New Delhi: How do you sell cooking gas to consumers who are convinced the gas will seep into the food and eventually find its way into their stomachs? That’s no laughing matter. That is the kind of consumer mindset marketing professionals often have to overcome in rural areas. Cultural and economic diversity, geographically dispersed markets, poor infrastructure and inaccessibility to conventional media pose other challenges.
Gaining mileage: A passerby stops to find out more about General Motors’ Spark car at a roadshow organized in December at Narayangarh, Haryana. Harikrishna Katragadda / Mint
“A marketeer interested in succeeding in rural markets must have an open mind and a creative approach to engage rural consumers,” says L.K. Gupta, chief marketing officer of consumer durables maker LG Electronics India Pvt. Ltd, or LG. LG, like many other companies, is betting big on rural markets. The company’s rural sales comprised 35% of revenue in 2008 and in 2009, it expects the rural share to increase to 45%.
Make it relevant
Rural consumers are different from their urban counterparts in purchase behaviour and consumption patterns. They are more inclined towards utility, convenience and value for money, experts say. Marketeers, therefore, should avoid replicating the urban strategy of selling lifestyle or indulgence to consumers in rural areas.
In many product categories, including household and consumer care products, rural consumers prefer buying in small units and avoid bulk purchases, says Arvind K. Singhal, chairman, Technopak Advisors Pvt. Ltd, a retail consultancy.
Keeping the utility factor in mind, the farm equipment division of Mahindra and Mahindra Ltd (M&M) has launched a fuel-efficient tractor, Shaan, complete with a trolley that helps both in farming and transportation. “We found that this model works well for brick kilns and we have been aggressively pushing Shaan for brick kilns in Uttar Pradesh, Bihar and some parts of Haryana,” says Sanjeev Goyle, senior vice-president, farm equipment sector, M&M.
Price it right
While incomes in rural India have been rising over the past few years, they are still not comparable with those in urban India. Low income levels and a conservative attitude make consumers resist expensive purchases.
In 2002, Coca-Cola India Pvt. Ltd launched 200ml bottles priced at Rs5 to push consumption in price-sensitive rural markets. The experiment prompted many other companies to adopt a low unit price strategy. LG introduced low-priced television sets Sampoorna and CinePlus for rural markets. It also has refrigerators, washing machines and microwave ovens targeted at price-sensitive consumers.
ICICI Lombard General Insurance Co. Ltd’s head of rural and agricultural business group, Pranav Prashad, says that companies need to bear in mind that the rural consumer seeks better value for money and is interested in tangible benefits compared with an urban consumer. Take, for instance, the greater market share of Hindustan Unilever Ltd’s (HUL) Clinic Plus shampoo over CavinKare Pvt. Ltd’s Chik shampoo, though CavinKare set the sachet trend popular in rural India, and Britannia Industries Ltd’s Tiger brand of biscuits over Parle Products Pvt. Ltd Parle G.
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Says Goyle: “One of the learnings that we have had from rural India is that customers are looking at better product and service utilization. He (the rural consumer) is clearly seeking value-added products and services with multifarious usage.”
Based on such insights, M&M introduced servicing camps with the slogan “Swasthya tractor, swasthya chalak” (healthy tractor, healthy driver) a year ago. The camps offer a free health check-up for drivers while their tractors are being serviced.
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Rural customers are clearly making marketeers think hard about ways and means to serve them optimally. “The future will see an increasing number of companies coming together to create products, services and infrastructure for bringing down costs and passing on the benefit to customers,” says Roopesh Kajrolkar, head of marketing, rural micro banking and agribusiness group, ICICI Bank Ltd.
According to MART’s estimates, there are at least 600,000 villages in the country and 4,738 towns that may be classified as semi-urban. While infrastructure has improved, it is still far from adequate in reaching most places.
“You may have the best of the product with excellent packaging and perfect pricing but unless it is made available to people, it will serve no purpose,” says Singhal. “Reach and penetration of most companies, other than the likes of HUL, is poor. Availability is still a big challenge,” he adds.
Several companies have adopted innovative strategies to reach their target groups. ICICI Lombard, for instance, has tied up with dairy companies such as Hatsun Agro Products Ltd in Chennai and Raja Ram Babu Dairy in Maharashtra to piggyback on their distribution channels to sell its cattle insurance policies. “We have also tied up with banks which offer loans for cattle purchase to tie the loan offering with our cattle insurance scheme,” says Prashad.
Godrej Consumer Products Ltd (GCPL) adopted its own strategy. “In inaccessible villages, we use weekly rural haats (markets), melas (fairs) and religious congregations as a platform to introduce our product range,” says Rakesh Kumar Sinha, chief operating officer, GCPL. “This has proved to be very effective in states including Uttar Pradesh, Madhya Pradesh, Chhattisgarh and Haryana.”
To counter issues such as shortage of electricity and the inability of several retailers to invest in refrigerators, beverage maker Coca-Cola India is providing them low-cost ice boxes to store its drinks.
Medium is the message
Unlike urban markets, a majority of rural India still has no access to traditional media platforms such as television and newspapers. Most national publications are not available in rural markets, and even the regional media is accessed by only around 6% of the rural population. This makes the exercise of communicating with rural consumers and making them aware of products and services extremely challenging, experts say.
For its Shakti brand of corrugated galvanized sheets, Tata Steel Ltd uses the words chaddar, teena and khadag to denote corrugated sheets in various rural markets, depending on the local dialect.
In the absence of mass media, most marketeers active in rural India use local mediums such as roadshows, outdoor advertising, fairs and weekly bazaars, among others. Radio is also a cost-effective medium favoured by many companies.
Innovation, in this respect, need not be always about big changes. For ICICI Bank, a simple innovation such as placing the lifesize dummy of a cow mounted on a branded van worked well in plugging cattle purchase loans in a programme called Kamdhenu.
“A lot of strategies have to be built around cost because speed of reach and response generated through traditional media vehicles have failed to justify the cost,” says Kajrolkar.
Graphics by Ahmed Raza Khan / Mint