REACHING OUT TO THE RURAL CONSUMERS-A TELECOM

PERSPECTIVE

Nidhi Nagar,
Assistant Professor,
Institute of Management Sciences,
University of Lucknow
nidhisaxena17@gmail.com

Nikita Kriplani
Student,
Institute of Management Sciences,
University of Lucknow
nikskrips@gmail.com

ABSTRACT
Rural markets demand a new thinking as conventional techniques often fail to deliver
with the rural challenges. The paper examines the current telecom scenario and
initiatives taken up by different telecom companies to woo the rural markets by first,
building a comprehensive understanding of rural India as a region having tremendous
potential for telecom growth and learning the inherent challenges. Secondly, by
presenting current rural marketing best practices in telecom sector which are being
successfully implemented in India and exploring similar initiatives in other emerging
economies. Following an in depth study of issues related to marketing of
telecommunication services in rural areas, recommending key strategies from
technical, distribution and marketing perspective for adoption and suggesting new
research areas which, if initiated, can successfully strengthen rural marketing
strategies in a bid to reach out to the millions of users who are expected to come from
rural centers.
Keywords: Telecom, Rural, Marketing, BOP, 4Ps

1. INTRODUCTION

1.1 Defining ‘Rural’

According to dictionary, rural means “anything pertaining to less- populated, non-

urban areas.”

The Census of India defines ‘rural’ explicitly. Areas with clear surveyed boundaries
not having a municipality, corporation or board, with density of population not more
than 400 per km and with at least 75% of the male working population engaged in
agriculture and allied activities qualify as rural. Rurality as a concept, however
remains, complex to identify even today. Improved understanding will require more
sophisticated analysis based on factors of remoteness, income and growth potentials.

1.2 Rural India - the key to fortunes

The growing power of the rural consumers is forcing big companies to flock to rural
markets. . Earlier factors like remoteness, low spending capacities, sparse & spread
out population with limited purchasing power were cited as many reasons for having
no dedicated line of thinking for rural marketing strategies by many organisations.
However with increased access to information and communication technology,
doubling of minimum support price in last decade, consecutive successful monsoons,
smooth fund transmission by state and center through schemes like NREGA, PMRY,
remittances by NRI’s and acquaintances in metro cities, better infrastructure and
increased government programmes to boost the rural economy ,the scenario is
changing rapidly. The importance of Indian rural market can be gauged from the fact
that India’s rural population comprises 12% of the world’s population approximately,
75% of India's population resides in around 6, 38,365 villages of India spread over 32
lakh square kilometres; 41% of India's middle class resides in rural areas and the rural
market is growing at a rate of 3-4% per annum. The rural revolution is further fuelled
by rising purchasing power, changing consumer habits and increased awareness.

The recent study by Associated Chambers of Commerce and Industry of India

(ASSOCHAM), disclosed that around 200 million out of 700 million rural population
in India are engaged in agricultural and non- agricultural activities, and have a decent
per capita income. According to international consultancy firm Celent, the Indian
rural market will grow to a potential of US$ 1.9 billion by 2015 from the current US$
487 million. . The McKinsey report (2007) on the rise on consumer market in India
predicts that in twenty years the rural Indian market will be larger than the total
consumer markets in countries such as South Korea or Canada today, and almost four
times the size of today’s urban Indian market and estimated the size of the rural
market at $577 Billion. The hinterland, commonly referred to as the ‘bottom of the
pyramid’, has caught the attention of several companies including the ones from
telecom sector.

However if we observe the tele-density figures for urban and rural India we see a
contrasting picture. According to the NCAER Rural Infrastructure Report (2007), the
demand for telecommunication services are surging across rural India, as middle class
and upper classes are growing in most villages but the tele-density levels are very low.
URBAN RURAL
Overall Tele-density 147.88 31.18
Wireless Tele-density 140.53 30.11
Wireline Tele-density 7.35 1.07
Source:TRAI(2011)

This huge gap between tele-densities of urban and rural area has lot of opportunities
for the telecom companies. With the saturated urban markets(with penetration levels
of more than 80 percent), cut throat competition among operators waging tariff war
and predatory pricing draining the bottom line of the major mobile service providers
in the country, players in the industry are scouting for untapped opportunities in the
rural mart with an objective to withstand competition and expand market share. The
rural market is still a virgin territory waiting to be explored completely. The mobile
penetration in the rural market is only 3% which is very small amount considering
more than 70% of the total Indian population live in rural areas. Telecom giant Sunil
Mittal, chairman of the $2 billion mobile telephony major Bharti Tele- Ventures, was
unabashed flag-bearer of the 'go rural' strategy.
In contrast to the poor status of other infrastructural elements in rural areas, the
telecommunication backbone network, is new and of high quality. The state-owned
telecom company has networked exchanges in all these areas which are equipped with
optical fiber that is mostly less than 15 years old. The mobile revolution of the last
four years has seen base stations sprouting in most towns, owned by three or more
operators, including the state-owned company. The base stations of the new
operations are also networked using optical fiber, laid in the last 5 years. There is a lot
of dark fiber, and seemingly unlimited scope for bandwidth expansion. Thus making
successful inroads into these rural populations will be the key to long-term revenues
for any service provider as it presents a huge opportunity for companies.

