country. It has classified them into six categories-around 400 class-I towns with one lakh and above population (these are further classified into 35 metros and rest non-metros), 498 class-II towns with 50,000-99,999 population, 1,368 class-III towns with 20,000-50,000 population, 1,560 class-IV towns with 10,000-19,999 population. It is mainly the class-II and III towns that marketer's term as rural and that partly explains their enthusiasm about the so-called "immense potential" of rural India.
Rural marketing involves reaching customers, understanding their wants, supply of goods and services and eventually satisfying the consumers which leads to more sales.
A special marketing strategy emerged known as rural marketing because on account of green revolution the rural areas consuming a large quantity of industrial and urban manufactured products.
The most common impression is that only agricultural inputs like seeds, pesticides, fertilizers, cattle feed and machinery have a potential for growth in the rural market. But now there is a growing market for consumer goods as well now.
Rural Marketing: Challenges
Success of a brand in Indian rural market is very unpredictable. It has been difficult to measure the rural market. Brands which should have been successful have failed miserably. People attribute rural market success to luck. These are the reasons due to which it is not easy to enter into rural market and take a sizeable share of the market.
1. pitiable literacy rates
2. Communication problems
3. Low per capita income and poor standard of living
4. Banking and credit problems
5. Seasonal demand
6. Non availability of shops
7. cynical consumers
8. Cultural gap between urban based marketers and rural consumers
9. Wholesale and dealer network problems
10. Market research problems
11. highly dispersed and thinly populated markets
Indian consumers are poor but not backward. The future lies with those companies who see the poor as their customers. Effective rural marketing is one of the solutions to reach the BOP segment.
Rural Marketing: Strategies
Considering the environment in which the rural market operates and other related problems, it is possible to evolve effective strategies for rural marketing. The strategies discussed here though not universally applicable depend upon product characteristics, the targeted segment of the rural market, the choice of the rural area and its economic condition. The following section deals with how MNC’s and local companies have successfully established themselves in the rural market.
The rural customer is very conscious about getting value for money. Low price high quality and multiple uses are the basic principles.
1. TATA Nano
TATA Motors launched the low cost Nano. It is a low end rural car and so creates a new segment of people of buying a car.
Strategy – A need to create a safe journey of transporting a family.
2. HUL pure it
HUL launched an innovative product pure it a water purifier. Pure it is available an economical price for the rural consumer as there is no clean drinking water in villages.
Strategy – Corporate social responsibility that means to come up with business models to cater to the BOP.
3. LG Sampoorna TV
LG electronics launched a customized TV. An important aspect of customization to make a TV set which can appeal to local needs, it facilitated on screen display in dialect language like Tamil, Hindi and Bengali selling one lakh sets in the very first year.
Strategy – Thinking locally and succeeding globally.
4. HUL Breeze 2 – in – 1
HUL developed a combined soap and shampoo that was cost effective and also less harsh on hair than any other soap.
Strategy – Value added product would create a loyal customer.
- Innovative product designs and packaging
- Be careful of product duplicates and using security features
- Avoid the marketing shortsightedness, which means the customer will have the same need but will want the new product.
- Application of value engineering which means costly metal being replaced by cheaper plastic. This practice does not let go the functional competence of a product but lower the product price.
v Price Strategy
Rural markets are low price high volume growth markets. The rural markets being tremendously price sensitive in contrast to urban markets, reaching at a lower cost is a major challenge.
1. Mc Donald’s
The Indian customers look for high value for every rupee spent so Mc Donald’s has been high lightening the happy price menu Rs. 20 to bind entry barriers request to Indian customers.
Strategy – High lightening the value being delivered for a small price
Nirma’s yellow detergent powder is the mass market fact. Nirma’s low price policy has penetrated into the deepest rural markets in India.
Strategy – Value for money
3. Britannia Tiger biscuits
Britannia also tasted success because of small reasonable packaging of tiger biscuits specially designed for the rural market and it helps the poor become consumers.
Strategy – Low price strategy has begun to appeal the target segment.
4. Marico Parachute
Marico launched parachute mini a bottle shaped small pack being sold at an MRP of Rs. 1, 20ml parachute at Rs 5.
Strategy – Consumers to try out the products with very little risk
5. Cavinkare’s chick shampoo
Cavinkare launched chick in 50 paise sachets. Cavinkare targeted rural and small town customers who used soap to wash their hair; it became the market leader in the rural markets with over 50% market share. It created a sachet revolution.
