Rural Marketing Article

Network, an alliance of rural marketing (ARM) organizations, In Bangor last week. It had long been the lament of R. V.

Raja, Chairman and Managing Director, Anagram Madison Advertising Pat Ltd, one of the partners in the Network, that companies paid only lip service to ARM. But this year he is upbeat. There are more companies expressing Interest, more firms dedicating teams and some money to the rural markets and more open-mindedness about re-learning marketing lessons. Though large-scale ARM is a long way away, a beginning has been made.

The new ruralOne issue that the seminar threw up was that rural India was not so rural after all. At least, many of the clichés one associates with ' rural' -? largely poor, illiterate, gullible, agrarian -? don't hold good anymore. While 75 per cent of the rural population Is engaged In agriculture and contributes half of the total rural Income, the remaining 25 per cent non-farm rural sector contributes the other half, which makes it richer. This also means that the monsoon doesn't exert the same kind of Influence It used to on buying habits earlier.

There are the developed rural areas, the evildoing rural and the under-developed rural. A potential gold mine MART, the specialist rural marketing and rural development consultancy has found that 53 per cent of FMC sales lie in the rural areas, as do 59 per cent of consumer durable sales, said its head Paraded Shape at the seminar. Of two million BASS mobile connections, 50 per cent went to small towns and villages, of 20 million Redialing subscriptions, 60 per cent came from small towns, so did half the transactions on Reedits shopping site.According to a study by Achaean-based Francis Kane' Marketing Planning Services Ltd, the rural market for FMC is RSI 5,000 core, for durables RSI 5,000 core, for tractors and agar-lineups RSI 45,000 core and two- and four-wheelers, RSI 8,000 core. In total, a whopping RSI core. This could be doubled if corporate understood the rural buying behavior and got their distribution and pricing right, he said.

Rural India buys small packs, as they are perceived as value for money. There is brand stickiness, where a consumer buys a brand out of habit and not really by choice.Brands rarely fight for market share, they just have to be visible in the right place. Even expensive brands, such as Close-up, pointed out Shape.

And many brands are doing well without much advertising support -? Shade, a big detergent brand in North India, is an example. Mostly myth Companies harbor a lot of myths too about the rural market. It is a diverse population spread across a vast country, speaking different languages, with different levels of literacy (and now, new literacy, conferred by TV) and composed of big landlords, traders, small farmers, marginal farmers, laborers and artisans. Disposable income is not low.Per capita annual income in rural areas is RSI 9,481; in urban, RSI 19,407, but remember, in the rural areas, hardly anybody pays home rent, ponds money on drinking water or on primary health care, so the disposable surplus is really high, said Shape. And the number of middle-class households is 15.

6 million in rural areas, and 16. 4 million in urban, which is not such a big difference. It's also not true that individuals decide about purchases, it's a collective decision though the influencer, decision-maker, buyer are often different, so marketers would do well to address themselves to several levels.Media reach According to N. D.

Bathing, Vice-President, TENS India, rural India can be a "happening" place. Why wouldn't it, if a rich farmer in Cornstalk's Amanda district buys a vacuum cleaner Just because one of his peers did, or a trucker in Koala district found it necessary to explain the finer points of Fl racing to his friends? Or if a sugar co-operative in Maharajah's Oklahoma district asked Hero, TV'S and Kinetic to stage a competitive demonstration so that they could order 400 mopeds?Stating that rural India was seen as a media-dark place, he said the yardsticks applied to study urban India could provide pointers to rural India too: demographic profiles in the dervish survey data, estimates of number of readers of different publications for each demographic segment, audience size for TV channels, radio stations, cinemas, hats, meals, number of users of FMC or consumer durables, where buyers are concentrated, where they are not, where they buy, and so on.To home in on pockets of wealth, he advocated the benefits of identifying and studying socio-cultural regions. Talk to the rural yuppie, he said, explaining that males in the 15-34 age group in SEC RI and RE are the decision makers of the next few years in households with high purchasing power. They are mobile and exposed to the winds of change from outside their villages.The seminar also recommended exploiting the existing infrastructure in villages to the hilt for brand building: 70 per cent of RI, RE and RE can be reached through mass media, post offices and postal stationery could be used, so could the weekly meals, mantis and hats; marketers could explore tie-ups with the public distribution system and bank branches, direct mail could be sent to opinion leaders, and word-of-mouth publicity could be built through local service providers such as retailers, barbers and tea-shop and Dhabi owners.

