Source: E-mail dt.
7 September 2013
Race to Reach
the Bottom of the Pyramid
Mrs. V. Vardhini
Ph.D Scholar, Bharathiar University, Coimbatore, Tamilnadu,
India
Introduction:
Large piece of cake is lying in the bottom of the pyramid. Companies must treat rural market as
different and not inferior. Rural market is a
different segment having different needs, different lifestyles,
and
different standard of living. Their motive to buy a product is different from their urban counterpart. In urban areas the socio-cultural similarities are many whereas in rural areas socio-cultural differences
are
many. Villages are spread
far
and
wide, and linguistic
and cultural
differences are many.
Rural market is still dominated by unorganized sector. According to NSS (National Sample Survey Office) survey 2009-2010, nearly 71 per cent of the workers in India were engaged in the
unorganized sector (74 per cent in the rural areas and 67 per cent in the urban areas). Organized sector has not reached well in rural market, for which the reasons are many. There are many myths in the organized sector
regarding the rural
market.
Myth
1: Rural consumers do not prefer branded products. Myth 2: Rural consumers prefer low
cost, low value products.
Myth
3: Rural consumers will opt
for tried and tasted home recipes
when
it comes
to baby care products.
Organized sector companies those were able to reach the rural customers came to know that
these myth aren’t true, the reality is totally different. They actually started to enjoy serving the rural market and started to get profits out of them. To reach the rural customers, companies definitely
have
to change their strategies to match with rural consumers. The companies must understand the pulse of the rural market and accordingly
they have to modify their marketing mix (4Ps – Product, Price, Place, and
Promotion) to attract
the
rural customers.
Rural customers can not afford high technology, high
customer perceived value
and high price products at the same time they do not want low technology, low customer perceived value and low price
products. Instead they
want basic technology, high customer perceived value and high value for money.
They
desire for branded “no frill” products which are well advertized, well distributed and offer value for
money. They do not want complex, high priced, luxurious products instead they want products with the basic function which they can easily
understand, which they can easily use and can fulfill their basic
needs. For example, Maharaja
Appliances
Limited
(MAL)
launched a range
of
“no frills” home
appliances, Bonus washing machine, without dryer. Maharaja introduced Bonus washing machine at Rs.2990,
which filled the gap
between cheaper
unbranded goods and
the more expensive
branded ones.
Saturation of urban market, increasing rural population, increasing rural consumption level, raise in
rural prosperity, change in rural lifestyle, and most importantly
rural customers being laggards they
help
in prolonging the life of the product makes the rural market more attractive for the companies.
The following are the few highlights of the recent survey
conducted by
NSS,
which shows the high growth
potential in rural market as compared
to their urban counterparts.
Between 2004-05 and 2009-10, the proportion of households with expenditure on cable TV increased
by
141% in rural
areas and
39% in urban
areas.
Television sets were possessed by 42% rural households in 2009-10 compared to 26% in 2004-05, and
by
76% urban households
in 2009-10 compared
to 66% in 2004-05.
The proportion
of rural households with motorcycles or scooters nearly doubled
in the 5 years prior to 2009-10 from 7.7% to 13.9% while in the urban sector the proportion increased from
26% to 33%.
To benefit and be
benefitted from these
attractions, companies
must understand the needs of
the customers and segment the
rural market intelligently For instance the companies can segment the customers on the basis of economic and psychographic aspects. Companies should provide different
products for different economic segment of customers. To do this, companies have to extend their
product line but at the same time they should
ensure that existing customers should not get hurt with the
launch of new product. For
example, P&G Home Products Ltd. introduced low priced detergent powder under the brand name „Ariel Super Soaker‟, it hurt the image of mother brand „Ariel‟
which is a premium detergent. Later
„Ariel Super Soaker‟ was re-launched as „Gain‟ detergent. Instead companies
must introduce economy products and ensure that the customers do not feel cheap for using that product.
For
example, HUL‟s Lifebuoy is low
priced carbolic
soap but it is projected as Hygienic soap.
“In Rural, Be Rural”, companies have to use local idioms when they
are
trying to attract rural
customers. Attracting customers in rural market is difficult
because of huge variations in language against their urban counterparts. In urban markets companies can use English as a medium to convey their message but in rural markets, due to low literacy
and
awareness level, companies have to promote
the product in
a language that rural customers understand. For example, Philips Electronics
India Limited organized two different campaigns for rural in two different linguistic states – „Enga vettu Super Star (The Super Star
of our home) and Ma inti
Mega Star (The Mega Star of our home) in the villages
of Tamil Nadu
and Andhra Pradesh respectively.
