Mega brands serenade a new consumer

Has the death knell rung for the burgeoning Indian economic growth story? As companies complain of urban saturation, Sunday MiD DAY finds that Act II of the great Indian growth story may well take place in a hitherto unexplored terrain -- the rural one

In Rural Marketing, a book meant mainly for academic use, author TP Gopalaswamy, a retired professor of Marketing at IIM, Bangalore, speaks of an unusual and amusing incident. The year was 1993, a time when India's liberalised economy was still nascent. ITC Ltd. had just launched its Hero cigarettes and wanted to promote it in villages, a rarity at the time.



Across Uttar Pradesh and Bihar, a human version of a modern-day teaser TV commercial, travelled through villages on a cycle, screaming into a mike: "Hero aa raha hai!". The villagers' interest was piqued. But lest they be let off the hook, on the second day, the advertisement was revealed. An elephant passed through the village, draped in a sheet with the 'Hero' logo embossed on it, carrying a huge cut-out of the cigarette packet. Free samples of the product were distributed. On the third day, a van drove into villages playing popular movie songs to attract crowds.

The campaign was apparently so successful, over 175 million cigarettes were sold in a matter of months.
In years to come, India moved on to become one of the world's largest economies. Our growth story, however, was marred by the conspicuous lack of rural involvement.

The story is different now. Since 2010, Hindustan Unilever, the country's largest fast moving consumer goods company, has been on a major extension drive, reaching out to 0.75 million rural outlets. South Korean automobile manufacturer Hyundai, whose market share fell from 20 per cent to 19.7 per cent last year, plans to revive its fortunes next year by launching a car specifically designed for the rural market. They are also increasing their village network by opening another 1,000 outlets. To overcome the barrier of grid power, soft drink giant Coca Cola has just launched a chest cooler that operates exclusively through solar energy and also doubles up as a mobile charging dock and solar powered lantern.

Last year, Godrej launched a refrigerator called Chotukool priced between Rs 3,500 and Rs 3,800. It doesn't have a compressor, only a cooling chip with a fan, and resembles a computer more and less a refrigerator. Elsewhere, in Malerkotla in Sangrur district of Punjab, the world's biggest retail company Walmart, which works closely with the villagers from the area to supply their stores, will open (through Bharati Walmart), an outlet in the area, reports Time magazine.

So why are companies that for the longest time did not consider the rural market significant, now thinking of villagers as consumers?

How many more pressure cookers will you sell?
According to Pradeep Kashyap, considered the father of rural marketing and CEO of Mart, a consultancy on rural markets, it is because India's phenomenal growth story has reached the end of Act I. The only way ahead is by focussing on the rural market. "The urban market is saturated. How many more mobile phones or pressure cookers can one sell in cities? Everyone already has one. Now, companies need to go to go where these products are absent."

The only logical way for India to raise its GDP level and close-in on China is by including the so-called bottom of the pyramid in the economic story, he says. Otherwise, villagers will continue to abandon their farms, migrate as unskilled labourers to cities or hang on in villages and collect subsidies.

Another reason, according to experts, is the fact that income in semi rural and rural areas has increased. In the last ten years, India has experienced eight good monsoons. The dairy and poultry business is seeing phenomenal growth, and even the handicrafts section has taken off.

More villagers use deo and fabric softeners than urban fellows
As a study that was presented by The Nielson Company in November 2010 proved, rural means big market. According to the study, the fast moving consumer goods market (FMCG) in rural India is tipped to touch US$ 100 billion by 2025 on the back of 'unrelenting' demand driven by rising income levels. According to the study, rural India now accounts for more than half of sales in some of the largest FMCG categories, with even "seemingly urban brands in categories like deodorant and fabric softener growing with more speed in rural India".

According to the National Council for Applied Economic Research, rural India accounted for about 22 per cent of computers sold, 29 per cent of refrigerators, 32 per cent of cars and 46 per cent of televisions. Average rural family income is expected to rise by 27 per cent in the next five years, most of it from non-farm sources.
But there are problems. Reaching far flung villages is difficult on account of absence of motorable roads, poor power supply, piecemeal landholdings, and a lack of training in even basic techniques of modern farming.