Many speakers pointed out that statistics showed rural India was moving rapidly from poverty to prosperity. In this context, marketing consultant Ram Bujumbura said rural India was morphing and leapfrogging beyond agriculture and that marketers need to adopt new mental models to view these audiences. There is a mixture of many stages of development, so a "zero-base, macro-consumer look at new rural India" was necessary. Needs blood and sweat Kart Rain, Chief Operating Officer of Dalai Consumer Care, which successfully "many people who worked in rural marketing actually worked! ARM is all about execution, not ideas.Sadly, all ARM programmed begin and end with cost, with no talk of the results, he said, adding that ARM was all about building a business. ARM is a marriage, not a flirtation; execution time has to be 80 per cent, idea time 20 per cent, if you don't have the guts, don't do it, have the skin of an elephant and the heart of an evangelist, was his advice.

The empowerment mantra TXT Prestige's K. G. George, head of the retail business, spoke about how the company achieved some success in retrieving market share in the South by tying up tit women's self-help groups and Nags in Andorra Pradesh to market its pressure cookers.The company is still perfecting a replicable model to adopt in other States whereby it can empower the rural people by providing them with some money and itself achieve its business goals. A cooker brand exclusively for the rural areas is on the drawing board. On the role of IT in ARM,J.

Raving Kumar, head of research in It's International Business Division, spoke of how the couple initiative gave farmers the power of scale and better bargaining power when it came to selling their produce and buying agric-inputs.It De-linked information from transaction and bestowed the freedom of choice on the farmers, he said, adding that it led to higher income from higher yields, better quality and lower transaction costs. Distribution dilemma Distribution, considered a great challenge, posed a big problem, said V. Examination, Managing Director, Suit Ethnic Marketing Services. When it comes to demand, there is a big mismatch between the rural consumer's expectations and the viability of a local retail point.

In the supply aspect, company policy conflicts with making a product available closer to a rural consumer. It was cheaper for a rural/ mi-urban consumer to buy durables in a city because the margins given to a big retailer there were better than those given to a distributor closer to home, he said. Also, converting a big dealer into a distributor was fraught with problems as the former was tuned to improving volumes and getting incentives on that basis whereas they should be based on parameters such as reach and distribution to new outlets and markets, he said.Urban-rural divide On communicating to the rural consumer, brand domain specialist and marketing expert Harris Bijou said advertising was easy, but that ARM was "donkey's work. " It as unfair that the urban-educated community of marketing managers ruled the rural majority in marketing terms; it is "urban hegemony. " He also questioned the utility of market research -? how would extrapolation of results from a small study work in a country as diverse as India? Communication gaps Anagram's Raja emphasized the need for a specific, rural communication programmer.

ARM is not Just van operations, he said, adding that an integrated ARM programmer using mass media and below-the-line activities was necessary. He told Catalyst that though an ARM programmer did not cost much, corporate' compulsions f having to report profits every quarter put paid to any such good intentions. Rural audiences did not understand fast-paced, gimmicky, hi-tech commercials; regional brands were much easier at marketing to rural audiences -? their ads reflected the rural ethos and corporate would do well to take a leaf out of their book, he said.He, its Than Mutual Coca-Cola ads -? markets. They were a hit with both the rural and urban R. A.

Paternal, Managing Director of Sampans Marketing and Advertising Solutions, another partner in the Rural Network, who specialties in rural advertising and event management, said that folk song-and-dance forms worked well though there was a gradual shift in the way messages were being communicated.The seminar also took note of other problems that the rural markets faced: the lack of electricity which made it difficult for marketer to build brands or sell consumer durables, the prevalence of spurious brands, the maturity of rural consumers in certain areas which rendered folk forms or specific rural communication anachronistic, a reliable method to evaluate the impact of on-ground brand building events, the ostensible success of such events when they take place which, however, do not translate into sales in the rural outlets but in towns.The mood, however, was optimistic. The number of delegates outnumbered expectations, and didn't dwindle as the day wore on. A number of corporate, such as Galaxy Smithies Consumer Healthcare, are eyeing rural markets and negotiating ARM programmed. Commitment may take a while but there is the growing realization, dinned in by all the speakers, that one should be in it for the long haul.

It will be interesting to watch the strategies city-slick, urban reporter India adopts to endear itself to rural markets in its quest for greater fortunes.Network at work FOR the Rural Network, the first ever but "informal alliance" of the country's leading rural market organizations, it's time to pat itself on the back. It is getting noticed, as its growing involvement with FOCI shows -? last year, the trade body organized a conference on rural marketing in association with it. Its plans for a mega conference this year have crystallites into a Rural Marketing Summit at Iambi being organized by FOCI this October, where the Network is being billed as the knowledge partner.And the four partners have seen growing demand for advice and training in rural marketing, and are scenting greater business opportunities too. Says R.

V. Raja, Chairman and Managing Director, Anagram Madison Advertising Service Pat Ltd, a partner, "Our second year of existence (2003) saw each partner getting referrals through the others. This proves we've made a dent, and also that corporate are taking rural marketing more seriously than before. " The other partners are the Delhi- based MART (headed by Paraded Shape), Pun-based Rural Relations (Paraded Lockheed) and Iambi-based Sampans (by R.

