Defying common perception that design houses devise products only for the top 10% of the consumer population, IDE, the industrial design arm of Tata Elxsi, has tried to address issues of concern to people right at the bottom of the pyramid. With a focus on the rural and the semi-urban market, that has been assessed to grow to $1.9 billion by 2015 by international consultancy Celent, IDE ensures that the products it designs not only deliver on cost for a price-sensitive market, but also satisfies the utilitarian demands from a product. The outcome is a slew of products, such as Hindustan Unilever?s water purifier, Pureit, Tata BP?s solar lamp, British Petroleum?s biomass stove that?s a huge improvement over the conventional device in terms of fuel efficiency and flame control mechanism and Encore?s Simputer that unfortunately had to be pulled out from the market due to changes in policy and market situation. During a recent visit to Delhi, Anil Sondur, general manager, IDE, Tata Elxsi, spoke to FE?s Radhika Sachdev.
A common perception is that marketers are interested in serving only the creamy layer of the population. Is that an India-specific phenomenon?
No, it?s a trend that can be observed across the world. There are brands like L?Oreal and Calvin Klein in the lifestyle industry and Audi and BMW in the automotive industry that cater almost exclusively to just this end of the market, but the disparity is much wider in India. Consequently there is a huge chunk of the population that?s simply ignored by marketers, although it accounts for nearly 60% of the country?s income and has remained largely insulated from the economic slowdown, according to a recent study by the Rural Marketing Association of India.
In that sense isn?t the telecom revolution an exception? Can that model be replicated in other sectors?
To understand how the telecom revolution happened, we have to step back in history. The seeds of this revolution were sown during the time of Sam Pitroda and Rajiv Gandhi, who in the late 1980s provided the first digital exchanges for telecommunication with rural India through C-Dot (Centre for Development of Telematics) infrastructure.
The latter-day cell phone revolution rode piggyback on this digital infrastructure. And, yes this model can be replicated in other sectors. We have the example of Tata Nano before us.
What is the size of the rural market in India and how is it expanding?
It?s difficult to put a figure on that because there is not just one size?there are different industries and they are growing at different pace. For instance, I heard from an auto major that the two-wheeler market is growing at 25%-30% per annum in certain rural pockets, albeit from a smaller base.
You have worked closely with product manufacturers who serve rural markets. Is it difficult extracting a clear brief from them?
Blue chip clients draw up very exhaustive, clear briefs and often have their own, authentic data back-up to support our design efforts. They are also willing to listen to us. However, in some cases, myths propound and have to be dealt with. For instance, telecom players realised rather early in the game that their business in rural markets would largely be volume driven. However, when sufficient levels of penetration stand achieved, there can also be significant realisation from value added services and the product has to be designed bearing that in mind.
Are the needs and aspirations of rural consumers vastly different from their urban counterparts?
I wouldn?t put it as such. Certain differences of course cannot be completely eliminated and would always remain. However, their basic needs and aspirations are not hugely different. The issue is that it takes a long time to study and understand those needs, and the gestation period for satisfying those needs is also longer. So marketers often shirk the responsibility with the why-take-all-that-trouble attitude.
Marketers often assume that cheaper versions of the same product would do well in the rural market. Is that perception correct? Are rural consumers more price sensitive and less quality conscious than their urban brethren?
That perception is overly simplistic. Rural consumers may be more demanding on the price parameter, but it would be wrong to assume that they are not quality conscious. They do demand that the product should deliver on the promised attributes.
Are there examples of brands that first launched in the rural market, did extremely well and were then introduced in the urban metros?
There are several examples, especially of food brands. You may have heard of Varana Srikhand that started with Kolhapur (in Maharashtra) and gradually became a household name in the rest of the state. Bigger names in this category are of Lijjat papads and Amul milk co-operatives that started in Anand and now market their products throughout the country.
If the rural market is no more homogeneous than the urban market, why don?t brands make the effort of segmenting this market?
There are brands that do that. We have examples of ITC?s e-chaupals. Hindustan Unilever and Godrej are other companies that have a range of well-designed, highly successful products for this market. In fact, companies dealing in agricultural equipment, rural retailing and food processing are doing extremely well in this market.
What resources do you rely on to decode the needs of rural consumers? Is there a scarcity of trained human resource for this field?
We have a full-fledged research team comprising product designers and ethnographers who provide us regular insights into this market. When we hire people, we do look for a rural or a small town background. We have found that they make more informed decisions in terms of designs.
What are your specific insights for brands planning to break into the rural market?
They must first and foremost develop resources for identifying real needs of rural consumers. The challenge is the huge size of this market that makes segmentation complex, but that?s more or less the case with the urban market as well. Second, brands need to dispel the myth that cheap is not necessarily the best for rural market. Next, when you develop a product for this market, you need to take a holistic approach, think of the supply chain, make your products and their servicing accessible. Further, the usability of the design must be such that it demystifies the processes and the technology behind the product. Lastly, you have to be able to communicate this design maturity to the target consumer, so that he/she feels inspired to test and buy your product.
Can you cite cases of a few brands that failed this litmus test?
When Motorola launched cell phones that were high on technology, they never really took off. Enter Nokia with simple handsets and they became a smash hit. Nokia?s 1100 model is a classic case study in customised model for rural consumers. Kellogg?s is another example of a company that has struggled initially. The unimpressive sales that followed the company?s first three years in India resulted in the need to completely overhaul the marketing to beat the inexpensive breakfast biscuits that Indians preferred. The failed attempts of Grey Worldwide?s Rs 100-crore, made-to-order ?India Shining? campaign aimed at pitching BJP government?s ?tall? achievements is another case in point. The punch lines, duration and execution of the campaign were all in sync. What was missing was that the campaign targeted only the Sec A and B segment. The masses that subsequently went to vote had no access to this media and it backfired, according to Devashish Dasgupta, assistant professor, marketing at the Indian Institute of Management,Lucknow.