Product:
Today we are not in a production orientation era where the customers have to buy
whatever the
companies are producing; rather we are
in a holistic orientation era where
companies have to produce
what the customer wants. Companies produce the products or carter the service to satisfy the needs of
the customer. Therefore it became mandatory on the part of companies to know the need and also the motive behind the buying decision of the customer. When a company is targeting the rural customers
they may not offer
the
same product or service
which the company is offering to their urban counterparts. They have to modify the product or service according to the rural customer‟s requirement.
Companies have to come out with innovative
strategies to attract and serve
the rural customers. Some
companies had modified their products
to serve rural
market.
Texla Elecrtrovision‟s television sets of somber urban shades of grey and black did not
attract
the
farmers. A new
range of bright
red
and yellow was grabbed
by
the farmers.
Mahindra and Mahindra Ltd. developed “Rural Transporter” basically a hybrid between a tractor and a rural transport vehicle. The
product at 20-25 HP will
be targeted at those who cannot afford a normal tractor and would
also fulfill the need of a family transporter that
could take in the rural roughs but would be much
more comfortable and safer than the
conventional tractor trolley.
TVS Motor Company launched TVS-50 XL. It is a
two seater
moped where
at
the time of its
launch there was only
Luna and Suvega
which were single seater moped. TVS-50 XL was powered by a 48 cc engine and had strength to carry a load of over 120 kg. It was priced at Rs.
3990 when introduced, targeted the first time buyer of a two wheeler in the rural and
semi urban markets. Price with simplicity of operations (no gears, no clutch), good mileage
(55 Kmpl), the ability to carry heavy weights and step through design that appealed to both
the sexes was what
helped TVS-50 XL to position as a value for money vehicle.
LG electronics developed a
TV set “Sampoorna” that would have
on screen displays in the vernacular languages of Bengali, Hindi,
and Tamil. The logic, rural customers unfamiliar with English would still be able
to use the TV without being intimidated.
Banks are issuing credit cards known as “Green cards” to the farmers. The cards issued by
Allahabad Bank
are: Diamond card, Gold card, and Silver
card.
Product includes design, colour, aesthetics and packaging. While concentrating
on rural market companies must give importance to the packaging of product. Since the income of the rural customers
are
neither certain nor fixed, they are unable to buy the products in large quantity. They are used to buy
the product in smaller quantity just to satisfy
their daily or weekly requirements. So the companies must introduce their products
in smaller quantity in an innovative packaging.
JK Dairy and Foods Ltd. came
up with a 50 gm
sachet of Dairy
Whitener.
P&G Home products Ltd. introduced Tide
detergent in 30 gm
sachets
Godrej Industries Ltd. sells
its
Velvette
shampoo in sachets.
HUL noticed that in rural area retailers are cutting their 100gm soap into smaller pieces
according to the need of rural customers. So, HUL introduced 75gm soaps to satisfy the rural
customers.
Colgate-Palmolive (India) Limited introduced tooth powder in 10 gm sachets and the tooth paste with “Super Shakti” in 15 gm packets. There have been many
who have upgraded from tooth powder to pastes. They also introduced combi-packs offering a tooth brush with a 30 gm
paste.
Price:
Another aspect where companies have to concentrate is price. Price is a very important mix in
the decision making process especially when the product is a high involvement product. Companies
must understand that major population in rural area has seasonal
income. They are wholly dependent on the monsoon for their agriculture
which in very uncertain in India. So, companies must relax their credit
policies (if they have credit policy, and if they do not have credit policy, they must introduce credit policy) when they are dealing with rural customers. Companies can offer basic model of their products to the rural customers with „no frills‟ at low cost. Many
companies have introduced their products in sachets for fulfilling the requirement of rural market of lesser quantity and lower price. Companies must
understand that rural customers are very price sensitive; they
must price their product very carefully.
Some companies have tasted
success by their innovative pricing strategies.
TVS Motor Company
introduced Rs. 399 scheme. This was the first time that a vehicle was
available
on installments of
Rs. 399 for a 24 month period. It appealed to the
rural customers
because now they could buy a two – wheeler
at a
down payment of less than Rs. 400.
Place:
Another factor which hinders the companies from serving the rural customers is the connectivity.