Yet rural living presents its own challenges, which demand a deep understanding and
appreciation by service providers, who must create services that chime with the day-
to-day needs of people. One has to have a strategic view of the rural markets so as to
know and understand the markets well. In the context of rural marketing one has to
understand the manipulation of marketing mix has to be properly understood in terms
of product/service usage. Product/service usage is central to price, distribution,
promotion, branding, company image and more important farmer economics, thus any
strategy in rural marketing should be given due attention and importance by
understanding the product usage, all elements of marketing mix can be better
organised and managed. The journey of marketers to the rural markets has indeed
been one of surmounting one hurdle after another; these include the 4 Ps – Price,
Products, Place and Promotion- adapting themselves to the atmosphere of rural
markets.

1.3 Rural Markets-A different ball game

The region has ample diversity in terms of demographics, infrastructure growth

potentials, income parameters, occupation options, technology penetration levels,
local markets and potential adapters, emphasising a need to understand these markets
more specifically and more strategically. The problem is accentuated by lack of
infrastructure facilities like transport, electricity leading to problems related to
distribution and channel management, low penetration of shops, low literacy rate ,
communication problems, fluctuating demand patterns, traditional outlook of rural
consumers offering resistance to change, delayed buying decision, high level of inter-
dependency affecting the dynamics of rural community behaviour, significant buyer
and user differences across regions as well as within that requiring differential
treatment. Besides, retailers sometime push imitation or fake products in place of
branded ones for better commission.
At the same time the absence of hard infrastructure in these regions is partially
compensated by their rapid soft infrastructure growth. Soft infrastructure includes
terrestrial cable, satellite television, mobile coverage and broadband cable. Soft
infrastructure growth compensates to some degree for the problem of remoteness by
enabling easier information availability. Soft infrastructure roll out, however, is being
perceived as the prerogative of private organizations involved in these sectors.

1.4 Assessing the Telecom Scenario in India

Indian Telecommunications at a glance

Rank in world in network size 3rd
Tele–density (per hundred populations) 52.74
Telephone connection (In million)
Fixed 36.95
Mobile 548.32
Total 621.28
Village Public Telephones inhabited (Out of 5,93,601 5,69,385
uncovered villages)
Foreign Direct Investment (in million) (from April 2000 4070
till March 2010)
Licenses issued
Basic 2
CMTS 38
UAS 241
Infrastructure Provider I 219
ISP (Internet) 371
National Long distance 29
International Long Distance 24
Source: dot.gov.in

In recent times, India has emerged as one of the fastest growing telecom markets in
the world. The Indian Telecommunications network with 621 million connections (as
on March 2010) is the third largest in the world. The sector is growing at a speed of
45% during the recent years. The telecommunication sector has emerged as one of the
key sectors responsible for resurgent India’s economic growth. Contribution of
telecom sector in terms of revenue is 2.1 % of GDP as compared to 2.8% in
developed economies. Since FY05-FY09, the telecom industry has grown by a
healthy CAGR of 36.1%. But this growth is skewed in favour of wireless services
rather than fixed or wireline services. The telecom sector is one of the highest FDI
attracting sectors in India, and has recorded FDI inflows worth over Rs 45,530 crore
(US$ 9,993 million) between April 2000 and October 2010. According to the CII
Ernst & Young report titled 'India 2012: Telecom growth continues, revenue from
India's telecom services industry is projected to reach US$ 54billion in 2012, as
against US$ 31 billion in 2008. India offers an unprecedented opportunity for telecom
service operators, infrastructure vendors, manufacturers and associated services
companies. A host of factors are contributing to enlarged opportunities for growth and
investment in telecom sector:

• An expanding Indian economy with increased focus on the services sector

• Population mix moving favourably towards a younger age profile
• Urbanization with increasing incomes

Investors can look to capture the gains of the Indian telecom boom and diversify their
operations outside developed economies that are marked by saturated telecom markets
and lower GDP growth rates.
Source: INDIAN ECONOMIC REPORT DEC 2010

1.5 Status of Rural Telephony

The mobile subscriber base in India is 680 million out of which 68% of the
subscribers are from urban areas and the balance 32% is from rural areas. According
to TRAI, 91% of the villages in India are covered by at least one operator. Overall,
51% of the villages in India are covered by three operators and 31% of the villages are
covered by four operators.