Strategy – Low unit price packs.
6. Nestle Maggie
Nestlé’s rural initiatives have largely been based on price led initiatives. Brand such as magi noodles are priced at Rs. 5 it helped Nestle in making in roads in to rural market.
Strategy – Small pack lower price
- Effective total quality management is a help to low price high quality product
- Using value based pricing strategy that means fixing of price starting with customer and ends with the product.
v Place Strategy
Planning physical distribution, managing logistics and controlling marketing communication are major impediments for entering rural markets. The distribution structure involves stock points in feeder towns to service these retail outlets at the village levels.
Hindustan unilever is the pioneer and a large player in India’s FMCG market. HUL is the first company to step into the Indian rural marketing. HUL launched operation stream line distributed HUL’s products in villages using unusual transport like bullock carts tractors and cycles. HUL’s products touch the lives of two out of every three Indians.
Strategy – HUL product can reach a place where you cannot reach.
Coca –cola is a pioneer company in distribution network. Coca cola has evolved in hub and spoke distribution model for effectively reaching and serving rural markets. Coca cola provides low cost ice boxes to the small distributors in rural areas because of the lack of electricity.
Strategy – Coke is available where even water is not available
- Rural shopping malls act as a two way supply chain. While selling goods to farmers and also to buy their farm produce.
- The best solution to enter into the rural markets is that the company should start the production in rural area. Then only it becomes easy to allocate and also to increase the local spirit.
- To make use of wholesalers and retailers to go through every nook and corner of the rural market.
v Promotion Strategy
The test is to create communication that would help the rural consumer to be acquainted with colors, brands, visuals and logos. To effectively strike the rural markets a brand must relate with their culture and personality.
1. HUL Lifebuoy
HUL launched a direct rural contact program called Lifebuoy Swasthya Chetana movement which made sales go up by 20% in 17000 villages.
Strategy – Lifebuoy has always been placed on the platform of health and hygiene
2. Idea Cellular
Idea’s forceful promotion campaigns what an idea sirjee ad creates a real rural feel through strong advertisement
Strategy – Spreading a social message that says each one has aimed at changing someone’s life for better.
3. MRF Bullock Cart Tyres
MRF introduced nylon tyres for bullock carts with real life pahalwans. MRF used the communication through wall paintings in villages in association with the muscleman symbol. The result was that the MRF bullock cart tyres become the brand leader in this segment.
Strategy – Rural consumers understand symbols better and look for endorsement by icons.
4. Dabur Chyavanprash
Dabur Chyavanprash was able to be in touch with its core benefits of energy and immunity by involving locals in a game of bowling wherein the nine pins symbolizing various diseases were demolished by a Chyavanprash ball
Strategy – For a brand to succeed in India its communication and image must respect Indian values and serve to defend them.
5. Coco – cola
Coco-cola ad thanda matlab coca cola caught attention of the rural consumers with Amir Khan playing with village bells.
Strategy: Using a famous celebrity in a rural background
- To capture the local spirit in communication using the local language.
- To be careful of retail margins or else they encourage local brands.
- Patience is the most important thing as the rural consumers are not in a hurry and you can take your time in communicating the message.
- To develop a website that will help to get a feedback from satisfied consumers and also display the total amount saved by consumers with the product image.
A quiet revolution is sweeping the Indian countryside. It has forced marketing career kids to go rural. The marketing battle fields have shifted from the cities to the villages but in this battle both consumers and companies are winners it is a win win situation. Go rural seem to be the latest slogan. Stop depending on research number. Go and meet up with a million villages and ask what they want. Create the products and services that are appropriate to their needs. Thus, it is quite clear value for money help companies to convert luxuries in to necessities for the Indian rural consumers.
- Dogra, “Rural Marketing”, Tata McGraw Hill Education, 2007.
- Awadhesh Kumar Singh, “Rural Marketing: Indian Perspective, New Age International, 2007.
- Rajagopal, “Indian Rural Marketing”, Rawat Publications, 1993.
- K.S. Habeeb-Ur-Rahman, “Rural Marketing in India, Himalaya Publishing House, Mumbai, 2011, 1st edition.
- R. Krishnamoorthy, “Introduction to Rural Marketing”, Himalaya Publishing House, Mumbai, 2011, 3rd revised edition.