Generic Rural Marketing: The Fortune at the Bottom of the Pyramid

Generic Rural Marketing

The Fortune at the Bottom of the Pyramid

Introduction:

Most Marketers realise that India is on a cusp of momentous change. The economy is vibrant, incomes are rising; and the habits, preferences and attitudes are changing rapidly. But nowhere is this more evident than in rural India.

Literature Review:

There are primarily three challenges that a rural marketer must overcome. The first and foremost is the challenge of Reach- Rural India is small and scattered, making them  inaccessible or unviable, sometimes both in unison. The second in line is consumer’s awareness. The challenge doesn’t rest on the fact of awareness of the brand but it is the mode of communication done to spread the right message. The third and by far the biggest challenge in Rural Marketing is that of influence. The influence stated is towards consumption and buying behaviour.

Research and Opinion:

Rural consumers are fundamentally different from their urban counterparts and different rural geographies display considerably heterogeneity, calling for rural specific and region-specific strategies. In urban context it’s the individual’s independent purchase decision call whereas in rural context because of strong social structures, including caste considerations and low literacy levels, community decision-making is quite common.

The new influencers in 20^th century arrived are liberalization and global connectivity through media telecommunications, the information age and increased education.

To achieve success in the new market available in rural India, companies will need to establish rural market- development programmes by innovating and adapting products to suit rural operating conditions and by educating rural consumers about new concepts relevant to the environment and usage habits that will improve their quality of life. Rural Market distribution channel is a chained distribution channel to reach the masses. The channel always doesn’t stop at 4 or 5 level and might dig deeper to 7 to 9 levels. Rural Market lacks a key influencer in terms of information providence. To some extent mass media might serve the purpose of achieving awareness and interest but for creating conviction the consumer must have a face to face interactive communication medium. The best identified mediums are face to face ‘below the line’ touch, feel and talk modes at haats, melas, puppetry, jatras and mandis.

To succeed in the rural market, companies will need to adapt from 4P’s of marketing to 4A’s in their strategy

Awareness, Acceptability, Availability and Affordability

In the coming years, companies should not fight for a share of the limited rural pie. They must join hands with the government to increase the size of the pie by creating economic activity in villages through micro enterprises and mainstream by linking them to large industries. The efforts create the much needed affluence, resulting in greater purchasing power in our villages and lead to greater demand for corporate products.

To claim a larger share of the growing rural pie will call for a radical shift in management thinking: from gross margins to high profit, from high value unit sales to a game of high volumes and capital efficiency, and from the one solution fits all mentality to market innovations. We also need to understand that different companies might have different meaning attached to the word ‘rural’. LG electronics defines all cities except seven to rural/semi-urban areas. A small innovation like Cavinkare’s chik shampoo became a huge success in rural India. This shows the idiosyncrasies of the rural market as it was believed that Shampoo is not at all used by the rural consumer. 

It’s just not innovation but also right strategic understanding of the sentiments and cultural attachments inducted in rural areas that is also important.

Henko failed in Maharashtra. Why? It sound like "Hey Nako" which means No, giving the brand a negative connotation in Marathi. Dabur's health tooth powder containing Tulsi failed. Why? Tooth powder meant spitting the tulsi out which was considered sacrilege in the rural areas.

Conclusion:

It’s quite surprising and shocking as well that many organisations and companies haven’t realised the full potential of rural markets. In India, Companies are still concentrating on middle income households. 75 % of our population currently resides in around 6 lakh villages. Rural markets comprises of around 15 crore households. Spending of a rural consumer on education to health varies considerably from urban areas. Managers tend to differentiate urban and rural markets only based on purchasing power which is a recipe for disaster. Income of a rural household is grossly seasonal and highly unreliable. Rural markets also suffer from a lacklustre infrastructure i.e. electricity and roads. The problems are inherent in a rural distribution system. This shoots up the cost of selling a product in rural areas. Therefore, promotional cost in rural areas is the biggest challenge for rural marketers. There is also a difference in the social and cultural behaviour of rural and urban people. Consumers have different tastes and preferences based on the socio and cultural factors prevalent in those areas. Rural customers also take a longer time in getting influenced by a particular brand because of a conservative outlook. Companies have to be patient with their brands when catering to the rural market.