A.Paternal). The basic objective of the Rural Network is to get clients who are looking for a national strategy in rural marketing and provide help in executing it across different regions with local expertise. Anagram, based in Achaean, specialties in rural strategy and communication and has the skills to conduct campaigns in several languages. MART'S strengths are rural research, strategy and distribution.

It has to its credit many rural marketing projects, including Hindustan Lever's Project Shasta. Rural Relations' forte is rural customer relations management and it has a huge database of opinion there events.In the last two years, the partners have handled assignments from Data Sheathe (roofing), Monsanto, Colgate-Palmolive and Accordance Fertilizers. The Network is also planning an association of firms involved with rural marketing, on the lines of the Advertising Agencies Association of India.

These could be advertising agencies, event management companies and vendors of various services. A directory of all these people, including van operators, folk artistes, wall painters and such who can be used to promote products in rural areas, is on the agenda. Research is a priority.The Network, which has been conducting small research studies, would like to take up big projects. As a pioneer in the field, it is also involved in educating clients and management students about rural marketing.

The seminars and workshops it organizes are part of this effort. There have been disappointments, too. The Network's plans to start courses in rural marketing in Achaean didn't take off due to poor demand but over time, and with the money the partners salt away whenever they can, it plans to offer a larger course with a diploma and the promise of placement. If corporate took up rural marketing programmed on a large scale, theNetwork as a unified entity would probably have had more business, composed as it is of organizations from various parts of the country, says Raja. However, Shape of MART does not see it as a disappointment.

"It is not a concern that business for the Network must grow right away. The important task is to create awareness of the need for a special rural marketing effort among corporate. Business will follow in its own course," he says. (Servant's Psychically, Business Line, Gag. 12, 2004) Reaping gains from greener pastures The rural buyer has always been a country cousin.To him, buying a consumer arable has invariably meant catching the next bus to the nearest town.

While manufacturers of consumer expendables like Hindustan Lever Limited and Procter and Gamble have always had some kind of a vision for the rural buyer, lack of electricity in rural areas deterred the makers of consumer durables. The result only watches and radios sold well in the rural belt. According to Indian Markets Demographic Report 1998 brought out by the National Council of Applied Economic Research's (NCAR), 'rural penetration levels are generally lower than urban penetration levels of consumer expendables.However, the rural urban differentials are not generally as pronounced as in the case of consumer durables.

There were exceptions as in the case of health beverages, cosmetic products like shampoos, nail- polishes and lipsticks... " In 1995-96, rural households, which form 71. 7 per cent of the total households in the country accounted for only.

2 per cent of ownership of durable goods. The average number of durable goods owned by rural households was only three, compared to seven in urban areas. 'Lack of electricity infrastructure is the single major factor explaining the rural-urban differential in interaction of consumer durable goods... Says the NCAR report.

But this attitude has begun to change. Especially after the economic slowdown. Since urban incomes are not growing as fast, whereas farm incomes have continued to rise, many companies today believe that they can't ignore the rural market if they want to grow. In fact, companies today are designing products especially for the semi-urban and the rural buyer. For instance, LAG Electronics India Private Limited (LEGAL) launched its Sampson range of color televisions in mid-1998 with on-screen display in Hindi.

Earlier this year, the company introduced Sampson Acts with Tamil, Amaranth and Bengali on-screen display.This way, LAG has taken care of 70 to 75 per cent of the Indian population. Recently, LAG also introduced the Indian cooking menu in its microwave ovens to makes things easier for techno-phobia's. Even though the market for microwave ovens will be minuscule in rural areas, an easy-to-understand microwave oven still stands a chance over others. And this strategy has paid rich dividends and LEGAL today is a RSI 500 core turnover company, as against a turnover of RSI 125 core in the calendar year 1997. Etcher Motors Limited (MEL) registered a 107 per cent growth in profit before tax in 1998-99.

This, when the commercial vehicles industry had been going through a very rough patch. According to S. Candidly, Managing Director, Etcher Motors bucked the trend essentially because the company chose to focus on segments that did not feel the heat of the economic slowdown. In the rural market, Etcher focused on the milk and poultry segment for segment," Candidly said. For instance, Meal's electrochemical vehicles are suited for the transportation of eggs since they fit snugly in the rear deck. There is better air recirculation in these vehicles and broiler chicken does not go bad even after 400 km to 500 km of run.

Besides, MEL has modified its Less to suit the needs of schools and hospitals. ' 'Recession or no recession, children would still go to schools, clinics would still require vans and therefore, we decided to concentrate on these segments," Candidly adds. Product modification is not always required. For instance, 68 to 70 per cent of Deadwood Motor India Limiter's (TIMID) sales come from semi-urban and rural areas.