Apart from the 200.77million fixed and WLL connections on March 2010 provided
in the rural areas, 570000 uncovered VPTs have been provided as on March 2010.
Thus, 96% of the villages in India have been covered by the VPTs. More than 3 lakh
PCOs are also providing community access in the rural areas. Further, Mobile Gramin
Sanchar Sewak Scheme (GSS) – a mobile Public Call Office (PCO) service is
provided at the doorstep of villagers. At present, 2772 GSSs are covering 12043
villages. Also, to provide Internet service, Sanchar Dhabas (Internet Kiosks) have
been provided in more than 3500 Block Headquarters out of the total 6337 Blocks in
the country. The target of 80 million rural connections by 2010 have already met
during year 2008 itself. USOF subsidy support scheme is also being utilized for
sharing wireless infrastructure in rural areas with about 19,000 towers by 2010.

This rapid growth is possible due to various proactive and positive decisions of the
Government and contribution of both by the public and the private sectors. The rapid
strides in the telecom sector have been facilitated by liberal policies of the
Government that provides easy market access for telecom equipment and a fair
regulatory framework for offering telecom services to the Indian consumers at
affordable prices. Presently, all the telecom services have been opened for private
participation. The Government has taken following main initiatives for the growth of
the Telecom Sector in rural India:
 • Increasing rural telephony has been the government's priority and roll-out of
any scheme may take various factors into consideration while inviting bids for
subsidy to be availed by the service providers to offer services in the rural
areas.
• The government will guarantee a modest return on investment for five years to
operators setting up rural telephones.
• According to the NCAER Rural Infrastructure Report (2007), the demand for
telecommunication services are surging across rural India, as middle class and
upper classes are growing in most villages but the tele-density levels are very
low. Government supported the growth of this sector by coming out with a
number of initiatives for the low end subscribers of rural India initiated
Universal Service Obligation (USO) fund. The USO fund was an initiative
taken up by the government to increase rural teledensity.
• As per vision 2010, government aimed to reach to 200 million rural
subscribers by 2012 and reduce urban-rural digital divide from present 25:1 to
5:1 by 2010.

2. SOME TELECOM INITIATIVES FOR RURAL

MARKETS
In India and across the world
2.1 Initiatives in India

2.1.1 RCOM targets rural customers with new services & sachet pricing for mobile
Internet access by introducing three initiatives:

• Launch of BharatNet High-speed Wireless Internet service plan

• Expanding rural services with new Grameen VAS
• High impact Machine-TO-Machine applications to be a thrust area

BharatNet Plan

To address the market base of around 4 million PC users in rural India with a need of
an effective broadband service with quality and speed, RCOM launched BharatNet
plan, the high-speed wireless internet service in over 20,000 rural locations across the
country. This is a high-speed variant of its Reliance NetConnect service, but
specifically designed for the rural and suburban markets offering speeds of
approximately 153 Kbps, which is 4 to 8 times the current dial-up speed of the wire-
line services. Additionally, speed quality will improve since it is no longer dependent
on the quality of the copper wire. As part of this, RCOM is offering BharatNet
internet access for just Rs 98/week with downloads upto 350MB. With this sachet
pricing, RCOM plans to create appeal with both, casual and heavy users.

Grameen VAS

RCOM's Grameen VAS services, a low tariff initiative, cater to the specific local
needs of rural mobile consumers in over 500,000 Indian villages. This roll-out
signifies the company's increased thrust into the vast potential but yet untapped Rural
VAS services. The underlying belief is that the mobile phone today is not just a tool
for communication, but a device to impart education, facilitate commerce and
transactions, offer health and travel solutions and a critical driver for community
building.
Grameen VAS will be an integral part of their day-to-day lives. Grameen VAS would
cover several specialised services including Mandi Bhav, Agriculture & Animal
Husbandry Updates, Weather Forecast, Local Info, Samachar etc. all in multiple
Indian Languages. These solutions can be categorised broadly under mLearning,
mHealth, mCommerce, mUpdates and GroupSampark (Community Messaging).
These services can be accessed via different modes i.e. Voice Portals, SMS, USSD,
Data (R-World) etc. To increase adoption, Grameen VAS is priced at Rs.15/month.

Machine to Machine Applications (M2M)

RCOM's third thrust area is high impact machine-to-machine applications. These are
mobile applications that aid automation, surveillance, remote monitoring, and data
gathering. The company is one of the largest users of IMs (Intelligent Modems) and
has successfully used them in energy solutions in urban and semi-urban areas. RCOM
sees a major potential of machine-to-machine solutions in both rural and urban
markets in India.
The M2M opportunity for rural market includes Automation of Agro & Irrigation
services, water level monitoring, and data gathering for milk & agri-cooperatives,
fisheries, poultry, and soil analysis. Similar such opportunities for the urban include
mobile ticketing, purchase at Kiosks and vending machines, and remote monitoring of
office automation products.

2.1.2 BSNL National Broadband Penetration Programme(NBPP)

It is a nationwide initiative to bridge the rural-urban digital divide by accelerating ICT

penetration in rural and remote areas.

Highlights of NBPP

NBPP project in line with GOI's objective of reaching 100 million broadband
subscribers by 2014 .USOF under DOT offers subsidy to consumers to the extent of
Rs. 4500 per connection.HCL will set up two call centres; one for enquiry and the
other for technical support (toll free numbers).BSNL is offering Broadband @512
Kbps at highly subsidized rates of Rs.99/- and Rs.150/- p.m. package.