Any company that understands the needs of a rural consumer and tries to come up with innovative products that can provide value for money will be able to penetrate the rural markets effectively. Products have to be made specifically for rural areas. In the past, Companies have tried to force products which became successful in urban India to rural India but this strategy has quite clearly failed. Success of brands like Cavinkare illustrate that the rural consumer is not averse to changes.

 

Contributed by:

Saahil Sharma and

Manisha Nair,

PGDM (2013-15), Goa Institute of Management

TAPPING THE RURAL YOUTH

RURAL MANAGEMENT – TAPPING THE RURAL YOUTH

The divide between India and “Bharat” is not new, yet it is not the one to diminish anytime soon. As much as we want to progress at a speed faster than light (which given the current situation of policy paralysis seems hilarious!) we cannot ignore the fact that there is a bigger population than the urban India waiting to be tapped and harnessed. Addressing this issue is the concept of rural management. Simply defined, rural management refers to the application of management practices in the rural context. 

India is a young country unlike countries like Japan which is facing an acute problem of aging population. Human resource is considered the best driver of growth, but only if it’s honed and groomed. The need of the hour is to harness the productive population in the age group of 18-59 years. While the youth is the urban areas is exposed to opportunities of growth, the rural youth is denied of this opportunity. The main mission of the 12^th five year plan is “Inclusive Growth”. Keeping this in mind the rural youth has to be brought into the mainstream with utmost urgency.

Taking this charge should be corporate requiring a large talent pool particularly the manufacturing sector. They need to understand the importance of engaging talent from rural India. 

There are already many companies that have engaged rural youth in their organisation by first recruiting them and then providing them with the necessary training. While India does not lack in talent, it definitely lacks in employable talent. Therefore, it is necessary for employers, if they are to be successful, to play a more active role in enhancing employability. Overcoming such barriers is Bharat Forge who have created what they call the “Talent Factory”. They have MoU’s with leading national and international universities. Training is imparted to students who are then absorbed within the company itself. Another example is that of Tata Motors who initiated several efforts to enhance employability of youth in addition to the Apprenticeship programmes that are run within the premises of the manufacturing units, as per the Apprenticeship Act 1961. The Company has built public-private partnership with government authorities to upgrade the quality of Industrial Training Institutes (ITIs). In addition, several technical and vocational programmes are run for rural youth from the project areas, including Motor Mechanic Vehicle Trade Course, electrical, welding, a/c refrigeration, computer skills, bee-keeping, etc. Special programmes are also run for women including sewing training, beautician courses, manufacturing food products and utility items and cable harnessing and assembly work. So far, more than 9,000 youth and women have benefited from these programmes across their locations. Many companies under their Corporate Social Responsibility programmes work towards empowering rural youth and women through means of Self Help Groups and various livelihood programmes.

A dedicated workforce that can be tapped in rural India is that of Rural Women. It is more likely that a woman would stick to a job given it is near her residence than a man would. Every day nearly 5000 men leave villages for urban settlement leaving behind their families. Financial independence, security and stability are factors that will be at play when a woman is being employed at workplace. Employing rural women is an area where companies in general have not really ventured into. By doing so, women workforce give the company commitment and thereby reduce attrition. 

One of the most efficient areas where rural employment can be sought is in Rural BPOs, the new kid on the block. It is highly cost saving for the HR to employee a rural employee since the salary expectations are very low in comparison to urban areas and the only cost incurred will be a onetime cost of Computer aid. However the limitation is usually providing Hindi/vernacular language assistance. Overcoming this challenge are many non-governmental organisations that are working towards empowering the rural youth. One such organisation is Centre for Learning Resources based in Pune that has developed an English training programme for youth that has passed school from the vernacular medium. These equip them with basic functioning knowledge of English required these days to be employed nearly in kinds of work. 

Another advantage of employing rural youth would be bringing them under the ambit of the formal sector from the informal and unorganised sector. This would enable them better pay, increased social security benefits and give access to wide range of labour laws which otherwise eluded them. 

The need of the hour is to identify the potential among the large pool of talent and guide them. They need to be given soft skill training along with vocational training. These training can be outsourced to external trainers trained in this domain.

