Sunday, December 28, 2008

Pro-active Rural Marketing strategies

Hi friends


We had a small session taken by Mr. Harish Bijoor. He runs his own consulting firm and teaches a course on Branding at ISB Hyderabad. He specializes in the domain of coffee. You can visit one of his 4 blogs dealing with different topics like:


Indian Marketing Trends - Some observable trends in Indian Marketing Strategies

Brand Thinker - Some thoughts about brands

Ask Harish Bijoor - You ask and he will answer.... Ask at harishbijoor@hotmail.com

India Coffee - About coffee


The session was enlightening in many ways. He talked about the potential of the rural markets, but not in a way that I expected. He was more practical and sound and loaded with examples. Some of his examples were very illustrative of some ideas that he had.


To illustrate the marketing trends in India, he compared it to the Apartheid in South Africa, where the minority whites controlled the majority blacks. Similarly in marketing, the minority Urban Marketers are controlling the majority Rural Market. Rural Markets are as important and significant as the urban market. We were shown statistics of so many urban-products which have a huge presence in the rural markets, sometimes even more than in the urban markets.


Rural Markets go more by the fundamentals (need and want) whereas the urban markets are swayed by the sentimentals (desire and aspiration). For this, he used the example of the Bio-fresh TV made by Samsung. The print ad showed that watching the TV actually refreshes a person. In the initial stages, they made 1,80,000 TVs for the urban market and an equal number of televisions for the rural markets too. In terms of sales, all the TVs made for the urban markets were sold within 2 months, whereas only 60 TV sets were sold in the rural markets in the same period! This startled the Samsung executives. When they researched as to why the product did not attract the rural customers, they found that the ad did not resonate well with the rural consumers who said that red petals coming out from the TV screen defies their common sense. They felt that the ad was cheating them. But for the urban consumer, the red rose-petals signified life and energy.


Similarly, we are driven by sentimentals when we buy a oxy-fresh toothpaste (knowing very well that oxygen is a gas and cannot possibly have more effect than it already does have on our teeth) or when we buy a Peter England shirt (just because it makes us feel "honest").


Are rural markets really that huge? Well, let me give you the basic fact: 74% of India is rural India and 26% of it is urban India. Now consider this:

  1. Lipsticks are used by more than 11% of the rural women and less than 22% of the urban women
  2. 46% of the soft drinks sales happen in the rural areas
  3. Talcum powder is used by more than 25% of rural India
  4. Credit cards are a rage in rural India

And the list goes on…


The fact is clear: Rural consumers are more passionate about the brands that they use as compared to urban consumers. They have less choice and hence are more involved with the brand as compared to their urban counterparts.


We typically look at rural consumers using C. K Prahalad’s “Bottom of the Pyramid” concept and say that the “bottom” set of people are the poor, impoverished people of the world. A typical BoP image would be as shown below:



But break up the pyramid by area and it looks like this:



We can clearly see that this picture shows more optimism than the previous BoP image. This picture shows the potential that lies in the rural markets in India and any other place in the world. This is how one should actually view the rural markets as: An opportunity waiting for you to tap into.


The typical urban marketer looks at any promotion in this way: He first targets the G1 set of customers and then proceeds to G2 and once that is exhausted he proceeds to G3. When there is a slowdown in the urban market or recession occurs, then only the urban marketer looks at G4. There is a very remote chance that the urban marketer even looks at G5 or G6 group of people. The right approach for a sensible marketer is to market the product to G1 and G4 simultaneously. After this, he/she should proceed to G2 and G5 and then later on to G3 and G6. Both the rural and urban markets must be looked at with equal opportunity.


Surely, a person may research a lot about the behaviour of rural consumers and design a product accordingly. But one must also be sensitive to the rural consumer. This was illustrated with a very good example, which you can read at this link (Click for Link).


The first question that comes to our mind is the amount of disposable income that separates the rural and urban markets. Surely urban people have more disposable income than their rural counterparts (almost twice per person). But think about the spending habits in the long run. Who makes a better long-term consumer – a consumer who spends money on a perfume every month or the one who carefully selects a perfume once a year? Common sense says that the first consumer is a better option, but research says that the 2nd consumer is more loyal to a brand as compared to the first person. From a strategic point of view, it is necessary for you to build a base – and what better base than 74% of the population waiting to be reached to!


