Give me more, says rural India4 min read . Updated: 16 Dec 2010, 08:31 PM IST
Give me more, says rural India
Give me more, says rural India
Pradeep Kashyap, founder of rural consultancy MART, admits to being pleasantly surprised by the sudden spate of queries his 18-year-old outfit started receiving recently. Foreign companies that haven’t yet stepped into the country are flocking to him with questions about India’s rural markets. They seem to be eyeing the rural consumer in India, armed with the knowledge that she is underserved, Kashyap says. He politely declined to identify the companies, but says that they cut across product categories.
Kashyap is known widely for his work in rural marketing, including co-creating Project Shakti with consumer products maker Hindustan Unilever Ltd by roping in women micro-entrepreneurs. He has worked in the field of rural marketing for almost two decades and says that it is only now that companies are beginning to pay more than just lip service to consumers in these markets. Of course, a lot remains to be done.
Last fortnight, we briefly touched upon the growing aspirations of the rural consumer and how the difference between what she aspires for versus her urban counterpart has diminished. There are several reasons for this, the biggest being media proliferation and consumption. Broadcast media has penetrated deep into the country. Of the total 142 million television owning households, 73 million are in rural India, according to the latest TAM-Nielsen-IMRB study.
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That’s not all. Direct-to-home (DTH), the digital media option, is being rapidly embraced by consumers in remote villages. Sameer Suneja, managing director of European confectioner Perfetti Van Melle’s India unit, who recently travelled to the innards of rural Maharashtra, became wide-eyed when he discovered Dish TV (the Zee group’s DTH brand) equipment installed outside mud-brick dwellings in a tiny village comprising 15 households. Suneja’s company sells confectionery brands such as Alpenliebe, Happydent and Mentos, among others.
Some weeks ago, Nandan Nilekani, chairman of the Unique Identification Authority of India, pointed out that low-priced mobile phones means that all socioeconomic categories have access to the same or similar content. Today two out of every five new mobile connections are bought in rural India.
Clearly, commercial messages flashing on the small-screen stoke desire for products that are available in cities, but are advertised even in remote villages. In one of its reports, The Nielsen Co. says that demand for even seemingly urban products such as deodorants is growing pretty fast in rural markets. At its event some time ago, Nielsen Co.’s executive director Prasun Basu talked about the rural consumer who is no longer merely experimenting with urban products because of a phase of prosperity. She is indulging herself unabashedly, providing gratification to her senses and self esteem, he observed.
However, while companies are igniting aspiration among such consumers, they are unable to meet them in terms of pricing and distribution. Companies, especially in the consumer products sector, need to accept reduced margins to drive sales, says Kashyap. However, in the same breath he adds that rural consumers are not really looking at cheap products. While they do not expect 100% performance from a product, consumers in emerging markets look for 75% performance at 50% price.
It’s true that they want the same products that are available in the urban markets, but minor tweaks may be useful. For instance, power-starved villages would be happy to buy solar lights that have a socket for charging mobile phones.
The biggest challenge to meeting the expectations of the rural consumers, however, is availability; awareness and affordability aren’t issues any longer. Their wealth and disposable incomes are climbing and Kashyap cites some numbers. There are more millionaires in rural Haryana than in Bangalore. And in terms of volume, more Clinic shampoo is sold in bottles in rural markets than in sachets, pointing to the fact that they would pay more as long as it makes economic sense.
But availability remains a serious bottleneck. Delivering stocks to far-flung areas is expensive. And it is not a one-time delivery, Perfetti’s Suneja points out. However, others feel that it has more to do with a mindset. A company’s sales force finds it easier to dump stocks in the city and other accessible centres to drive up sales in a bid to meet targets. Smarter companies are now launching rural verticals with targets only for those markets.
It’s easy to see where the multinational companies that are queueing up outside Kashyap’s office are coming from. A Nielsen Co. report estimates that India’s rural consumer products market will grow to $100 billion by 2025. Currently, in the same space, consumer spending is estimated at $9 billion. It also says that in the last six quarters, rural purchasing power has grown faster than in urban areas.
Considering that rural India is not dependent on real estate, stock markets or corporate jobs—sectors that tanked during the 2008-09 economic slowdown that affected urban markets—it is reason enough for the companies to service this market sincerely.
Shuchi Bansal is marketing and media editor with Mint. Comment at firstname.lastname@example.org