As a Human Resource professional it is of utmost importance to realise the extent of prospective human resource that will be available from these rural centres in the years to come. With the urban professionals migrating to countries abroad, this dormant human resource in rural areas is the answer to our problem of Brain Drain, creating a win-win situation for both the employers and the prospective employees in rural areas.

Contributed by:

Vasundhara Pande and

Prakriti R Singh,

HR, Symbiosis Institute of Management Studies (2013-15)

Opportunities in Rural Management

Opportunities in Rural Management

 Rural Management is a term used to describe the kind of relations that a company or an organization establishes and maintains with the population in the rural areas.

The development of rural areas is shooting up in terms of rising total and disposable incomes, increasing consumption, buying power and as a fuse-box to balance the economic fluctuations in the country. Backed by favorable monsoons, this year the agricultural growth has surpassed the expected levels. This also means higher agricultural outputs, which are sold in the market to generate rural incomes.

When such a growth is being delivered by a society or a market classified as ‘rural’, an in-depth inquiry must be done so as to understand what can be the possible interpretations of the very word ‘rural’. Is it a set of population that are socially backward or economically handicapped? Or it comprises of villages made famous (or notorious) by Bollywood movies? A single answer to this question might be tough to be framed. Considering various definitions such as “areas comprising of less than 10000 population,” areas with limited infrastructural facilities” etc., one can only get a rough outlook of the same.

The primary issue arising now is that the rural environment is radically transforming. To define a rapidly changing environment it becomes all the more difficult. The change is happening from traditional outlook to a more modern outlook, with more of the rural population engaging in service industries and utilizing the latest technology in their daily lives. With extensive programs by the Government of India such as “Bharat Nirman”, pathways to development are very near to crowning. With national and international corporations setting up units in rural corners pan India, the ‘Bharat’ within India is adding to the world’s story.

For management graduates, rural markets act as a treasure chest. The reason being, an acute absence of efficient and effective managers to handle companies in lower tier cities and villages to facilitate business development. While companies are developing their channels to cut through the rural population to capitalize on their increasing buying power, professional human resource to aid the same is found to be in minimal numbers. Hence, this creates a wide opportunity for management graduates, business schools etc. to take up “Rural Management” as a major area of study and prospect.

Contributed by:

K. Akhil Anilkumar,

PGDM Rural Management 2013-15, WeSchool

Journey of Samvad !!!

The Marketing Guru- Philip Kotler

Contributed by: Chandni Tolaney (2012-2014), WeSchool

The most dreadful thing for the first year students was the 600 odd pages textbook of Philip Kotler.Although the Indian examples mentioned in the South Asian Perspective of the Kotler-Keller-Koshy-Jha were easy to relate to the concepts mentioned in the chapter.Philip Kotler (born 27 May 1931 in Chicago) is an American academic focused on marketing. The author of Marketing Management among dozens of other textbooks and books, he is the S.C. Johnson & Son Distinguished Professor of International Marketing at the Kellogg School of Management at Northwestern University.

Marketing Students specifically read Marketing Management by Philip Kotler to understand the core nature of Marketing in Corporate terms.Today Kotler is considered to be the best Marketing mind in business world and his experiences in the form of booksare helping a lot of students to understand marketing better and in a more efficient manner. Also a lot of Professionals from Corporates and Professors take the lessons from Kotler’s books.

The most distinguishing fact about Philip Kotler is that he never won any degree in Marketing. He did his master’s from the University of Chicago and then did Ph.D. in economics from Massachusetts Institute of Technology. He served different positions in Corporate before becoming a Marketing Professor in North Western University. His articles in ‘Financial Times’ and ‘New York daily’ are appreciated throughout the years and received an award in 1985 for distinguished Marketer of the year.

CRUX of Kotler

·   He always writes about Marketing as the primary activity of the Organization. Many Companies who use to concentrate on Manufacturing only, are focusing more on marketing to promote their Manufacturing.

• He gave more Importance to Customers than anything else in its books. Company’s focus needs to be on Customers rather anything on else.
• The most important thing here is that he separates the Marketing from Selling as large number of people use to think Marketing as same as Selling. The confusion was corrected by the examples which he put to clear the differences between both the terms.