Assessing the Marketing for Rural India


By

Dr. Venkatesh Tamlurkar
Faculty Member
ICFAI School of Marketing Studies
4th Floor, Astral Heights, Road No.1, Banjara Hills
Hyderabad-500 034
 


Introduction:

In 2005, Hindustan Lever Limited had a contribution of Rs. 5,000 crore from the rural market that was a whopping 50 percent of its total sales turnover. Another large corporate house LG Electronics that had a total turnover of Rs. 4500 crore had a share of 55 percent from the rural and semi-urban market. With such kind of contribution from the rural India, corporate houses perceived great opportunity in the rural markets and tapped the countryside to enlarge their market share.

Rural marketing is the much talked about subject for the business establishments especially the FMCG and the consumer durable industry. A large number of companies have made a big headway by focusing themselves on rural markets. It proved to be an opportunity rather than a problem for the marketers to concentrate on rural markets and the poor. Many of them who had earlier ignored this segment due to lot of investment requirements and low returns have again started foraying into it and targeted the rural masses. They attempted all the feasible approaches to sell the products to the rural consumers that met their lifestyles and living standards. Several large companies like HLL, ITC, Coca-Cola, LG, Britannia, Philips, Colgate-Palmolive etc., penetrated aggressively into the rural markets and spent heavily in the rural areas. Some of them even invested money to create separate sales and marketing teams exclusively for rural markets. They also appointed specialist agencies who could advise them on rural marketing.

But all said and done, how far were the companies successful in offering their products to the rural consumers? This remains a big question for the management of these corporate houses. Most of the products purchased by the rural masses were at times used for some unusual purposes other than what they were basically made or manufactured for. Like the Godrej hair dye is used by the rural consumers for applying on their buffaloes to make them look immaculate black before displaying in the market for sale. Of course, if viewed optimistically, this in one way gave scope for the companies to market their product in an innovative way and also push up the sales figures further. But what about the fundamental purpose for which it was manufactured? There is no correlation between the kind of usage of the product and the application of the marketer's strategies. It is a disproportionate to the extensive research that a company usually does before entering a new market or launching a new product and the outcome it expects. This also gives scope to raise a query to the marketer whether he had properly assessed his marketing strategies and the basic requirements of the customers before planning his strategies. The company needs to analyze this aspect before it proceeds further with dumping the products on rural consumers and thinks of capturing the rural market in a big way by any means.

The Rural Market Scenario:

The rural markets offered a huge potential to the business houses because of their enormous spread and rising consumer demands. Around the world, over 4 billion people survived in rural areas that came to more than 60 percent of the total population. In India also, the ratio of rural to urban population was slightly higher than the world's ratio with 70 percent of them living in rural areas. They domiciled in nearly 6,27,000 villages spread over 3.2 million sq. km. This growing affluence along with good monsoon and the increased agriculture output, increased the total disposable income of rural consumers to 58 percent with two-third of middle income households being in the rural market. About 40 percent of the graduates coming out of Indian Universities were from rural areas. As they are eager to earn more and live better, their aspirations are similar to the urban youth. It is predicted by industry analysts that by 2009 10, the urban households are projected to grow by 4 percent while rural households are expected to grow by 11 percent. If the rural income rose by 1%, then the buying power would correspondingly increase by about Rs. 10,000 crore. The colour televisions, refrigerators, air-conditioners and microwaves have become a household sight in villages and small townships that was long thought of as a luxury and domain of urbanites.

However, rural India had its own set of problems like illiteracy, early childhood marriages, lack of access to birth control measures, poverty etc., that were interdependent on each other. There are also large numbers of daily wage earners and most of the people depended on vagaries of monsoon. Inadequate infrastructure like non-availability of gas supply, frequent power cuts, improper sanitary conditions, inaccessible areas were the other common sight of rural areas. 

The paradigm shift:

In most of the rural areas in different parts of the country, there is considerable awareness on various latest products that are available in the market. This has been possible due to the penetration of cable and satellite channels that have brought down the world at the finger tips of the common man. The media influenced the mindset of the rural consumer to such an extent that people who had money started purchasing the products unmindful of the costs, just to satisfy their needs as well as their ego. But, the growth of rural market could be attributed to many other reasons that in one way increased the sales as well as the profits of the companies. Some of the important causes for the growth of rural markets are

* The rise in disposable income of the rural families
* The economic boom
* Timely rains
* Rural population involved themselves in business other than agriculture
* Increase white-collar jobs in nearby towns
* Commercialization of agriculture
* Saturation of the urban markets
* Media penetration in rural areas (particularly satellite channels)
* Globalization
* Economic liberalization
* Revolution in the Information Technology
* Women empowerment
* Improving infrastructure

However, there was a significant role of the corporate enterprises simultaneously in the development of rural market. Their timely intervention into the rural areas, their appropriate planning, their perception and identification about the growth of rural markets and the use of marketing strategies all have equally contributed for the progress of rural markets. Even though corporate houses were hedged with so many problems in the rural areas, they saw a galore of opportunities in the rural market and converted all the pessimistic characteristics of the rural market into affirmative attributes. They satisfied themselves with the availability of limited infrastructure, saw a sign of prosperity rather than fear during the entry of competitors into the rural markets, showed excitement at the availability of satellite channels in the rural households, visualized their cash bells ringing with the increase in purchasing power of the rural masses that came equivalent to their urban counterparts. They traced a constant rise in the demand for those products that were once confined mostly to the urban houses. But, blame it on the kind of awareness created by the companies people started using the products for other purposes as seen earlier.

