Making the rural connect

What does it take to bond with the rural consumer, whose aspirations are similar to his urban counterpart’s?

For Prabhawati Devi, an arthritic septuagenarian who also has cataracts, automobile major Mahindra’s Swasth Tractor is a blessing in disguise. The monthly visit by the vehicle eases the burden on her aching joints, saving her the effort of trudging to the nearest hospital 20 km away for a health check. The ‘Swasth Tractor’ inspects not just the health of her son’s tractors but also acts as a mobile health service for rural denizens.

“For us, implementing project Swasth Tractor in rural areas is a way of building the last-mile connect. Therefore, if the customer doesn’t come to us, we go to the customer,” Sanjeev Goyle, Farm Equipment Sector, Mahindra and Mahindra, said, speaking at a workshop on rural marketing organised by the Rural Marketing Association of India.

While service engineers inspect the health of the vehicle, doctors and health workers attend to the medical needs of the villagers. “We asked ourselves how can we make the model as lean as we can to benefit a larger section of the society and in this case, people in rural areas, which comprises a large chunk of our clientele,” he adds. Mahindra Samridhhi is a one-stop shop for all farmer interfaces, delivering innovative farming technologies for rural prosperity.

“Connecting with the rural population has to move away from transactional to emotional bonding. A great amount of research points out that rural consumers take to brands slowly and even give them up slowly,” said V. Swaminathan, Managing Director, Suhita Ethnic Marketing Services, a rural marketing consultancy.

Noting that rural buyers are urbanising with prolonged exposure to popular mass media, he pointed out that the rural buyer’s dreams are not very different from the urban customer’s. “And with agrarian income shooting up substantially, there lies a huge untapped market for manufacturers and marketers,” he said, adding that the challenge is to get the distribution model right.

“Look around and you will realise that prices of almost all agricultural products have grown by over 200 per cent in the last 18 months alone. This means that the farmer is getting better return for his produce which, in turn, spurs consumerism even in rural areas,” he notes.

Getting Distribution Right

While the fast moving consumer goods (FMCG) sector has managed to create a revolution of sorts in rural market distribution with small pack sizes, the consumer durables and automobile industries are still grappling with the issue. “The aspiration of the rural consumer is the same as his urban counterpart’s. Therefore, when he comes to buy a product in the rural market he wants to see the same models as he has seen in a city outlet or a popular mass media campaign. However, companies are unable to distribute the entire range in a rural market due to logistics and supply chain challenges. We believe this issue is critical in improving the rural market,” said Partha Rakshit, Managing Director, South Asia, The Nielsen Company.

He says the FMCG market grew at 14 per cent for the year ending November 2009 as compared to last year. The rural market grew at a higher rate of 18 per cent than urban (12 per cent).

“Rural areas in States like Rajasthan, Uttar Pradesh and Eastern States like Assam, Bihar and West Bengal posted high growth. Distribution increase, smaller packs of premium categories combined with rural consumers moving up the value chain are the key reasons for a healthy growth in rural FMCG sales,” he added.

Rural India reflects a CAGR of 11.6 per cent (volume at 7.9 per cent and price at 6.3 per cent). The growth in the last two years has been fuelled by price increase in many categories with higher growth in rural than urban.

Functional categories such as mosquito repellent, digestive aids such as antacids, condoms, televisions and mobile phones were among the products doing well.

According to Rajeev Karwal, Founder and CEO, Milagrow Business & Knowledge Solutions, the percentage of rural buyers is growing, with as much as 26 per cent durables’ growth coming from rural areas. Interestingly, only five per cent of the rural population bought from a rural outlet.

Experts also believed that rural consumers upgrade akin to their urban counterpart as well as opt for premium products in smaller formats. Therefore, communication needs to be defined for such buyers.

“Companies have to understand that rural buyers have a sustainable advantage as they take to brands slowly and give them up slowly. Rural branding and communication must be clear and cohesive for the market to grow. Therefore, reorienting the market segment to ensure rural gets adequate focus,” he added.

Reviving the ‘Haat’ concept

According to R. V. Rajan, Chairman, Anugraha Madison Advertsing and past President of RMAI, any product or service when marketed in rural areas with fervour and festive spirit thrown in for good measure, brand acceptability and recall assumes a new high. But when you create a mela or haat environment, the engagement opportunity increases manifold. It is also a method to qualitatively capture data on rural buying.

Infrastructure and Innovation

According to Prof D. B. Gupta, Senior Consultant, National Council of Applied Economic Research, it is almost mandatory for the Government to adopt the ‘bundle’ approach to rural infrastructure development.

“Public-private partnerships are fine but ensure the capacity of the private partner to participate in infrastructure development. There is also a need for a national surveillance agency for continual monitoring of the implementation of works undertaken for rural infrastructure development,” he said, adding that NRI interest in rural infrastructure springs from vested interest in the development of areas of origin.

Said Dr Jagdish N. Seth, Charles H. Kellstadt Professor of Marketing, Emory University, “You need to create value for all 4 As – awareness, acceptability, affordability and accessibility.”

He adds: “Markets do not make trade-offs; only the managers do. Generally, most industries know how to create market acceptability through innovation and market awareness through advertising but are not very good at creating market affordability and market accessibility. Therefore, rural markets will require special focus on market affordability and market accessibility.”