2.1.3 Rural Broadband Initiative by Vodafone

Vodafone and Telecom are in commercial negotiations for Rural Broadband Initiative
(RBI).

Besides, Vodafone has launched a slew of offers for its rural customers. It introduced
low-cost handsets along with services such as information, entertainment, mobile
payments and money transfers.

2.1.4 Special Prepaid Grameen Packs by Airtel

Airtel offers special prepaid Grameen packs for rural customers. In 2008, it partnered
with Nokia to come up with two handsets that would have the menu and SMS
facilities in Kannada to achieve deeper penetration in rural Karnataka. Airtel also set
up service centres in rural areas of the state. Apart from these initiatives, the Telco
constantly reinvents its value added service offerings for rural areas.

2.1.5 Mobile Gramin Sanchar Sewak Scheme (GSS)

Mobile Gramin Sanchar Sewak Scheme (GSS) – a mobile Public Call Office (PCO)
service is provided at the doorstep of villagers. At present, 2772 GSSs are covering
12043 villages.

2.1.6 IFFCO Kisan Sanchar

IFFCO, or Indian Farmers Fertilisers Co-operative, in partnership with Bharti Airtel

launched IFFCO Kisan Sanchar, or IKSL. IKSL uses IFFCO’s huge network to sell
co-branded SIM cards to farmers, who use them to make calls. They also receive five
free voice messages daily on mandi prices, farming techniques, weather forecasts,
fertilizer availability, agriculture and related issues. In less than three years, the
service is available to over 85 lakh farmers across 18 states. IKSL accounts for almost
half a million of the 3 million subscribers that Airtel scoops up every month across
the country. The project proved to be a success for all the partners. Farmers agreed
that the information helped them. IFFCO’s outlets proved effective in distributing
SIM cards; for Airtel, three of the 11 villages turned “100 percent subscribers” despite
the presence of other telecom service providers

2.1.7 Mera Airtel Mera Vishwas

Airtel has come out to give a helping hand to the farmers of Vidharbha with its new
social responsibility initiative ‘Mera Airtel Mera Vishwas’. With this programme
Airtel aims to create alternate revenue opportunities to the farmers of Vidharbha.
Under this initiative Airtel will be presenting 100 farmers across 20 villages with
PCO boxes. Villages from Akola, Amravati, Yavatmal Bhandara and Wardha with a
population of 15,000 to 20,000 will be the first to benefit from this initiative. Along
with enhancing the lives of these farmers monetarily, this initiative will further
improve quality of life of the villagers by strengthening the telephone connectivity.
Each PCO box installed under this initiative is worth Rs. 2500 and is extended free of
cost to the farmers with free initial talk time of Rs 2800.

2.1.8 Nokia is also taking up several initiatives in the areas of microfinance,

distribution and value-added services specifically for farmers, as part of its strategy to
address India's rural market.

2.1.9 Innovative value added services like Krishi Labh, Airtel Mobile Pumps
launched by Airtel.

2.1.10 Initiatives of telecom PSU’s BSNL and MTNL as a part of social obligations
where they provide PCO’s to handicap citizens for creating employment avenues.

2.1.11 Spice Telecom will be launching local market rates for commodities across
Karnataka to connect with rural customers. Spice has localized contents available in
Punjabi and Kannada
2.1.12 Examples of effective distribution tie-ups in rural market: -
• Samsung has tied-up with the Indian Farmers Fertilizer Cooperative (IFFCO).
Thus, Samsung will use IFFCO's cooperative network for marketing the hand-
sets to rural consumers over a wide area.
• Nokia has entered into a partnership with HCL for distribution of its hand-sets.
• Motorola and Nokia have partnered with ITC e-Choupal which gave them
wider reach in rural market.

2.2 Initiatives Across the world

2.2.1 Grameen Phone (Grameen Foundation 2005, World Resource Institute,

2001) in Bangladesh

Highlights
It captured 63% of the country’s Mobile market
Average of 60 customers use each phone and average monthly bills amounted upto
$144.02 in 2000.
Model has been extended to Uganda.

Reasons for success

Uses Share access business model
Developed a cadre of phone entrepreneurs
Displays effective use of the Microfinance network for promoting Grameen Phone.
Uses GSM Technology
Significant subsidy being given to the service.

2.2.2 Smart Communications Inc (Anderson & Billou, 2007, Anderson et.al,
2005) in Philippines

Highlights
Mobile penetration was at 30% by 2004 and reached 70 % by 2008.

Reasons for success

Use of Innovative over the air payment system to overcome the availability problems
Developed smaller denominations of recharge
Use of used handsets reduced barriers to ownership.

2.2.3 Rural Communications in Chile (Wellenius, 2002)

Highlights
From 1995-2002 reduced the population living without access to basic voice
communication from 15 to 1 percent

Reasons for success

Reliance in market forces and minimum regulations
Simple and relatively expeditious processing
Effective Government leadership

2.2.4 African Experience in Mobile Telephony (Vodafone 2006, ITU 2006)

Highlights
15 million mobile subscribers added to subscriber base in 2004, equivalent to total
number of telephone subscribers in 1996
Mobile penetration three times the land line at 9.1 per 100 inhabitants
75 % of all African telephone subscribers are Mobile

Reasons for success

Use of Mobile technology to leap-frog the older technologies
Ability of Mobile operators to provide mobile coverage rapidly
High degree of liberalization and competition in the mobile sector
Reduction in Tariff combined with “ultra-low-cost” Handsets and availability of
prepaid service

3. ROAD MAP AHEAD

Building a successful rural marketing strategy
Historically telecom network in India was owned and managed by the government as
it is considered as a strategic service. Bottom of the Pyramid (BOP) marketing
strategies as advocated by Prahalad (2004) are based on aggregating the demand of
consumers who have low individual purchasing power and are spread out. The basic
commercial infrastructure suggested by Prahalad and Hart (2002) for the bottom of
the pyramid markets constitutes of four things, creating buying power, improving
access, tailoring local solutions and shaping aspirations.The 4 P’s Product, Price,
Place and Promotion combined with the fifth P of Positioning and sixth P of Policy
intervention together can give impetus to the current marketing strategies of the
telecom companies. Adapting the 4Ps marketing mix to the context of rural marketing
of telecom services we have the following strategies:

3.1 PRODUCT

Providing a cost effective technology solution to bring the benefits of a

personalized mobile information service to the huge farming community
across the country is not just an innovation but also a much-appreciated social
cause. Consumers need a good range with no network problems.

• Use of Next generation network (NGN)-Here one network transports all

information and services (voice, data, and all sorts of media such as video) by
encapsulating these into packets, like it is on the Internet. In the Next
Generation Networks, multiple access networks can connect customers to a
core network based on IP technology. These access networks include fibre
optics or coaxial cable networks connected to fixed locations or customers
connected through wi-fi as well as to 3G networks connected to mobile users.
Indian telecom networks are not as intensive as developed country’s telecom
networks and India's teledensity is low only in rural areas. 670,000 route
kilometers (419,000 miles) of optical fibres has been laid in India by the major
operators, even in remote areas and the process continues. BSNL alone has
laid optical fibre to 30,000 Telephone Exchanges out of their 36 Exchanges.
 Keeping in mind the viability of providing services in rural areas, an attractive
solution appears to be one which offers multiple service facility at low costs.
A rural network based on the extensive optical fibre network, using Internet
Protocol and offering a variety of services and the availability of open
platforms for service development, viz. the Next Generation Network, appears
to be an attractive proposition. Fibre network can be easily converted to Next
Generation network and then used for delivering multiple services at cheap
cost.

• Combining Wi-Fi & WiMax in cost effective way- Low population density
and spread out population, difficult topographical and climatic conditions
make it difficult to provide telecommunication service of acceptable quality by
traditional means at affordable prices (CDOT, 2007). But with the
development of new appropriate technology like wireless technologies it is
possible to overcome these difficulties. Wireless technology has been
proposed to be the first viable infrastructure to rural and underdeveloped areas.
(Pentland et.al, 2004) and Gunasekaran and Harmantzis, (2007) have therefore
recommended that villages near a larger town can take advantage of the fiber
backbone; a remote village can be connected via VSAT link. From the fiber
backbone, a point-to-point or point-to multipoint WiMAX link can be used to
connect one or more villages near the town, thus enabling WiMAX to
distribute locally among all rural community groups in a given village using
long distance Wi-Fi technology
• The cost-effective construction of base stations that can support multiple
standards simultaneously may help modify the RF (Radio Frequency) by
proper planning and assignment of standards through remote software changes
and maybe also upgrade to new standards through a software-only download.
The service provider must be able to meet the quantum jump in the demand
for service. The quality of service (QoS) must be satisfactory to keep up the
customer base and the cost of switching high.
• By developing customised variants of products-The customers want value for
money. They do not see any value in frills associated with the products. They
aim for the basic functionality. However, if the seller provides frills free of
cost they are happy with that. They are happy with such a high technology that
can fulfil their need. As "Motorola" launched seven models of Cellular Phones
of high technology but none took off. On the other hand, "Nokia" launched a
simple product, which has captured the market. Mobile handsets which are
simple to operate, with good battery performance requiring minimal
recharging, supporting local language, are durable and are low-cost may be a
good solution for the BOP market. Good battery performance would be the
most important among the above listed factors as it will be used by people
who do not have reliable access to electricity.
• The product has to be packed for low price and convenient usage.