Indian villages are poorly connected and lack
of adequate transport facilities. As the rural area is
widespread, it is very
difficult for companies to reach to the interior villages. Also it is not feasible for companies to establish
its outlet in every
village. To overcome these hurdles companies are employing innovative ideas to reach to the rural customers that are cost effective
to the company. Companies are
exploring all the possible channels to reach the rural customers. They are distributing through bicycles, vans, mules. They are selling at haats, melas, and fairs. They have tie-ups with the unofficial channels, NGOs, petrol bunks and agricultural input dealers who have retail outlets within a range of 5 km to any village. Apart from the transportation of goods to villages, companies also have to ensure the right ambience for the right customers. Companies have to understand the psychology and behavioral aspect
of the rural customers while considering
the ambience of their outlets. The customers must feel
comfortable and confident while entering the shop therefore, the ambience of the outlet should
match with the lifestyle of the rural customers. Companies who understand these aspects of reaching the customers
and making them
comfortable while buying its
products are successful.
HUL uses fleet of vans which regularly visit remote villages with a population of less than 5000 at regular intervals to restock small shops with its primary
products. The strategy is
called Operation Harvest.
HUL is focusing on mobile sub-stockist in hinterland towns having a population of less than
20,000 to supply its
toothpaste brands – Pepsodent and Close up to consumers in surrounding villages. The sub-stockist will be linked to a super stockist who will be present in nearly
every district.
Maharaja
Appliances Limited (MAL) has
15,000 dealers and
400
wholesalers. In
the villages, kirana stores will be their retail outlets instead of large intimidating
showrooms. These shopkeepers have close connection with the villagers, needs and preferences are
more likely to
establish if local vendors of
vegetables or like pushes
the brand.
JK Dairy and Foods Ltd. launched Whitener,
Dairy Tops in
small 50 gm. sachets. It hired vans to penetrate the rural interior, each van travelling around 125 km a day, 25 days a month.
Colgate-Palmolive (India) Ltd. has supply vans which offer free samples and screen video films on oral hygiene. These are supplemented by bicycle vendors who go to remote villages where vans cannot reach.
Brooke Bond used mules for
distribution of Tata chaap packaged tea
to rural consumers who reside in hilly
areas. The itinerant traders transport their wares to interior hill markets on mules.
The unofficial channels of distribution
for Hero Honda Motors Ltd. were village mechanics, real estate
agents, and shopkeepers of non-durable goods and so on. These people take 2 to
3 motor cycles from the official dealers, display them outside their premises and close a deal.
The paper
work
though,
left
to the official dealer to
complete.
Even if the rural consumers have the desire to buy the product, and they have the capability to buy
the product, what stops them from buying the product is the “maintenance” of the product. Distribution of the product is just not enough; the companies have to ensure
an
effective after sales
service of the product.
Videocon Industries Ltd. is focusing on making its presence literally
felt in the villages. The mechanics of the company, take a round of the villages twice a week to assure the villagers of the after sales service as an important component of consumer durables. For this purpose,
the company employed 1800
engineers and
mechanics.
Hero Honda Motors Ltd. introduced the concept of mobile service center. In doing so, it overcame the problem of setting up permanent service centers in multitude of rural locations.
The consumer is happy
as
the servicing team comes to him rather than the other way round.
Equipped washing and preventive maintenance equipment and an audio visual set up to reinforce the brand.
Companies should understand that rural people are basically laggards. By introducing a product to rural customers, companies can prolong the life cycle of the products which are in the decline stage in the urban market.
Electrolux is test marketing its urban models of refrigerators and washing machines in rural
Punjab.
Videocon Industries Ltd. is pushing walkmans into markets with a population of fewer than
50,000.
Promotion:
Companies must understand that the tastes, preferences and interpretations of rural customers are
different from their urban counterparts. Companies cannot use the
same promotional strategies for urban as well as rural customers. When customers are looking at an advertisement, they must connect themselves with the advertisement, if the customers could not find a connection with the advertisement;
they
might feel that the product is not suitable for them. For example; a hair oil company
promoting its product through an advertisement, where a lady is illustrating
the features of the hair oil with free hair in urban area. The company cannot use the same advertisement to attract the rural customers because in
rural areas ladies are not used to leave their hair free. They might not connect themselves with the advertisement
and will not buy
the product. Majority of rural customers feel
that
the
urban
advertisements are vulgar. They feel that there is no connectivity
between their culture, language and dress
to that is showcased in
the
advertisement.
