'Rural India is comfortable with brand stickiness'

Written by fe Bureau | Updated: Jan 18 2011, 08:52am hrs
Though revenues from rural markets have made significant contributions to the coffers of many companies, the marketer is just not too upbeat about cashing on this opportunity. Pradeep Kashyap, president of RMAI speaks to FE BrandWagon on how marketers need to unlearn the concepts of urban markets to understand rural the next biggest phenomena.

Over the last few years, what have been the significant changes in data availability and media consumption trends in rural markets

Few years ago there was hardly any data available for rural markets. Over the years, research companies like McKinsey and others have come up with research reports on rural. Media scenario in the rural has undergone a dramatic change in the last three to four years.

For instance, out of 20 million DTH connections in the country, 14 million are in rural India. While rural parts of the country boast of 80 million TV sets, the count for urban India stands at 65 million. Let us not forget that rural India is a vast territory with more than 6 lakh villages. Figuring out the right way to reach so many heads is something that will take many years of research and onground experience.

How can the right knowledge help companies get a grip over the dynamics of rural markets

While everyone talks of Indias promising demographic dividend (rise in the rate of economic growth due to a rising share of working age people in a population) of younger population, I would like to throw some light on its rural dividend.

Indias rural population is three times that of urban. This guarantees huge volumes. Post the beginning of liberalisation process in India in 1991, the gap between urban and rural incomes have been decreasing rapidly.

Today, rural India has purchasing power and education levels are improving. Exposure to brands has increased significantly as youth goes to towns or metros for higher education.

If last years numbers are anything to go by, in spite of facing issues like poor infrastructure and lack of financial services, rural markets have outgrown urban in categories like FMCG and consumer durables.

In 1990, almost 80% of rural income was spent on food. This has now come down to 55%. Interestingly, when it comes to food, rural households are not affected by inflation as the produce comes straight from the kitchen garden.

For marketers, is rural all about providing the best product/service at the cheapest price

This attitude will certainly not work and it is no more than a myth that rural consumers are suckers for cheap products. While Clinic Plus is the largest selling shampoo in rural India, Britannias Tiger outsells the innumerable local biscuit brands available in the interiors. Last year, the volume of Clinic Plus shampoo sold in bottles was more than what was sold in sachets. Apparently, value for money is the main concern of the customers here. Due to a rise in incomes, 350 million people (from lower class) living in rural India will soon enter the middle class segment.

This figure will shoot upto 500 million by 2018. Rather than alluring the poor lot with cheap products, marketers will eye this new middle class of rural India seriously.

Are rural consumers more brand loyal as compared to their fickle-minded urban counterparts

Urban consumers are constantly switching from one brand to the other. Brand loyalty stands for active involvement of a consumer with a brand. Rural consumers are more comfortable with the concept of brand stickiness which means they are happy with a brand that gives reasonable satisfaction and do not wish to get into experimentation.

Lack of education can be a reason behind this inability to discriminate between brands. Also, due to unavailability of brands in these markets, there are not many options within the consumers budget.

Is corporate India seriously looking at penetrating these markets

For many companies, rural markets bring 50% of overall revenue. Obviously, the media spends are not proportionate in urban and rural markets. One can make a difference in upping spends on below-the-line initiatives like doing activities in haats (unregulated markets) or putting stalls at the Kumbh Mela.

Also, companies are hesitant to spend in rural because these markets are difficult to monitor. Additionally, such platforms are not used imaginatively by the agencies.

The less literate a community is, the more difficult is the communication challenge. Few understand that simplicity is the key here.

Marketers mindset is another hindrance in the path of rural penetration as they are urban dwellers who may not be comfortable in meeting sales targets in the uneven landscape of rural India.

To deal with this, many companies have now set up separate rural verticals. Getting trained manpower with a strong understanding of the rural market is another challenge.

Things have changed. Today almost every business school worth its salt conducts classes in rural marketing. RMAI is also conducting such courses with the likes of SP Jain Institute of Management and Research and Mudra Institute of Communication, Ahmedabad.