3.2 PLACE

The successful strategy to crack the rural market should be not to create ‘special’
products but ‘special’ marketing initiatives instead, with a focus on efficient
distribution and availability. The importance of availability and developing
efficient distribution channels to gain market share have been realised by many. In
the case of telecom services studies Availability have been shown to be the major
 barrier to overcome (Anderson and Biliou, 2007).Distribution systems have been
found to be the most critical component and a barrier which needs to be overcome
(Prahalad & Hammond 2002) for success in marketing in rural areas. The
distribution task in these areas is considered to be more difficult than in urban
areas (Mandira, 1977), with low density of population and inaccessibility making
the problem of servicing villages individually difficult and often uneconomical.
Direct delivery of goods even to the top one percent of villages cost twice as much
as servicing urban markets (Ganguly 1985). To overcome the difficulties related
to distribution more intensive personal selling efforts need to be taken.

• In order to reach the nook and corner of the country companies need to adopt
localised way of distributing services. They have to reach the "local Paan
wala, Local Baniya". The SIM cards must be readily available when the
customers want to buy it. Some times the task of procuring the SIM is a
tedious job. The SIM cards should be made available through small shops or
kirana shops where the customers are comfortable. Also the top-up cards or
recharge coupons of all denominations should be made available.

• By adopting Syndicated distribution-The telecom industry needs to identify

successful partners in sectors like agriculture, health, banking and retail.
Companies having lesser distribution reach in rural areas can collaborate with
companies already having wide network in rural market. Identifying as many
different partners as possible will help organizations reach out to a maximum
variety of the rural population. Service providers such as banking, government
agencies and insurance companies already have a network of trained customer
service personnel and linking with these existing agencies can provide a cost-
effective way to access remote markets. Other possibilities include partnering
with post-offices, utility suppliers and educational establishments The purpose
of such partnership will be to leverage the existent marketing network that has
already been created by these partnering companies. Both partners stand to
benefit through extended knowledge sharing as well as profit division. Also,
this type of joint collaboration can help both companies to reduce distribution
costs and can convert operation which seems to be unviable into financially
viable operation.
However, if one wants to retain one’s own stronghold on the rural market,
telecom companies will need to opt for exclusive partnerships creating a
complex network of monopolistic rural distribution chain.
• In areas where there are not enough such retail chains, the product has to be
placed using innovative retail points which can be small portable kiosks or
booths.
• To have a vast coverage of rural arena companies can use their own delivery
vans to reach the rural consumers.

3.3 PROMOTION

• Personalised Selling Effort-Like educating the rural consumers about the use
of mobile services and the mobile handsets is very essential. According to E M
Johnson (2000), a customer sees a company through its front – line employees.
Therefore, they must, be well informed and provide the kind of service that
wins the customer’s approval. The firm must recognize that each employee or
 his representative is a salesman for the company’s service. In this, the retailers
selling SIM cards can play a big role. They can educate consumers about using
SMS facility and how to recharge the SIM cards. Also they can be educated
about the top-up cards and the tariffs should be displayed for their
convenience. The vendor also must be educated about the various schemes and
offers so that he communicates properly to the customers.
• By effective media communication-Media rural marketing is being used by
companies. They can either go for the traditional media or the modern media.
The traditional media include melas, puppetry, folk theatre etc. while the
modern media includes TV, radio, e-chaupal etc. For rural areas, promotion
methods like demonstrations, folk-theatres, road-shows, puppet shows, house-
to-house campaigns etc are more useful than conventional mass media
techniques.
• Word of mouth plays an important role to rural consumer in determining his
choice of mobile phone .Various innovative last mile strategies like organizing
‘Dangdut’ in Indonesia and ‘Jatras’ (dramas) in India and Bangladesh wherein
trained personnel are sent to the fields directly to interact with the rural
consumers, involving religious leaders ,respected community elders or village
heads in utilizing a certain product or service and then using them as
spokespersons to make others aware of the benefits of the schemes, arranging
monthly lucky draws in village markets or before local banks need to be
evolved to reach out to the largest sections of the sparsely distributed rural
population.
• Mass media campaigns often fail due to low literacy, remoteness and low
population density. Facing the challenge of lack of access to technology like
TV, mass media campaigns are also unable to take account of local dialects
and cultural differences. In order to fully benefit from the Mandi’s, Haats and
Melas could also be a great platform to display products. Every region
consisting of several villages is generally served by one satellite town termed
as Mandi where people prefer to go to buy their durable commodities. Over
25,000 melas are held every year all over the country. Out of these, 5000 are
commercial melas, 2,000 are cultural melas and 18,000 religious melas. The
following facts regarding melas will help us to understand their importance to
marketers: -
 Number of visitors per mela is approximately 7.5 lakh.
 On an average, 850 outlets are set-up in every mela.
 Average sale per day in a mela is Rs. 25 Lakh.