Companies must have different promotional strategies for rural customers. They must groom a
separate set of professionals who are more conversant with the rural people. They must understand the psychology of rural customers.
Geoffry Manners & Co. Ltd. participates
in village meals where its salesmen
dressed in white apron resembling doctors
explain
the virtues of Anacin.
Philips Electronics India Ltd. dressed up people to look like its bulbs and batteries, and parades
them
through village.
Usha International Ltd. runs sewing schools in villages which offers short term tailoring courses for women.
Cavinkare Pvt. Ltd. tunes in psychological association and attitude triggers related to the
name Meera and Chik in rural and Nyle in urban.
Brooke Bond adopts tea stalls which tempt villagers to sample its product by offering free
cup of tea.
Rural customers are more emotional than their urban counterparts; they value human relationship when compared to urban customers. They prefer those brands that are in some way related to them.
Many
companies have established direct relationship
with the customers to make their products a
success.
Brooke Bond‟s Red Label tea
packed in red colour
carton; it has made the identification of
the brand easy. Red is considered as auspicious colour. Designed with slogan “Jiyo mere
lal”. Lal have two meanings;
son and
red.
This made an arousing emotional
bondage.
HUL used promotional gifts to convey its concern for their general health and their well beings by distributing height
charts
along with the soap.
Marketers must
consider geographical variations while developing their promotional
strategies.
HUL used to distribute a calendar featuring Lord Ganesha in Maharashtra but the same
strategy may not
work in Punjab.
Companies must understand that in rural areas they will be competing not only
with organized sector competitors but also with the competitors from the unorganized sectors. Companies have
to position their product
to compete with unorganized
sector competitors also.
Tata Global Beverages Ltd. launched Agni Tea as an economy brand; it was positioned as a
blend competing with loose tea. The packaging was done with the objective of positioning
the product for the masses.
It is very important for the marketer to know the opinion leaders, decision makers and users in
the rural market. Opinion leader is a person who is been consulted before taking a decision on purchase.
The opinion of the opinion leader is taken seriously
in decision making process. And in most cases, it is
not necessary
that user and the decision maker will be the same person. Decision maker is a person who
decides whether to buy the product or service or not and user is a person who uses the product or enjoys the service.
When Asian paints Ltd. launched Utsav range during the pre-Diwali season, the salesman selected the opinion leaders in villages and painted the village post office or library
or the
house of the mukhiya to demonstrate that the paint
does not peel off.
Dabur India Ltd., to market its product – Dabur Janam Gutti, profiled rural customers at haats and melas.
It discovered that
while it is the housewives
that decide the product
category, the brand selection and purchasing is done by
the
man. It helped the company
to redesign its
communication.
To attract rural customers, the promotional activities should be exciting, full of fun and there
must be a personal touch so that rural customers can remember their product and its virtues. They
must establish a relationship between the company and the customers.
To build awareness for its Kadak Chaap tea, Brooke Bond India Ltd. added local flavor to its all India campaign. A local magician was brought in to deliver the message under the grab of
a skit. An element of interactivity was added to the skit with one of the local boys enacting the role of the underdog Nathoo, who kills the evil guys after he has had a strong
cup
of Kadak Chaap tea.
At the end of the show, everybody is given a
sample pack.
To
attract rural customers,
marketers use semiotics and
mnemonics. Semiotics works best for products that have low involvement at the time of
purchase and have a very frequent usage. Mnemonics helps to retain the
products in the mind space. Colour, logo, mascots add strength to semiotics, for example; 555 soap, Cheetah light matches, Sheru beedi, 3 Roses tea and
Asian paints mascot „Gattu‟.
Service:
With the help of technological advancements, companies can now serve the
rural customers in a
better way. They can interact and they can be connected 24X7. Now, it will be easy for the company to
educate and create awareness among the
rural customers. Rural customers will be empowered with the help of the technology. They can update themselves with the prices of various
agricultural products, with
the change in season or monsoon and with the prices of the agricultural inputs like pesticides,
fertilizers etc.
Koshika Telecom Ltd. set up public cell booths dubbed “Yes TD” in some 1500 villages of eastern Uttar Pradesh typically inhabited by less than 10,000 people with 3/4th of them engaged in farming. Since rural women could not be drawn to talk from the
booth, the franchisee allows the mobile phones to be carried to their home. They are also going to
convert the booths into cyber dhabas. Villagers can use these cyber dhabas to send and receive e-mail and faxes. The company is also providing people with information on
commodities through
the internet.
TARAhaat: It was developed by an NGO (non Government organization); with the vision to
bring internet facility to the rural India. It is a franchisee based business model that attempts
to generate revenues by focusing on the marketing
services through the module (especial focus on the local applications). It was initiated in the region of Punjab with the
introduction of different centers called as Kendras that are connected to each other through the dial up
internet connection
facility. These Kendras have power backup also; in case,
the electricity supply
is interrupted. The info kiosks provide online and offline services information on education, prevailing
opportunities in the market and other useful information for the
villagers. TARAkendras are very popular
among the local
population as it provides
the information in the local
language and
the portal is designed in such
a pattern
that semi literate population can also understand it without
any difficulty. Different services that TARAkendras
offer are,
namely, TARABazar, TARAdhaba, TARAdak, TARAgyan, TARAguru, and
TARAvan.
e choupal: It is designed especially for the farmers of India. Through e choupal, farmers who
are
living in the remote areas of the country and cannot manage to have direct contact withthe consumer can come forward to
have a direct contact. It provides an e-procurement system through which the
farmers can access the latest and updated information (local, national and
international) related to different farming practices. It provides real time information and customized knowledge to the farmers
through which
the farmer can take
better
decisions and can have direct contact with the customer, reducing the amount wasted by moving through the distribution channel of intermediary.
Another opportunity lying in the rural areas is in health care sector. Many rural areas lack
basic health care facilities. They
have to reach nearby towns or cities for the ailment of diseases. According to the NSS Survey on “Morbidity, Health Care and the Condition of the
Aged”, 12% of the aliments were not treated citing “No Medical Facilities” as the
reason in rural
areas, whereas
only
1% of their urban
counterparts cite the same
reason
for no treatment. It is very
evident that there is an untapped market in the area of medicines in rural area. The same survey
also
indicates that “Average total expenditure (Rs.) for hospitalized treatment per hospitalization case
during a period of 365 days” for rural areas is Rs. 6,225 whereas their urban counterpart‟s total expenditure is Rs. 9,367. Even though there are
differences in spending between rural and urban areas, the differences can be
shrunk by improving the medical facilities
in the rural areas. Apollo hospital has set up a multi- specialty rural hospital at Aragonda for Aragonda and its hinterland. Apollo
rural community health centre
an initiative
of Apollo Hospital was
established at
Ayanambakkam
near Chennai in 2005. This centre caters to an average of 94 inpatients and 800 outpatients per
month. Several
rural health initiatives have been
regularly implemented.
Conclusion:
According to 2011 Census, There are 6,40,867 villages in India that comprises of 68.84% of the
whole population among them 68.9% of rural population
is literate. This
information makes rural market
a very attractive
segment. No company
which has a
presence, either
in
regional, national
or
international, is in a position to ignore it. Abundance of opportunities are lying in this segment, if
utilized properly a company can reap great profits out of it. To get the maximum benefit from the rural
segment, a company
should minutely study the rural market, should understand the changes happening
and
must know the reasons for the changes happening and modify its own strategies accordingly. Handful of companies is able to reach the rural customers and make a presence there. The question is
when some of them are able to reach the rural India, make a presence and satisfy the rural customers why can‟t all the companies? Due to
the
increase in
rate of literacy, companies can
reach
rural
customers in a better way
and
create awareness regarding the product which will reduce the chances of
counterfeiting. A problem which mostly
all
the electronic companies are facing is large hours of power
cut in rural areas, due to which
rural people are unable to use the electronic products.
Companies have to come with innovative solutions for this crisis. Companies have to invent electronic products which will run on natural resources like solar energy or wind energy. Companies can see the shortcomings in rural
areas as the hurdles and avoid entering in rural market or as the opportunity and come with innovative
ideas to serve rural customers. Only those companies who dare to change and innovate
can survive in
the market for a long run.
Bibliography:
http://censusindia.gov.in/2011-prov-results/paper2/data_files/india/Rural_Urban_2011.pdf
http://mospi.nic.in/Mospi_New/site/lookin_for_ofc_data.aspx
Rural Marketing – Text and
cases
Third
edition
by C.S.G Krishnamacharyulu
and Lalitha
Ramakrishnan – Pearson Education
Publication.
The Rural marketing Book by Kashyap Pradeep
and Siddharth
Raut – Biztantra Publication.