Each company is making its way to Rural India. Most of them have studied the market and analyzed the things over there and are ready to fight Rural India.
The rural market may be alluring but it is not without its problems: Low per capita disposable incomes that is half the urban disposable income; large number of daily wage earners, acute dependence on the vagaries of the monsoon; seasonal consumption linked to harvests and festivals and special occasions; poor roads; power problems; and inaccessibility to conventional advertising media.
There are companies like HLL, ITC, LG and Mahindra who have written their success stories in Rural markets, they have given a new format for rural marketing
Marketing in Rural India is different than marketing in Urban India, which makes companies think over the traditional marketing mix. Marketing mix is such an element in rural market which gives a sense to think of marketing activities. The 4A model on the similar lines of 4C model has been developed for rural markets. This constitutes of:
India’s 627,000 villages are spread over 3.2 million sq km; 700 million Indians may live in rural areas. The greatest problem here is to reach the consumer or the retailer. It is the logistics way to make the product available there. Once the product reaches the retailers self, it will sell itself as the number of brands available in rural markets is limited.
Over the years, India’s largest MNC, Hindustan Lever, a subsidiary of Unilever, has built a strong distribution system, which helps its brands reach the interiors of the rural market. To service remote village, stockiest use auto-rickshaws, bullock-carts and even boats in the backwaters of Kerela. Coca-Cola, which considers rural India as a future growth driver, has evolved a hub and spoke distribution model to reach the villages. LG Electronics defines all cities and towns other than the seven metros cities as rural and semi-urban market.
Study on buying behavior of rural consumer indicates that the rural retailers influences 35% of purchase occasions. Therefore sheer product availability can affect decision of brand choice, volumes and market share. Some of the FMCG giants like HLL took out project streamline to significantly enhance the control on the rural supply chain through a network of rural sub-stockiest, who are based in the villages only. Apart from this to acquire further edge in distribution HLL started Project “SHAKTHI” in partnership with Self Help groups of rural women.
Here affordability does not mean that cheaper products should be made and marketed, the meaning is to reach the customers by satisfying their needs. It is to ensure affordability of the product or service. With low disposable incomes, products need to be affordable to the rural consumer, most of whom are on daily wages. Customers should not think that they cannot buy it that means it should be in their buying capacity. The income in rural markets is from different ways, so keeping this in mind companies should design the product in such a way that it reaches the customers.
Some companies have addressed the affordability problem by introducing small unit packs. Godrej recently introduced three brands of Cinthol, Fair Glow and Godrej in 50-gm packs, priced at Rs 4-5 meant specifically for Madhya Pradesh, Bihar and Uttar Pradesh – the so-called `BIMARU’ States.
Hindustan Lever, among the first MNCs to realise the potential of India’s rural market, has launched a variant of its largest selling soap brand, Lifebuoy at Rs 2 for 50 gm. The move is mainly targeted at the rural market. Coca-Cola has addressed the affordability issue by introducing the returnable 200-ml glass bottle priced at Rs 5. The initiative has paid off: Eighty per cent of new drinkers now come from the rural markets. Coca-Cola has also introduced Sunfill, a powdered soft-drink concentrate. The instant and ready-to-mix Sunfill is available in a single-serve sachet of 25 gm priced at Rs 2 and multiserve sachet of 200 gm priced at Rs 15.
The third challenge is to gain acceptability for the product or service. Therefore, there is a need to offer products that suit the rural market. One company, which has reaped rich dividends by doing so, is LG Electronics. In 1998, it developed a customized TV for the rural market and christened it Sampoorna. Because of the lack of electricity and refrigerators in the rural areas, Coca-Cola provides low-cost ice-boxes – a tin box for new outlets and thermocol box for seasonal outlets.
The insurance companies that have tailor-made products for the rural market have performed well. HDFC Standard LIFE topped private insurers by selling policies worth Rs 3.5 crore in total premia. The company tied up with non-governmental organisations and offered reasonably priced policies in the nature of group insurance covers.
This is the most important aspect of the marketing mix, the customer should think that he can but that product by putting an extra money on that. Mass media is able to reach only to 57% of the rural population. Creating awareness then, means utilizing targeted, unconventional media including ambient media.
For generating awareness, events like fairs and festivals, Haats, etc., are used as occasions for brand communication. Cinema vans, shop-fronts, walls and wells are other media vehicles that have been utilized to increase brand and pack visibility. innovative media used by personal wash like Lux and Lifebuoy and fabric wash items like Rin and Wheel. Idea was to advertise not only at the point of purchase but also at the time of consumption.
With large parts of rural India inaccessible to conventional advertising media – only 41 per cent rural households have access to TV – building awareness is another challenge. However, the rural consumer expressions differ from his urban counterpart. Outing for the former is confined to local fairs and festivals and TV viewing is confined to the state-owned channels. Consumption of branded products is treated as a special treat or indulgence.
Hindustan Lever relies heavily on its own company-organised media. These are promotional events organised by stockists. Godrej Consumer Products, which is trying to push its soap brands into the interior areas, uses radio to reach the local people in their language.
Coca-Cola uses a combination of TV, cinema and radio to reach 53.6 per cent of rural households. Since price is a key issue in the rural areas, Coca-Cola advertising stressed its `magical’ price point of Rs 5 per bottle in all media.LG Electronics uses vans and road shows to reach rural customers. The company uses local language advertising.
The key dilemma for MNCs eager to tap the large and fast-growing rural market is whether they can do so without hurting the company’s profit margins. In case of nestle, company’s product portfolio is essentially designed for urban consumers which cautions companies from plunging headlong into the rural market as capturing rural consumers can be expensive.
To conclude, unlike urban consumer rural consumer go for value driven and cost consciounessly for any product instead of lifestyle and impulsive buying. Also they can be more loyal to brands if four A concept being fulfilled