Mobile manufactures like Nokia, Motorola, LG, Samsung etc. have started to
reach out to the Indian villagers through Mandi’s, Haats (unregulated markets)
etc as their on-ground activity to attract the villagers towards their handsets.
• Rural folks can also be approached at local congregations like weddings,
religious and social gatherings like Ramleelas, dangals etc.
• Options like using Hot air balloon also work well in promotion in rural areas.
• Firms must be very careful in choosing the vehicle to be used for
communication. Only 16% of the rural population has access to a vernacular
newspaper. Therefore, the audio visuals must be planned to convey a right
message to the rural folk.
• Mobile banking is a catalyst to promote mobile services in untapped rural
India. Even today the banking services have not reached the rural India fully.
It will be very expensive to provide the banking services through branch
expansion or through ATM. Mobile phone is the ideal and unique vehicle to
 extend the banking services to rural India. Many African countries have
successfully employed mobile phones for fund transfer among the rural
population. RBI and the banking sector should make the necessary policy
changes and join hands with the telecom sector to reach the banking services
to the uncovered areas.
• By promoting products using Indian faces and themes that associate with rural
India. Using famous celebrities for endorsements, such as pop stars may be
successful in urban markets but fail to hit the right note with rural
communities if they lack the emotional connect.

3.4 PRICE

Rural consumers are price sensitive hence they univocally voice for low call
rates and cheap handsets.

• Sachet pricing-The component of recharge needs to be tailored according to

the needs of rural masses as the cost per-use is more important than the cost of
the overall product or service.
• Value for Money-Bundling communication services containing information
relevant to people’s livelihoods, such as market data, finance availability or
potential sales data will be highly appreciated.
• Reducing entry barriers-By adopting successful practices including per second
charging and giving away SIM cards loaded with free minutes.
• Government needs to provide financial support / subsidy to the telecom
companies to compensate the costs of bundling of handsets along with
connection and subsidising the handset cost.

3. 5 The fifth P of POSITIONING

Brand visibility can be gained by making a presence in large village congregations
such as fairs, weddings, religious and social gatherings etc. to differentiate itself
amongst others positioning needs to be done on following aspects.

3.5.1 Need Based

• SMS facility in local language if provided may increase usage by the BOP
consumers, who may not be comfortable with English or our National
language (Hindi). This can be done by making the keypads in local language,
which can be easily replaced from the existing handsets.
• The process of registering through a service provider should be simple and
transparent so that the delivery process of SIM cards gets over very quickly.
As it is mandatory for the service subscriber to furnish details regarding his
place of residence, identity etc. therefore instead of asking the customer to get
passport sized photos for filling the application form, it would be better if the
seller has a digicam or webcam, as it can save a lot of paper work. This would
save inconvenience and expenditure for the customer as well as the vendor.
• The literacy rate in rural areas is very low. It is therefore, important to develop
content in vernacular language and design the application software such that it
is user-friendly and menu driven, with innovative graphics to overcome the
limitations of illiteracy.
• The product pack has to be easily understood by the rural consumer. The
information on the pack is preferred in local language communicating the
functional benefit of the product.

3.5.2 Value Based

• Rural consumers wouldn’t mind if SMS facility was not provided but could
provide more talk time instead.
• Free talk-time offers like free calls to any two or three pre-selected lines, or,
free calls or subsidized rates when call is made to someone using the same
service would be very attractive service.
• They mainly use the mobile for receiving customer calls. Thus they wouldn’t
mind a zero- call balance. Whenever they want to make calls, they could
recharge using low-ticket top-up cards.
• Product/service should be able to help them or in any way increase
productivity for the users.
• Most of the add-on services including the STD facility could be made
optional. This may further reduce the cost of providing service to them. At the
same time special tariffs can be introduced for the sections that make large
number of STD/ISD calls.
• Operators should take initiatives to offer regional and national news, weather
forecasts and market prices for crops in regional languages to help improve
mobile uptake in rural areas.

3.5.3 Variety based

• Selling more to existing subscriber-This is relatively easier as compared to

acquiring new customers. Also since now the new subscriptions will largely
happen at the bottom of the pyramid therefore the new subscriptions will
further lower the average revenue per user. In such a scenario mobile VAS
sector including Mandi Bhav, Agriculture & Animal Husbandry Updates,
Weather Forecast, Local Info, Samachar etc. all in multiple Indian Languages.
I s a potential long-term revenue stream as it will be easier to sell more to the
existing customers.
• In order to address the issue of improving the willingness to consume,
distribute or sell a product or in other words to make the product or service
more acceptable to the rural consumers the strategy would be to incorporate
features which would make it attractive to them. Within the product there is a
need for customization in terms of language and user friendliness. In a rural
area a radio combined with a mobile might make more sense to the rural
consumer than perhaps a camera.
• Additional facilities like flash-light, AM/FM radio facility etc. would be very
attractive for the handsets.
• Mobile services can act as a source of entertainment.

