RURAL MARKETING: IT'S TIME TO "EYE THE PIE"...ASHUTOSH HARBOLA DIVES INTO UNLEASHING THE UNTAPPED POTENTIAL OF RURAL INDIA.

So far, Marketers were looking at Rural Markets with Enthusiasm & Speculation. It’s High time they gave up on The Latter

No one denies the fact that pace of change in today’s marketing world is extremely fast. But ‘fast’ proved to be a gross understatement in this case. Micromax launched its mobiles in the Indian market in 2008 with no baggage and a powerful vision. It was tough for a new player, as the mobile market was dictated by Nokia with almost 70% market share and a huge following. But Micromax realised an opportunity, which Nokia failed to address; the company introduced X1i, a mobile phone with a battery backup of 30 days targeting rural India, where electricity was a prime concern. The result was unexpected – within the next three years Micromax is the third largest player in the market and is seriously challenging Nokia’s domination. Micromax’s case clearly indicates the immense potential in the suburban regions of the country.

India has been termed as an agrarian economy, but not much has been done to utilise the massive potential of the rural market. There have been initiatives like AMUL and the Green Revolution, but they were not enough to boost the massive growth of the neglected parts of the country. It is indeed sad that there have been three major industrial policies since independence, but not one for agriculture, which was once the prime GDP earner for the economy. But times are changing as urban markets are almost at a critical stage; and marketers all around are hunting for opportunities in rural India. Arshit Pathak, MD, Kingtech Electronics India Pvt.Ltd (Group Company of G’FIVE International Limited) tells 4Ps B&M, “In the present scenario; cities do not hold much potential for mobile phone brands in terms of market volumes. It is the rural or the upcountry market, which is showing decent traction”.

Demand from rural India has been on a high trajectory and most importantly, the urban market has reached a saturation level with tele-density almost reaching 137.25%; and companies are now making a move to rural India, where telecom players are seeing the future. Tele-density reported in rural India till September 2010 by TRAI was a mere 28.42%. It’s strange that 11 long years have passed since the National Telecom Policy was introduced in India and the rural market has been completely overlooked by the giants. There is even a strong need to develop products that are a value proposition for the rural consumer as his tastes are altogether different from his counterparts in urban India. Sunil Raina, CMO, LAVA tells 4Ps B&M, “We have been penetrating the Indian market via the rural route. For this, we have been making customer oriented handsets with long battery life, entertainment applications and others”. The prime reason for Airtel’s success in the rural market was the launching of a 2 in 1 offer with Nokia by bundling Nokia cell phones and Airtel cards. A massive campaign was introduced to capture 34904 villages. The scheme became a hit and managed to generate Rs.168.2 million in just 12 months.

FMCG players have been looking at every opportunity to penetrate in rural India for years. The consumers here accounts for 60% of the total consumption and moreover, the biggest scope lies in the fact that most of the market is unorganised and handled by local players. Players like ITC have already been very successful here with initiatives like e-Choupal and HUL’s Project Shakti has been equally well known and celebrated. Retail giants were happy catering to urban masses but now, with the development of infrastructure in rural India, they are planning to tap this area. Deepak Mowar, Vice President (Hotels, Retail, Cinemas & Strategic Planning), Parsvnath Developers, tells 4Ps B&M, “It is very important to keep in mind that the rural population gives more importance to basic needs. Thus, the kind of products introduced should be well thought of.”

FMCG major Godrej introduced a nano refrigerator – Chotu Kool – precisely for the urban market. It was so designed that it could even support power cuts. Priced at Rs.3200, the little wonder successfully added 5000 villages to Godrej’s customer base in 2009 only. Such innovations can actually boost the buying power of the immensely value-conscious rural consumer. Even Thums Up started a campaign called ‘Thums Up Jalsa’ targeting rural India, and its sales grew by 37% in 2009 as against 18% in the previous year.

The automobile sector has also successfully forayed into the rural market. In 2007, Hero Honda started the Har Gaon Har Aangan campaign focusing on educating rural consumers on the product. It even targeted festivals in rural areas, which were generally related to harvest season – when farmers are in a buoyant mood. It even tied up with NBFC’s loan schemes to promote buying. Penetration levels in rural India for two wheelers are just 10%. Even Castrol India Ltd. successfully penetrated in rural India by educating farmers about the benefits of Castrol CRB over the competitors. Mayank Pareek, Executive Director, Maruti Suzuki India Limited addresses, “We have been seeing 10% sales from rural customers and the numbers will shoot up in the times to come.”

Even the banking sector has been looking at new ways of penetration. When ICICI entered rural India in October 2008 with its financing portfolio, the journey wasn’t easy for the banking tycoon initially. It had to play with the general mentality of consumers who preferred taking loans from locals rather than from banks, as it asked for a lot of paper work. To overcome the stiff resistance, ICICI started the Kamdhenu Cattle Loan Campaign, which completely changed their game in rural India. Spread over a period of 150 days across five states and 48 districts, the campaign generated the requisite awareness. Post campaign, awareness levels about cattle loan increased by over 20% amongst target group.

There have been many such cases in marketing history that have unleashed the potential of rural India; but obviously, infrastructure issues and the constraints of a scattered market are pressing issues. As the urban market is at a tipping point, it has become all the more difficult for companies to compete profitably if they are in this space alone. The rural market is the platform for companies to turn around businesses now. Another opportunity that stares them in the face is the huge budget allocation granted in the Union Budget to develop agriculture in India. And with it lies the obvious threat. If they are too late to cash in, someone else will. It’s a lesson that Nokia learned the hard way.