Jane Jacobs said “Great cities are not like towns, only larger. They are not like suburbs, only denser. They differ from towns and suburbs in basic ways, and one of them is that cities are, by definition, full of strangers.” Yes, we in cities are strangers to each other. But a village is a community. Each person knows what the other person is upto. So when you approach a person, you are essentially approaching a group of people he/she influences. Hence, one must be careful when approaching a rural consumer as a wrong move may affect a larger set of consumers.


One more point that crept up was the value of money to a consumer. Traditional thought dictates that “Money is what money can buy” or “Money is what money is”. But we fail to consider how the money is earned – the same Rs. 100 can be earned by a daily-wage worker in a week, by an accountant in a day and by a fashion model in a few minutes of work. The value of money changes with the profession and this must be considered before jumping to rural markets.


The new definition of literacy is any person who has eyes and ears and can watch a Television. Media has played a huge role in educating the rural consumer about various brands and technologies and considering that the penetration of TV in India is around 97%, it is quite obvious that the TV is a very powerful medium of communication.


Another basic difference between a rural and urban consumer is that of the after-sales service. Urban consumer sees after-sales service and product usage as a simple “customer service” but the rural consumer views this with delight and ecstasy. For him, the product is mystical and precious in its usage. So it becomes necessary for us, as marketers to talk to the customer in the language he/she thinks and dreams in, in order to reach out to his senses much better and develop a relationship.


Three more examples were told about the promotion of products using the simplest, yet very effective ideas. They are:


  1. Tata-Kaapi on Papads in marriages (Link)
  2. Tata Coorg Pure Coffee on eggs (Link)
  3. Tata Coffee ads in KarolBagh (Link)


These 3 examples illustrate the fact that you just need to look at the right opportunity. When you want it to happen, it will happen!




There was also a mention about the 3 layers of consumers in India:


  1. Layer 1 consumer lives in the big city. In her family, 5.5 people reside and consume in a home on an average. She is fully a consumer.
  2. Layer 2 consumer lives in the periphery of a city or in a Tier 2 city. She is part consumer (70%) and part seller (30%).
  3. Layer 3 consumer lives in the villages of India. She is poor and wants to rise in the social ladder. She is not even a consumer most of the times, because she cannot afford the goods. She is a 100% reseller. She acts as a individual distributor given the chance. TARGET HER!!!


Well, this is what Mr. Bijoor told us. You can read an interview of his here (Link) for more details about him.


Ciao in the New Year! Have a blast friends and colleagues!

5 comments:

Sugandha said...

awesome gyaan for... U know what ;-)

Rajesh Aithal said...

Thanks Varun linking up to my blog -:)

Rajesh

Sugandha said...

Alternative Perspective: The popular 'bottom of the pyramid' (BOP) proposition argues that large companies can make a fortune by selling to poor people and simultaneously help eradicate poverty. While a few market opportunities do exist, the market at the BOP is generally too small monetarily to be very profitable for most multinationals. At the same time, the private sector can play a key role in poverty alleviation by viewing the poor as producers, and emphasize buying from them, rather than selling to them.

Do also read this for the complete picture: Karnani, Aneel G.,Fortune at the Bottom of the Pyramid: A Mirage. Ross School of Business Paper No. 1035; California Management Review, Forthcoming. Available at SSRN: http://ssrn.com/abstract=914518

krishna said...

Very meaningful insights.Thanks indeed. Looking for some inputs on Marketing Research, essentially some corporate examples of wrong/vague problem definition resulting in faulty marketing research.

Varun Reddy Sevva said...

@ Sugandha: Thanks for the comment and the inputs... Will look at it...

@ Sir: Thanks a lot for linking to my blog! It's an honour for me!

@ Krishna: Thanks for the comment. I merely reproduced what Mr. Bijoor told us in the session. Although I am interested in marketing, I am not a core-marketeer. But will certainly work on some examples w.r.t. faulty marketing research and post them when done...