3.5.4 Occasion Based

 • To effectively tap the rural market, a brand must associate it with the same
things the rural folks do. The companies can associate themselves with the
myriad rituals and celebrations. Adopting local strategies will position the
brand as well informed and interested in rural conditions. Such strategies are
also considerably inexpensive as opposed to nationwide adoption of hyper
local strategies, telecom companies will need to undertake detailed research on
socio cultural knowledge systems in each of these focus communities
individually and assess how the same can be converted into community
specific marketing efforts. Occasional Offers such as free talk-time offers,
festival offers (on national festivals, local festivals, sports fests etc.), low call
rates etc would also attract the customers.

Besides the above mentioned strategies companies also need to take

the task of Rural Enablement as there is a clear need to educate rural
consumers on the benefits of adopting communication services and possible
incremental income hikes. This challenging job requires a good understanding
of the culture and livelihood of rural dwellers as well as a willingness to adapt
marketing strategies to local conditions and expectations. It is essential for the
service providers to convey a serious long-term commitment to their
responsibilities in providing a good quality communication service.
These consumers should be pushed higher up in the value chain by a process
of co-creation which would benefit both the company as well as the BOP
community. The shared-access model of Grameen Telephones in Bangladesh
can be adopted where rural telephony can be improved through the provision
of mobile telephone service by creating microenterprises that can both
generate individual income and provide the whole village with connectivity.
By working closely with their customers, service providers can co-create value
and deliver innovation that will form the basis for a competitive advantage and
mutual success.

3. 6 The sixth P of POLICY INTERVENTION

As telecom and network connectivity is seen as enablers of nation’s socio-

economic growth, the Government is aggressively looking at plans to improve
the tele-density in rural areas. In order to improve rural teledensity following
measures are also suggested:

3.6.1 To improve site acquisition mechanism

As considerable time is spent for the acquisition of land and for obtaining
permission from the quasi-government authorities like Panchayats for the
erection of BTS withstanding a threat of site demolition and considerable
delay Government should instruct the Village Panchayats / Forest departments
/ Highway authorities to issue the permission for the erection of BTS site on a
fast track .Issues related to difficulty in laying down optical fibre cable due to
right of way issues, the acquisition of land should be handled on priority.

3.6.2 Making SEB (grid) power connection available at industrial rate

The Government should treat the telecom as essential services and mandated
to the state electricity board that the power connections should be made
available within one month of application and at industrial tariff. The BTS
sites should be exempted from power cuts and uninterrupted power supply
should be made available.

USO subsidy should be considered for non-conventional energy sources like

Wind power, solar energy and bio fuels.

3.6.3 Connecting rural areas with VSAT

To reduce the delay and effort in providing optical fibre, leased lines and MW
backbones at rural areas, the Government should provide VSAT connectivity
at these rural areas, faster approval and lesser charges.

3.6.4 USO subsidy for OFC connectivity

As the OFC connectivity at rural areas requires huge investments, USO Fund
should be made available to the telecom operators who invest capital
expenditure for rural connectivity. In order to reduce the capital expenditure
Government should mandate that the OFC infrastructure available in rural
India should be shared among all operators at a pre-fixed nominal cost.

4. NEW RESEARCH DIRECTIONS

4.1 Need for customer segmentation

Rural segmentation remains a major challenge for the marketers of telecom

services and this will be the key to evolving successful marketing strategies in
future. Further studies might be initiated to develop an understanding about
the rural consumers and rural segments to obtain strategic marketing insights.
Detailed segmentation based on occupation, literacy, income and noticeable
service needs will allow for the preservation of profit margins in sectors which
can afford such premium costs while allowing for subsidized rates in the rural
markets. Rural consumers will thereby be served strategically with a good
service and at effective price points.

4.2 Innovation in services

C.K. Prahalad describes in comprehensive detail how "bottom-of-the-

pyramid" thinking can lead to the creation of "an impossibly low-cost, high-
quality new business model."
Customised services need to be tailored catering to exclusive customer
segments. Understanding the intricacies of their lives enables successful
product service creations and innovative bundling for profitability resonant
with the needs and expenditure.
Ensuring effective user-friendly after sales services and maintenance is also a
great challenge in view of huge regional disparities.
 5. CONCLUSION

The Indian rural market offers a huge opportunity for the telecom sector, waiting to be
tapped. The challenge for the marketers is to identify and accept the uniqueness of
these markets and develop strategies to suit their needs. The paper dwelt on the
complexities of selling in the hinterland (rural market) and the efforts required in
building competitive brands in the heart of India which requires an in- depth
understanding of rural livelihood rather than of rural lifestyle and a willingness to
become involved in rural communities by developing an appreciation for rural
markets, perceiving the rural community as a special customer base which is worth
investing in and helping rural consumers to understand the value of the services by
showing how they can be used to best advantage. Operators need to create and
implement business models capable of driving profitable growth through a rural
expansion strategy. Obtaining local insights is of utmost importance for succeeding in
these markets.

Thus, comes the conclusion that any sound strategy should be devised only in tune
with the “aspirations of the consumer” for which it is important to adapt the 4Ps of
marketing mix combined with fifth P of Positioning and sixth P of Policy
Intervention as per the rural perspective.
References:

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