Marketing to Rural India: A Road Ahead

Francis Xavier More and more companies are now looking at rural markets for growth. As the urban markets are getting saturated and the disposable incomes are decreasing, rural market with its huge latent demand seems to be beckoning the marketers. Rural market is not what many believed it was - poor populace, not aware of brands and not conscious of quality. On the contrary, rural market is now characterized by high disposable incomes and more aware consumers. In quantifying and tracking the growth of rural markets for various products and the contribution of households with different incomes, NCAER and ORGMARG have demolished many myths. They demonstrated that rural India is not really an ocean of poverty with a few wealthy landlords floating around. They also demolished the myth that rural folk buy only the cheapest of products. Therefore, it is now almost universally accepted among marketers that the rural markets have emerged. They are dominant in many branded segments and are large contributors to most of the others. After having gone this far, one would have imagined that there would be a stampede to understand and target the rural markets. However, nothing of that sort has happened for almost a decade since the importance of rural markets has been widely accepted. Among the host of reasons why this is so is the fact that quantification of the contribution of the rural market did not lead to its demystification. Villages remain remote, inaccessible and alien to the minds of most of the marketers. There is this chasm between cities and villages that has never been bridged. The result is the kind of tokenism that we see. Rural marketing means a van campaign, a badly made cinema commercial, a few wall paintings and occasional participation in haats / shandies. Recently, there was even the incredible suggestion that vans should take CTVs and refrigerators to villages and sell them directly to the village folk! Then there were those rare attempts at coming up with products for rural markets which most often reflected the ignorance of the marketer about rural customers. Naturally, they disappeared without a trace. To understand this phenomenon, all we have to do is pick up 100 best-selling branded consumer products in the rural areas. It is unlikely that we'll find even five of them as those made originally for rural folk. The hypothesis that the high degree of competition as a result of liberalization and globalization would compel marketers to look at rural areas as an opportunity has not worked either. Competition has unleashed a battle of survival of the kind that marketers in the country have never faced before and the almost reflexive reaction has been a total preoccupation with the short-term. And the marketing community, embattled thus, simply has not had the will or the resources to embark on a journey into the unknown. The inclination to deal with the perceived complexities or to come up with the required

discipline in dealing with the rural markets, which was not there during the leisurely period prior to liberalization, could hardly be expected now. Given this background, the thesis of this presentation is that while the marketers have steadfastly refused to go near the villages, the rural consumers have been moving closer to the cities over the years. This movement has gathered momentum in the last decade because of the sociopolitical upheaval happening in the village. The forces that have been unleashed are so powerful and the changes so rapid that villages in many parts of the country bear no resemblance to what they were 10 years ago, even though in physical appearance they may remain similar to what they were earlier. The point is that a marketer willing to have a closer look today is likely to find that rural India is not all that complex, remote and alien as he believed it to be. On this basis, a perspective is presented here which makes rural marketing truly viable. The inputs for this analysis have come from my own exposure to villages over 26 years. Francis Kanoi as a company has, on an average, covered some 5,000 villages a year, for the last 10 years, interacting with possibly a million rural people. This apart, I was also fortunate to be exposed to the holistic perspective that 120 Mudra Institute of Communication Ahmedabad (MICA) students brought from villages across the country, over two years, after each of them had spent two weeks living in the villages. The Classical Understanding of Rural Communities A rigid hierarchical structure based on landholdings and caste and a very strong mooring in traditions were the basic characteristics of a classical village. The village represented a picture of unity and stability, with everyone knowing his/her place and respecting tradition. Within families, the patriarch called the shots and was obeyed without question. In other words, the decision-making within families, and therefore within villages, was in the hands of the elders. Villages, per force, have had to be highly politically conscious because their dependence on the Government is so direct and all encompassing. Water, power, crop prices, credit, roads and jobs for their children, were all affected by Governmental action. Therefore, the dominant sections of the villages were always politically allied. And this alliance remained stable for a long time. The villages have always had far too many people needing to be supported by far too little of land. Therefore migrations to cities have always been there. The well-to-do in the rural areas educated their children and got them Government jobs. In some States, they even sent them abroad. The skilled workers found better remuneration for their skills in the cities and the poor went wherever there was need for manual labor. The Revolution that is Underway in Rural India The fragmentation that we see today in the political constituencies is a direct reflection of the breakdown of the hierarchical structure of the villages. The rigid hierarchical structure which compartmentalized people on the basis of their caste, together with the huge disparities in the economic status of these groups, was a fertile ground for a social revolution.

The drivers of this revolution were education, reservations and the coming of age of a new generation which was educated, exposed to the world and therefore not intrinsically inclined to accept either the hierarchical structure or the traditions. They could readily see that the existing village structure, and the political order supported by it, simply did not allow an outlet for their mounting aspirations. The middle groups, which had seen the transformation of the sizeable sections of SC/STs through reservations, wanted to share its benefits. They simply refused to wait in the hierarchical queue and accept the crumbs that came to them. They were impatient and demanding and they started realizing the political clout that their numbers offered them. Thus, the process of disintegration of hierarchies began in the States, with reservation policies being extended to backward classes. And the Mandal issue broke the last line of resistance in this regard. The impact across States has not been uniform. But the bottom line is that the traditional structures are either dead or dying. What are the implications of this revolution on marketing? The impacts of the breakdown of hierarchical structures in rural India have been as follows: The Education and Prosperity Levels have percolated Along with the hierarchical structure, the hegemony that elders had in decision making at family and community levels is also breaking down. Therefore the young are either having a say in decision-making or they have simply taken over decision-making. The young are educated. An education beyond middle school has meant intense exposure to urban influences. The educated youth are the most exposed to TV and the satellite channels. This means that they are not only exposed to metropolitan lifestyles in the capitals of their States or the major cities of our country, they are also exposed to the world. They have images, either real or of a celluloid kind, of how their counterparts in cities live. Most of it is of the elite, and many of them aspire to similar lifestyles. If they could, many of them would go to the cities. But the number of aspirants has gone up exponentially and the opportunities in cities/towns by way of Government and public sector jobs have shrunk. The village youth are at a disadvantage vis-a-vis the city youth in competing for private sector jobs. In other words, the cities have become inhospitable to them. Therefore, many are staying out in villages, setting up businesses there or in the nearby towns and cities. The implications of the above in marketing terms are:

The young and the educated in the villages are already large in number an their number is increasing. Already 40 percent of all those graduating from colleges are rural youth. They are the decision-makers. They are not very different in education, exposure, attitudes and aspirations from their counterparts, at least in smaller cities and towns. If we look at this group, in this fashion, most of the stereotypes in the minds of the marketers that made the rural customer so forbidding, would simply disappear.

Villages of relevance to marketers of branded goods are urbanizing rapidly. The act that signals the crossing of the threshold and an entry into what can be loosely called middle class, through upward economic mobility, is the extent to which children are educated. Educating their children through high school can be seen as a cut-off for the middle class attitude.

Given the above, we can as well hypothesize that educated youth will encompass most of the households which are significant consumers of branded goods. Since the argument is that educated youth in the villages are urbanized, it follows that almost all the households of relevance to the marketer are urbanized or have a strong urban influence within. In other words, we can see such households as representing the urbanized staying in the suburbs of districts called villages! The Cosmopolitan City Dweller and the Urbanized from the Districts Since marketing is to target the growing segments, we can see the urbanlike village dweller as an urbanized person from the districts. The point of such a perspective is that we are reducing complexity and make targeting more feasible by looking at the market as comprising just two segments - the cosmopolitan city dwellers and the urbanized people from the districts. The village then becomes a location or a suburb of a district. And the district becomes the basic geographical entity. Since the urban-like populations in the villages are taken as a part of the district, they will represent the dominant part of the market in most of the districts. Thus, when we look at the districts we are really looking at the new generation from the villages. In other words, from this perspective, the rural customer gets the kind of attention that he/she never ever got. City Markets and District Markets If we take the above logic forward, we can look at India as comprising large cities, meaning those with a population of over 500,000 and other urban areas. The cut-off at one to five lakh cities is not arbitrary. One to five lakh cities are the primary feeder markets for small towns and rural areas in logistic terms. And because, individually, they are not big enough and their economies are closely linked to the economies of villages, they are unlikely to dominate the attention as the large cities do. The next move will be to see districts as those with a large city and those without a large city. And, we can call those with a large city simply as 'city markets' and those without a large city as 'district markets'. If we then aggregate them along the respective lines, we have two entities which are sizeable and reasonably homogeneous among themselves and therefore become viable segments requiring focused attention. Take the example of color television sets. The city markets represent 60 percent of the total and the district markets represent 40 percent. The distribution of these markets across the states vary, but they are individually sizeable in all states. In the case of two-wheelers, the reverse is the case with districts markets accounting for 60 percent of the total. What is the point of a city / district segmentation in rural marketing terms?

The sway that big cities exercise on all aspects of marketing, in most companies, is unbelievable. The very act of separating them will dramatically increase the attention paid to consumers elsewhere. For example, if Mumbai, Pune, Nagpur, Nasik, and so on, and rural Maharashtra were to be the preoccupation of one person, rural Maharashtra has no chance at all of getting any attention. Take the example of color TVs (CTVs). Mumbai alone accounts for 400,000 units and the whole of rural Maharashtra, comprising thousands of villages, does not account for even half this number. But if you take out these cities, suddenly rural Maharashtra becomes very interesting. Add rural Maharashtra to the smaller cities and towns which are not very different from the villages as far as a CTV buyer is concerned, then the perspective changes completely.

In the districts marketing set-up, since rural areas will be the dominant contributors, they will compel the kind of attention that they deserve. A district's perspective removes the cobwebs of complexities, heterogeneity, access, target ability, and so on that have hindered rural marketing initiatives. Rural marketing requires every element of marketing including product, pricing, packaging, advertising, and media planning to have the rural customer as the target. And this becomes possible when we have districts marketing as a separate entity.

Since the city and district markets will be different in every imaginable way, the logical thing to do is to have two completely independent set-ups covering marketing, including product management, sales and distribution for each of the entities from the HO to the states. Ultimately, markets are where people are. India is urbanizing faster than what is revealed by the statistics because the statistics don't count urbanized people either choosing or being forced to live in villages. These people are urbanized, but not the same as the city dwellers, but neither are they anything like the rural folk that the stereotypes depict. There is a huge opportunity out there in understanding them, addressing their needs and going closer to them. Doing this requires organizations to restructure themselves and to make a part of the organization totally dedicated to this task. And those who do it early and well, will really enjoy the first-mover advantage in creating an organization that is best placed to cater to the whole of the country.

http://www.slideshare.net/yashpal01/sales-promotional-strategies-in-rural-market This is for sales/ promotion and distribution strategy. http://www.authorstream.com/Presentation/rahul01987-241265-hul-final-hulfinal-090728133705phpapp01-education-ppt-powerpoint/ http://www.slideshare.net/siddharth/godrej-rural-project http://www.chillibreeze.com/articles_various/rural-marketing.asp

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