Why are marketers in India making a beeline for semi-urban and rural markets? - Sandeep Sharma, President, R K Swamy Media Group
Rural market is currently witnessing a high demand; in quite a large part of the country the rural segment of market contributes more profit than its urban counterpart writes Sandeep Sharma.
Consumption is a constantly evolving process influenced by a multiplicity of factors, of which the major ones are disposable income, level of awareness and standard of living. Different societies go through specific consumption patterns at different points of time. It is, therefore, interesting to assess the current situation in rural India and analyse macro-level patterns and trends while appreciating the fact that differences do exist at the micro-level. The Government of India has planned various initiatives to provide and improve the infrastructure in rural areas which can have a multiplier effect in increasing movements of goods, services and thereby improve earnings potential of rural areas subsequently improving consumption.
India’s per capita GDP in rural regions has grown at a Compound Annual Growth Rate (CAGR) of 6.2 percent since 2000. The Fast Moving Consumer Goods (FMCG) sector in rural and semi-urban India is expected to reach US$ 100 billion by 2025
Rural India is growing and keeping pace with its urban counterparts. Its aspirations are becoming similar to those of the urban consumers. Audis / BMWs are not an uncommon sight in the hinterland.
Rural markets are different and hence need a different approach to marketing. Consumers in the rural regions are also expected to embrace online purchases over time and drive consumption digitally. The rural regions are already well covered by basic telecommunication services and are now witnessing increasing penetration of computers and smartphones. Reliance Jio is likely to be the greatest tipping point for a rural marketer. The Internet has become a cost-effective means for a company looking to overcome geographical barriers and broaden its reach.
Some segments require a more meticulous approach to marketing when it comes to the rural audience;
FMCG – Smaller SKUs (e.g. Chic Shampoo) were introduced for market penetration in rural India but it has become relevant in the urban market as well due to convenience and increased travel. During the ‘live’ demonstrations of shampoo usage, the audience were invited to touch and smell the freshly-shampooed hair of volunteers (usually young village boys). Movies of popular actors like Rajnikanth films were screened in villages and Chik shampoo advertisements were shown in between, thus creating a strong impression in the minds of viewers. Shampoo sachets were also distributed for free after such screening and at village melas to create awareness
Finance – Private Banks such as Kotak / HDFC are launching products specifically catering to the Rural market everything from a plain savings product, to loans for businesses and wealth management advice. The great Indian rural story for long has been told by shampoo and motor cycle manufacturers, but bankers, especially the private ones, who always look for the big fish, have been lagging behind. Not anymore. It is not that the financial inclusion slogan of the regulator and the government that is leading lenders such as HDFC Bank and Kotak Mahindra into the Indian hinterland, but the sheer opportunity & potential to make money.
Logistics – Rural logistics is a regional logistics concept relative to urban logistics market. Rural logistics mainly refer to logistics activities in rural areas and covers transportation, loading, unloading, packaging and storage activities provided for production, life and other economic activities of peasant household. Better infrastructure has enabled bridging gaps between urban / rural markets. Hub & Spoke model of transportation enables delivery for hard to reach market catering to a much wider geography and hence reaching out to the rural consumer as the by-product.
Brands – Rural consumers have started experimenting and adopting like switching commodity products like loose oil for the refined variety offered by the brands. Consumers have graduated to branded products with increased affordability as a result of increasing rural incomes in recent years. A brand-name in the rural context facilitates easy brand recall and in drawing any colours, visual or numeric association. But some brands are known by their names, for example, Nirma and Baba Zarda. The choice of Sampoorna as the name for its rural television brand helped LG as it is a Sanskrit word meaning "wholesome" and hence it cuts across all regional linguistics barriers. The latest one is Broke Bond Sehatmand.The motive behind launching Sehatmand was tea as Health Supplement in the rural areas. HUL fussed Vitamin B in every granule of tea by the use of technology. Company is tried to fill-up the gap of required Vitamin B with an intention to reduce numbers
Key to success in rural markets not dissimilar to urban markets
· Availability – Better infrastructure and enhanced logistics have already made this possible
· Affordability – Price conscious consumer, but smaller SKUs help overcome the hurdle and influence trials
· Acceptability – Communication needs to be different as rural consumer takes additional time to build trust. The need to identify and involve key influencers (Sarpanch) in marketing initiatives.
Taking advantage of these developments, online portals are being viewed as key channels for companies trying to enter and establish themselves in the rural market.
Rural market is currently witnessing a high demand; in quite a large part of the country the rural segment of market contributes more profit than its urban counterpart. Rural households have moved from datun to tooth brush and tooth paste, from soil to shampoo and beauty soap to hair and body wash, from traditional mosquito repellent to coil and mats. They are shifting from local and unbranded to national brands, from low cost price product to premium products. The general impression is that only agricultural inputs like seeds, fertilizers, pesticides, and cattle feed and agricultural machinery has a potential for growth in the rural market. But it is evident each and every sector is booming in rural areas. Rural India stands on the cusp of a consumption boom. Brands that are not geared up to capitalize are likely to be left behind. Brands that don’t understand and communicate with its rural audience in their own unique voice and dialect are likely to suffer.
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