Rural markets have acquired significance in India as the overall growth of the economy has resulted in substantial increase in the purchasing power of rural communities. As urban markets are getting saturated and competitive, companies focus themselves in capturing the vast rural market. “Go Rural” is the slogan of marketing gurus after analyzing the socio-economic changes in villages. Rural markets accounts for 54% of FMCG and 60% of durable goods. Rural consumption is getting high as the technology is advancing everywhere and also buying pattern and demand of the rural consumers have changed from basic low-priced product to luxurious ones due to their increased income.
Let us now understand the different promotion strategies involved in rural marketing. These are described as follows:
This article describes some of the common product strategies that companies have used to penetrate rural markets. These range from selling small packs, innovative product design, sturdy products and giving names that are more acceptable in rural India.
Designs need to be modified to suit rural habits and lifestyles. Electric gadgets, for example, must sustain irregular voltage and long periods of electricity cuts. The Godrej ChotuKool is an example of complete product redesign for rural areas. “Rural consumers show a distinct preference for bright colours,” write Kotler et al. (2009), which is used by products such as Lifebuoy and Tiger biscuits. They give the example of Hindustan Latex Ltd, which found in a survey in Uttar Pradesh that rural households preferred bright colours. It then decided to re-launch its Rakshak condoms in bright yellow and red colours as these were considered the colours of festivity.
Pricing for rural areas requires innovative approaches. The price points have to be kept in mind while, at the same time, not compromising with the utility and sturdiness of the product. While it is true that rural preference for branded products is increasing, companies must avoid the tendency to introduce frills and increase the price. Very often rural consumers prefer basic products at good prices.
Some of the pricing strategies that can be followed are given below:
Cost is a great deterrent for a rural marketing plan. Marketing managers struggle to control costs in serving rural markets—large distances, small orders, lack of economical transportation, non-availability of warehouses, excessive spoilage and damages. Each of these adds to the cost. It would not be wrong to compare the cost model for rural India to organizing an Indian wedding—budgets can quickly go out of control and unforeseen expenses may arise suddenly. Rural marketing also need long-term interventions and their results are difficult to measure in the short term. Managers used to serving urban markets, find it difficult to anticipate the many costs in reaching villages.
Several strategies are suggested to keep costs under control in rural marketing:
i. Target One District at a Time:
Instead of rolling out an all India rural plan, companies should approach one district at a time. These initiatives require full commitment of the company. Since each district is different, it is important to focus energies on one district before adding more areas.
ii. Avoid Dependence on Third Parties:
A company must build its own dedicated team to tackle rural marketing. A third party can be involved only when the company wants to scale up. In this way, it can create benchmarks for costs and potential benefits.
iii. Do not Extend Urban Strategies:
The common mistake made by many companies is to replicate urban strategies in rural areas. This does not work. Rural areas require their own pitch, advertising and distribution. These must be worked out for each specific area. That is why, it is important to treat each area as distinct.
iv. Find Data for Each Village:
A lot of factors will have to be considered to assess market potential. Some of the factors to consider in each village are: penetration of TV and mobiles, number of school-going children, state of the economy and social exclusion and connectivity to the highway. Consumer behaviour has also to be looked at closely. For instance, if the objective is to introduce cleaning products in a village, it would be important to see how many people use ash for cleaning dishes and then progress to those using counterfeit bars.
v. Use BTL Techniques:
Instead of looking for advertising media, which is difficult to find in villages, companies must demonstrate products via live skits or kiosks in fairs, haats (weekly markets) and gatherings. For example, Godrej Consumer Products monitors brand awareness levels pre and post the activity to determine whether to scale it up or not. Keeping track of the cost per contact and keeping a targeted payback period helps as well.
vi. Work with Local People:
Companies should work with local people who can be helpful in providing reach and service. For example, after struggling to increase penetration in rural areas for three years, Tata Sky started identifying local repairmen with whom they could partner. The local repairman, usually called Sonu, became the local contact for the company.
The repairmen were volunteers and not permanent hires with Tata Sky, so the distribution worked on a variable cost model. The company trains the repairmen but saves on infrastructure cost, because it does not have to set up offices in villages. This is a good way of keeping costs in check.
Distribution to villages requires new and innovative approaches. Companies have to figure out how to reach villages—through existing wholesalers or establishing dedicated channels.
In doing so, it will have to consider various options as described in the following:
Communication is important in marketing. Promotion plays a major role in changing behaviour and product adoption among rural consumers. However, it is difficult to find communication channels that are favoured by rural consumers since reach of mass media is limited. Moreover, messages have to be tailor-made for each region.
A number of issues like illiteracy and socio-cultural values pose challenges in developing communication strategies for the rural markets. Experience marketing and BTL techniques are more effective than media in villages but organizing such activities for lakhs of villages is an arduous and costly task.
However, some of the strategies followed by some companies is described below: