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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://www.ncaer.org/

 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.