Shaktimaan to the rescue
So, for old market structures to crumble, creative solutions are required. Like the ones HUL came up with. The company plans to reach 2 million stores across India by the end of 2011. Already, 88,000 stores have been added, many because of their Shakti programme. Using micro-credit systems, some 45,000 women reach villages that house less than 5,000 individuals, as direct-to-home distributors. The women, who fall in the Below Poverty Line group, in turn, earn anywhere between Rs 750 and Rs 1,000 a month. "We started off with 17 women in two states. Today, the scheme provides livelihood enhancing opportunities to about 45,000 women in 15 Indian states, and access to HUL products to more than 1,00,000 villages and over 3 million households every month," says R Ram, HUL spokesperson.

Riding on the success, last year, the company introduced a male version of the scheme -- Shaktimaans. Here, men in the Shakti amma families were roped in to distribute HUL products across villages. Around 20,000 Shaktimaans have been given bicycles to travel across the countryside; each sales soldier reaching at least five to six villages selling HUL products.

HUL is also making use of wireless technology to get real-time information on demand patterns. Instead of visiting retail outlets to find out about demands and going back to the office to report them, distributor sales teams now use these devices to key in the data. "With this system, we now reach more outlets in lesser time," adds Ram.

Just look at the ads
An obvious giveaway of the power of the rural market is the nature of advertisements being telecast on TV. Neville Shah, Senior Creative Director at ad agency JWT, says, "Advertisements that are emotional have a direct all-India connect. But many brands, for instance, come out with sachets that highlight a value-for-money element, just to target the rural market. Ads for these products are dubbed in regional languages to target audiences in smaller towns and villages."

But despite most satellite channels beaming the same shows across urban and rural viewer bases, large 'media dark spots' remain. Prashant Mandke, General Manager of Anugrah Madison, an advertising agency that focuses on advertising strategies for rural markets across India (works under the Madison Communications group), says, "It is important that companies understand the needs of consumers in rural markets and then tailor their products and advertisements accordingly."

The agency uses advertising in mini vans, holding promotional events in mandis and village squares as tools. Thus, to promote Mangaldeep Agarbathi in rural Tamil Nadu, dance performances and live skits were used. And like product placement, the incense sticks found their way into the story of a couple.

A small car for gaon ke drivers
According to Hyundai spokesperson Rajiv Mistri, brands cannot continue to ignore rural markets. "Despite not focussing heavily on rural markets, that's where a bulk of our cars were being sold," he admits. No wonder then that the 1,000 new rural outlets that Hyundai intends to open will be smaller in size compared to showrooms in urban markets, with a car or two on display and sales teams ready to take spot orders.

As G Sunderraman, Vice President of Corporate Development, Godrej points out, "The rural market has purchasing power. All companies need to do is to find out what they are interested in."

Sunderraman has been deeply involved with the production of ChotuKool, the refrigerator which is currently available in rural areas of Maharashtra and Goa, and will soon roll out in Karnataka, Tamil Nadu and Gujarat. To understand the needs of villagers, a series of workshops were held by Godrej researchers. "Villagers were involved right from the designing to the selling of the product," adds Sunderraman.

Promotion of the product is now done through various Indian Post Office branches, allowing them to spread their influence into far flung areas. Women from these villages, with the help of NGOs and a micro-finance system, help sell the product.

"Yes, there are problems when selling to rural markets," says G Sunderraman. "But you just need to find innovative solutions."

The company:u00a0 HUL
The products:u00a0 FMCG goods
The strategy:u00a0 Using 'Shaktimaans' on bicycles as direct-to-home distributors
Hindustan Unilever expanded Project Shakti last year by adding 20,000 Shaktimaans to its fleet of 45,000 Shakti ammas (45,000 women reach villages that house less than 5,000 individuals, as direct-to-home distributors). They have been given bicycles to travel across the countryside; each sales soldier reaching at least five to six villages.

The company:u00a0 Godrej
The product:u00a0 Chotukool refrigerator
The idea: It doesn't possess a compressor, but a cooling chip with a fan, just like a computer.
Godrej's Chotukool, a refrigerator for the rural population, was introduced last year and will see major expansion this year. It is priced between Rs 3,500 and Rs 3,800. Villagers were involved right from the designing to the selling of the product.

The company:u00a0 Coca Cola
The product:u00a0 Chest cooler
The idea:u00a0 It operates exclusively through solar energy and also doubles up as a mobile charging dock and solar powered lantern
To overcome the barrier of grid power, soft drink giant Coca Cola has just launched a chest cooler

22 per cent of computers sold
29 per cent of refrigerators
32 per cent of cars
46 per cent of televisions
That's what rural Indiau00a0 accounted for, according to the National Council for Applied Economic Research