Rural Retail Marketing: Innovation and Creativity


By

Nihar Mohapatra
Research Scholar, Commerce and Management
North Orissa University
Baripada, Mayurbhanja, Orissa
 


Abstract:

Marketers make consistent attempts to innovate tools and strategies to overcome the challenges they face in the business arena. Business innovations are broadly classified under two heads, namely Product / Service innovation. Marketers need to design creative solutions to overcome challenges typical of the rural environment such as physical distribution, channel management, promotion and communication.

India's rural markets offer a sea of opportunity. The urban rural split in consumer spending stands at 9: 11, with rural India accounting for 55 percent of private retail consumption. Indeed the market can be tapped with focused attention and strategy. Currently the Indian retail market is estimated at Rs. 13,30,000 Crore and almost half of this growing retail market at present lies in rural India, which is a tremendous growth sector that needs to be tapped with care. This paper examines how the corporate sectors with their innovation and creativity tapping the Indian rural market with their retail marketing.

Keywords: Innovation, Retail Marketing, Rural Retailing and Rural India.

INTRODUCTION

According to the great management guru Peter Ducker "the organisations have only two functions, one is marketing and other is innovation." Rural markets are characterized with huge potential for marketers, but at the same time pose several challenges to serve them with similar set of marketing mix used in urban settings. The main challenges in rural marketing are:

  • Physical distribution
  • Channel management
  • Promotion and communication
  • Poor infrastructure
  • Uneconomical market size
  • Diverse socio-economic Consumer profile

Against the backdrop of such a market environment, marketers need to design creative solutions to achieve success in rural markets. The problems of physical distribution and channel management adversely affect the quality of service (delivery) and cost. With poor or even no means of communication to exchange information with rural consumers directly, the success of a brand depends largely on the village retailers. Therefore, rural marketers have felt a great need to overcome the existing limitations across business stages in general and distribution in particular of which retailing is the final stage.

NEED OF INNOVATION FOR RURAL MARKET

As the competition increases in the rural market there might be the need for competitively priced products that are developed as per the needs of the rural consumers. Non-consumers of yesteryears are entering into the rural market as first time buyers for a large number of products in a large numbers. This calls for shift in management thinking from gross margin to higher profit from high value unit sales to game of high volumes, capital efficiency and from one solution fits all thinking to market innovation.

PRINCIPLES OF INNOVATIONS FOR RURAL MARKETS

The principles and practices of innovation to be adopted in rural market have to take into consideration: needs, lifestyles and consumer behaviour of the rural population. It is extremely important that the product, pricing, promotion and distribution strategy are not just innovative alone but they must make product value proposition attractive and relevant for rural consumers.

PROCESS INNOVATION

Process innovations are critical in rural markets. Innovation must focus on building a logistics infrastructure, including manufacturing that is in accordance with the prevailing conditions and can deliver solutions in a cost effective manner.

PRODUCT INNOVATION

Product development must start from a deep understanding of functionality, not just form. Marginal changes to products developed for customers in the towns might not be that effective in rural market. The infrastructure and environment, in which the rural consumers live and work in, demand a rethinking of the functionality a new. Poor consumer's problems can not be solved    with old technologies. New technologies need to be developed to make the product relevant to the rural consumers whose product use environment is very different from urban consumers.

PRICE INNOVATION

Conserving resources is the mantra; the product meant for rural market must eliminate or reduce, the various recurring costs and thus should reduce resource intensity. The option of reuse, refill and recycle are critical principles in product development for rural market as they reduce the overall cost of the product. India is a value for money society- while the value may range from a few rupees to millions, the basic instinct remains the same. Market strategies must ensure the prices of the product are reduced either through re-engineering, cost saving in operations, reduction in pack sizes, deletion of frills from the core product, etc. but this reduction I price should not be at the cost of quality and service. Organisations have to focus on price performance of the product.

PROMOTIONAL INNOVATION

Changing demographic and spending profiles present countless opportunities for a creative response by the corporate sector. Promotional campaigns have to be innovative to target the youngsters by engaging them through combination of media options. Promotional campaign such as video mounted on trucks traveling low cost theatrical need to be undertaken for any serious promotional effort in rural areas.

RURAL RETAILING

Retailing in India is slowly on the rise with changing consumer preferences and tastes and evolution of a global structure. Rural markets are relatively virgin markets, which have evolved on their own with very little direct contact with them by the corporate world, but their size is compelling and attractive. Retail sector offers opportunities for exploration and investment in rural areas, with Corporate and Entrepreneurs having made a foray in the past. India's largely rural population has caught the eye of retailers looking for new areas of growth. Market structure in india is dichotomous having rural and urban markets.

Retail outlets have sprung up practically in all the villages. In interior villages retailing is a part time chore unlike the case of the retailer in town. In a part of their house, the villagers make retail counter. The maintenance costs for retail outlets in interior villages are also low with most of the cost spent on traveling and transportation.

One of the principal reasons behind the explosion of retail outlets and its fragmented nature is that retailing is probably the primary form of disguised unemployment/ underemployment. The overcrowded agricultural sector, stagnating manufacturing sector, the hard nature of jobs and low wages in both virtually force many Indians to the service sector. So, it is almost a natural decision to open a small shop or store depending on the available means and capitals due to the lack of opportunities. This phenomenon explains the million of kirana shops and small stores.   ITC launched the country's first rural mall ' Chaupal Sagar', offering a diverse product range from FMCG to electronics appliance to automobiles, attempting to provide farmers a one-stop destination for all of their needs. There has been yet another initiative by the DCM Sriram Group called the ' Hariyali Bazaar' that has initially started off by providing farm related inputs and services but plans to introduce the complete shopping basket in due course. Other corporate bodies include Escorts and Tata Chemicals (with Tata Kisan Sansar) setting up agri-stores to provide products/services targeted at the farmer in order to tap the vast rural market.
 

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Source: E-mail May 1, 2011

          

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