'Manufacturers have grossly underestimated the rural market," says S G Swatch, Managing Director, TIMID. According to him, priorities, aspirations and lifestyles are fast changing in rural India. 'From the very beginning, we chose not to ignore the rural areas," says Swatch. And with the launch of its small car Mattie semi-urban areas have become all the more important for TIMID. The other Korean cacheable Samsung India Electronics Limited has also chosen to go rural. According to R Zits, Vice President, Sales, Samsung India, 'since the penetration levels are very low in India, and more so in non-metro areas, companies are increasingly focusing on semi-urban markets to tap latent demand.

Samsung India is targeting 10 per cent of its total sales turnover or RSI 90 core from semi-urban markets.It has launched 14 inch and 20 inch basic color television models especially for the rural markets. Its competitor, LAG Electronics' strategy appears somewhat similar, but more focused. At present, 25 per cent of Legal's sales come from rural areas (as defined by the census survey). And by the end of this year, LEGAL hopes to increase this share to 35 per cent. According to Eraser Kraal, Vice President, Marketing and Sales, LEGAL, ' 'since the very beginning, our idea was to SSH similar quantities in large geographical areas rather than concentrating on some high-incitements.

Both Samsung India and LAG are positioning their semi- automatic washing machines and direct cool refrigerators in rural areas due to erratic electricity supply. Both the companies have introduced mobile vans that showcase their products and make the rural consumer aware of their brand. For the rural segment, instead of having a company-dealer-customer distribution chain (as in the urban areas), LEGAL has introduced a distributor (who is invariably into FMC) to facilitate wider penetration. Samsung participates in local fairs to spread brand ' 'The rural buyer is today the most misunderstood and uncared for," awareness. Eels Kraal.

According to him, its the marketers' prerogative to go to them and understand them. For instance, he feels that the shoe manufacturing Macs would have done far better had they redesigned their products to suit the needs of farmers and marketed them aggressively in rural areas. 'Doesn't the rural consumer require rugged and durable shoes," he questions. He is also of the view that consumer electronics manufacturers should start focusing on black and white televisions, fit hem with car batteries, and sell them in the rural markets.

According to the Nacre's latest quarterly update, higher rural demand resulting from good agricultural performance is expected to be the main pillar supporting industrial growth in 1999-2000. So it seems that the rural consumer may finally start getting his dues, as more and more ' ecological' brands head towards the farms in search of growth. The great rural goldfish But they're all marketing men out to capture the rural sector, it seems. " How can urban India find the key to the rural market? A COMPANY wanted to market its toothpaste in rural areas.

The mint, foaming product didn't find favor with the pan-/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 lowly. 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 organized by the Rural Marketing Agencies Association of India (RAMAN) and Ad Club Madras. Aragua Shah, NationalCreative 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 behavior 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 Bishopric in many Hindi films is not to be found anywhere except in the film studios of Iambi. Also, movies that purport to reflect a rural atmosphere, such as Lagan, 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 Tulsa plant stand, which was a practice prevalent in the coastal areas of Andorra Pradesh and Arioso, he said.There were rural nonusers in urban areas, like those who came into big cities to find work, and vice versa, Shah said, adding that it was mentality and not locality that mattered. Also, with growing arbitration, rural consumers were becoming aspirations 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 aspirations 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 note 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. 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 Dubbed and Singapore shopping festivals were the city equivalents of the village hats (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 eatable 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, Paraded Shape, Managing Director, MART (Marketing and Research Team), said the rural market presented as many advantages as it did challenges to the marketer.

0 Brands rarely vie for attention because a shop in a rural area usually wouldn't have place for too many SKU (stock-keeping units) 0 They can build a strong rural base without much advertising support (like Chic and Shade, the shampoo and detergent brands).This could be due to product design and benefits as well as due to self-sustaining distribution/marketing models 0 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) 0 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 RSI 45,000-2. 5 lack) are almost equal at 15. 6 million in rural areas and 16.

4 million in urban areas. 0 Another opportunity lies in making effective use of the infrastructure: 3. 8 lack public distribution shops, 1. 38 lack post offices, 42,000 hats, 32,000 bank branches, 25,000 meals (exhibitions) and 7,000 mantis (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 DSSSL Hardily and Warrant, as well as IT initiatives like TIC"s e- hoopla will help make inroads into rural markets, Shape 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 capitalist on once the lower segments progressed to the higher reaches of the pyramid. Corporate need to hire professionals from rural management institutes such as Institute of Rural Management And and Xavier Institute of Management, Banner's, organize rural assassinations training for managers and explore new distribution models, he said.