Changing face of rural markets
With growing affluence coupled with better communications, roads, mobile phones and televisions, the rural markets are all set to occupy the centrestage
Marketers have always been scared of the rural markets of India. Many MBA careers have been destroyed by the ominous threat of a rural posting. Consultants like Pradeep Kashyap have battled on valiantly, helping marketers delve into the rural markets of the country. But the dark rural markets may not stay dark for too long.
In a country of around 1.2 billion people and 231 million households, rural India accounts for almost 162 million homes (as against 69 million homes in urban India). A total of 75 million homes have access to bank accounts, and Aadhaar numbers have been issued to almost 900 million individuals. Taken at a household level, mobile phone penetration may have already crossed 80%, while television is also creeping up beyond 70%. The nation has an adult literacy level of 74% (according to Census 2011), set to rise to 95% by 2021. The Bihar election has showed us that bijli, sadak, paani (electricity, road, water) is no longer on the wish list; that train has already left the station even in a relatively backward state such as Bihar.
So, if the young MBA graduate was under the impression that rural India is one dark continent, as yet unexplored, he has some surprises coming. It is not as if all is done and dusted. A large segment of rural homes do not have access to drinking water or have toilets. Power cuts are a norm in many parts of rural India. But things are changing rather rapidly.
Take the case of female empowerment. Just about 7% of board seats of India’s listed companies is occupied by women. Compare this to the panchayats. The 50% reservation for women has worked, and how. From being just a proxy for their husbands, women in rural India are moving up to take charge.
Till recently, marketers used to look at urban and rural consumers through two different lenses. For urban households, the categorization was A/B/C/D/E based on the education and occupation of the chief wage earner (CWE). For rural India, it was R1/R2/R2/R4 based on the education and type of house. This led to two different typologies, difficult to mash together.
This old socio economic classification (SEC) system has given way to the new consumer classification system (NCCS). Here, all households—urban and rural—are being measured using the same yardstick; the education of the CWE and the number of durables owned. There is a pre-decided list of 11 items that a household can own and households are mapped from SEC A1 to E3, across India.
The new system was applied during the Indian Readership Survey 2013 and is now the metric for television ratings being put out by the Broadcast Audience Research Council (BARC). Marketers are also using this metric in all their marketing research projects to ensure that the currency stays the same.
I remember the late Ramesh Thadani, the then CEO of IMRB, explaining to me the logic behind the SEC system when it was introduced in the National Readership Survey in the early 1980s. Till then, households were classified on the basis of income alone. For its time, the SEC system was a great move forward. And I am sure that the NCCS is a significant move forward for this decade.
The other big change with rural India is the improved connectivity being offered by new roads. In a recent speech by the chairman of a leading consumer products company, it was mentioned that the company has identified 14 urban centres that act as focal points for addressing almost 50% of the rural demand for packaged consumer goods.
BARC started publishing rural television viewing data from October. For the first time, we are getting television viewing data from around 6,000 rural homes on a minute-by-minute basis. BARC has been able to harness the power of technology and mobile telecommunication to achieve this miracle for what is seen as one of the lowest-cost television metering models.
It is often said that to address rural demand, you need to press two buttons: affordability and accessibility. Rural consumers do not want diluted products. They want products that are tailored for their needs and they can be made to pay a fair price for such products.
With growing affluence coupled with better communications, roads, mobile phones and televisions, the rural markets are all set to occupy the centrestage. Don’t be surprised if your fresh MBA recruit opts for a rural posting next year.
Ambi M.G. Parameswaran is the executive director at FCB Ulka Advertising and president of the Advertising Agencies Association of India. He will take stock of consumers, brands and advertising trends every month. The views expressed are personal.