In many villages, one can see today the alternate use of the products other than for their actual purpose. People in the state of Bihar feed the cattle with Horlicks as a health drink to fatten them! Similarly, people in Punjab use washing machine not for washing clothes but to make frothy lassi in huge quantities! Animals are rubbed with Iodex on their skins to relieve them from muscular pains after a day's hard work. Paints meant for houses are used on the horns of cattle for easy identification and theft prevention! The weavers in North India wear condoms on their fingers as gloves to weave fine threads while its lubrication allows them fine control on threads and protect their sensitive fingers! If companies felt happy with their increased sales and profits through this means and thought that they captured the rural markets, then it is time for them to review their marketing strategies. They should understand that these results do not coincide with the application of the marketing tools and the technical expertise that are generally used to satisfy the customers as well as the company objectives. The implications of 4 Ps of marketing mix or the use of 4 As for successful rural marketing have produced wrong results.

All companies usually claim that they provide the right product at the right place at right price with right kind of promotion. Then why was a right product accepted by the rural consumer used for different purpose? Why did he afford to spend either much or less on the product that has not derived him the kind of benefit as claimed by the manufacturer? Why did the place of offer differ than to where and to whom it actually was supposed to be available? Why the right promotion has created wrong awareness in the minds of the target customers?

There was something missing in the marketing strategies of the companies while serving the rural markets. Otherwise, the results should have been more astonishing where the sales turnover or the balance sheet would have shown much more than what is presently achieved. Though, only few products were used by the consumers in this way, that use might be the result of the accidental or wrongful application by the rural consumers. The marketer's planning about the product and the communication with the target customers should be perfect that produces the desired results.

The Marketer's Plan:

If the marketer truly understands the needs of the rural consumers, he should strive to provide them with those products and services that would meet their requirements. The marketer has to focus on his core competencies like the technological expertise to design the products for the rural masses. Companies like Cavin Care who launched their shampoo in sachets, Britannia who conveniently packaged its Tiger brand biscuits with low price tag are the best examples of understanding the rural customer's needs and providing them with the desired products.

The marketer's basic need is to understand the pulse of the rural masses and serve them accordingly. The companies need to make proper assessment while marketing for the rural India. This could most probably happen in one way by changing the profile of their managers. As most of them are management graduates bred in urban areas and are taught marketing principles and strategies applicable for the western countries, there is a mismatch in their thinking and the requirements of the rural consumers. Hence, hiring professionals who have expertise in rural marketing would go a long way to improve the situation as they can truly understand the rural traditions and cultures, understand the feelings of rural people before designing and actually launching the product. It is very essential for the rural marketer to understand the psychology of their consumers in terms of their usage habits and shopping behavior along with their emotions and value systems. The integration of both technological and managerial knowledge would help them to develop the various marketing strategies for the rural Indian markets. This will further lead to technologically superior, robust and low cost products that would be in resemblance with the Indian tradition and culture.

The marketers may also consider depending more on traditional media when marketing for rural consumers. This unconventional method acts as an effective way to create awareness as mass media is unreliable as it is too glamorous and interpersonal for the rural market. Uses of skits, magic shows, and education by NGOs are some of the most preferred traditional media which the marketers can usually use as it goes well with the tastes of the rural consumers.

Conclusion:

The rural India that has lot of money with it definitely offers a great potential for the companies where the chances of outnumbering the urban areas in all aspects are very high. But only those companies would survive at these places and win over the rural consumers who can spend time and money on understanding the needs of them and come up with innovative ideas.

The companies should also strive to give more focus to the rural market in order to make it a market leader. This can happen only with the firm commitment of the top management and extension of full support to the marketing personnel by each and every department of the organization.

References:

1. www.rediff.com/money/2005/jun/02inter.htm
2. http://www.indiauntouched.com/blog/archives/2004/12/rural_poverty_o.html
3. www.rediff.com/money/2005/jun/02inter.htm
 


Dr. Venkatesh Tamlurkar
Faculty Member
ICFAI School of Marketing Studies
4th Floor, Astral Heights, Road No.1, Banjara Hills
Hyderabad-500 034
 

Source: E-mail April 7, 2006

    

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