Enticing rural India in the $5 Trillion economy race

In November 2016, Vishal Yadav, a Bulandshahr (UP) based agriculturist made a dream purchase, a Grandi10 car. “It had to be a Shahrukh Khan car. Now, Shahrukh Khan has come to the village”, he said with a beaming smile.

Between 2011 and 2016, Hyundai witnessed a spike in its rural sales from 14.16% to 23.2%. Likewise, over 60% of Maruti’s sales in 2016 came from India’s rural and semi-urban markets. Accounting for 40% of the overall Indian FMCG market, India Brand Equity Foundation (IBEF) expects the rural and semi-urban FMCG segment to cross US$100 Billion by 2025.

India’s rural economy - armed with 800 million people from across 650,000 villages and providing employment for 53% of the country’s workforce (PHD Chamber of Commerce and Industry) - is a “hidden oasis”. Between 2009 and 2012, this very rural population spent an astounding $69 Billion, a figure that trumped urban India’s spend by a cool 25% for the same period. And if Nielsen’s estimates are to be believed, rural consumption will continue to outpace the urban equivalent by 1.5 times while hitting the $100 Billion mark by 2025.

Rural India, therefore, is seen as a key force to propel the country towards the “$5 Trillion economy” finish line.

Stagnant consumer spend – a marketer’s worst nightmare

While the aforementioned premise might appear mouth-watering enough for a marketer to embark on a fresh campaign to propel sales, recent trends paint a slightly different picture, albeit a rather gloomy one.

In 2019, Nielsen’s India FMCG Growth Snapshot reported a 5% growth in the demand for consumer goods in rural India for the September quarter of 2019 - a significant drop from a 20% growth for the corresponding quarter in 2018 and also the worst growth figure recorded over a seven-year timeframe. The consumption rates dropped to 3.9% for the July-Sept 2019 period, when compared to 13.2% for the same quarter in 2018. Also, the National Statistical Office (NSO) survey for the period July 2017-June 2018 reported a drop in consumer spend in the villages by 8.8%. 

With the already sluggish demand scenario having caused massive headaches to marketers, the pandemic is a crushing blow. So how does a marketer approach the rural customer segment, not just in these volatile times, but also in markets where small regional players, often unbranded, give the national brands a run for their money?

While it is easy to wear the hat of a punter and place predictive bets on definitive marketing approaches that might work best, it’s wiser to study the precedents, take stock of the catalysts and devise methods that work best for a given organisation and industry.  

Stoking brand-recall

In the rural marketplace, visual and linguistic colour associations play a significant role in brand recall - a case in point being LG and HUL’s brand messaging. In 1998, LG launched “Sampoorna”, its first stab at the rural marketplace with a low cost television while leveraging the Sanskrit word for “wholesome”. Likewise, in 2010, HUL launched Brooke Bond Sehatmand, a vitamins loaded tea to address the cause of health and nutrition across the states of Bihar, UP and MP.

Meanwhile, the makers of Chic Shampoo exploited the typical village fair in South India to conduct live demonstrations of shampoo usage and to hand out free samples. Also, screenings of Rajnikanth movies were arranged and ads of Chic Shampoo were shown to aid product-recall.

Galvanising channel partners

A “boots on the ground” approach for marketing while infusing a flavour of “empowerment” has historically worked for certain brands in rural India. Coca-Cola created the “Parivartan” program, with the goal of arming the rural retailer with the requisite skills pertaining to customer service, inventory management, merchandising, store and finance management. Additionally, Coca-Cola provided rural retailers with bright-red solar-powered coolers that displayed the recognizable company logo. This strategy contributed to a fivefold rise in the rural retail sales. On the other hand, Idea Cellular recognised the role that sales personnel play in the rural markets and therefore, offered its sales force larger clusters and greater commission based remuneration. To this effect, sales persons began enjoying almost a 60% rise in commissions when compared to those offered in the rural-automobile industry.       

Influencer marketing

In the rural markets, word-of-mouth plays a huge role in brand building. Tata Motors turned select healthcare professionals and teachers into influencers they called “motor dadas”, while empowering them to refer customers to the nearest Tata Motors dealer outlet. Similarly, Ashok Leyland embarked on a “Ban Jao Maalik” campaign with the aim of fostering self-employment in the truck driver community. The company employed the “Voice-of-customer” philosophy to engage the truck drivers in constructive conversations while training and certifying them for tools and parts usage.

Customer retention initiatives

Idea Cellular turned their mobile vans, a hitherto marketing vehicle, into a mobile customer service unit. Villagers could now approach such vans - equipped with photo copying machines and cameras – to buy SIM cards and also to get their problems addressed.

Likewise, Ashok Leyland created an “All the best” campaign to provide scholarship programs to children of high-performing truck drivers. Additionally, the company set up a medical centre in Hosur, Tamil Nadu so their drivers could avail free medical check-ups. These approaches were central to the retention strategies of both firms.        

Fostering trust and leveraging catalysts – the pillars of rural marketing

While conventional marketing wisdom would tempt the easy adoption of proven urban tactics, intricacies of the rural demand cycle create an entirely different ball-game in the race to entice the rural customer. And with Reliance Jio ushering in an internet proliferation that witnessed the rural internet user pool (277 Million) outgrowing its urban counterpart (227 Million) in 2019 (Nielsen), the present marketing mix of rural India is concoction unlike anything seen before.

And while the problems of disposable income in rural India persist, companies will continue to chug away at creating brand fueled product value. In parallel, marketers will strive to create an eco-system where robust service and community-outreach programs, coupled with brand value shall infuse consumer-trust that far exceeds the results garnered by an otherwise quintessential marketing campaign.

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