Wednesday, April 15, 2009

Rural India Calling



Neeraj Sharma,IIMS

“India is fast emerging on the world map as a strong economy and a global power. The country is going through a phase of rapid development and growth”
These lines from an article made me ponder whether “India”, as quoted, referred to the rural masses as well, or to just the select few echelons of the Indian society.
Once, the Father of the Nation Mahatma Gandhi said -“India lives in its villages”. I also recall some figures here -“Indian economy is predominantly an agrarian economy which employs 65% of the total workforce in the country”. With over 700 million people living in about 638691 villages, the “Rural India” certainly can’t be left out.

Seeking Insurance

Has the recent economic meltdown projected risk and uncertainty in the corporate world only? Or it incorporates the major chunk of India that lives in the villages? The rural mass have always lived under risk and uncertainty, be it the risk of nature’s wrath in the form of a hailstorm or a crop disease or uncertainty in the rains. The uncertainty casted a constant shadow of apprehension of being deprived of reaping the fruits from their sweat sown fields. Despite constant improvements in measures to act as a guard, the risk and uncertainty due to one or the other factor has always been, and, probably shall always be there.

A key ASSOCHAM finding reveals that the Life insurance market in semi-urban and rural territories is expected to rise from less than US$ 5 Billion to US$ 20 Billion in the upcoming 2-3 years. In contrast, inurban zones it is expected to surge to US$ 15 Billion. Similarly, the non-life insurance business in semi-urban and rural regions is expected to reach US$15 Billion by 2010 compared to US$ 10 Billion in the urban areas.

With some positive government policies and a more financially enabled rural India;
Do we see an “Emerging Rural Insurance Market in India”?
Be it LIC, Bajaj Allianz or Max New York Life insurance, their distribution network is being upgraded to reach this market. Adding to this is the fact that 177 RRBs together with 14,150 branches cover 516 districts and about 129,000 rural post offices.

Do we also see a possibility of “Cross ¬Selling” and “Strategic tie-up’s”, tapping the opportunity in this segment?

FMCGs Making Headway
A number of category products have established themselves firmly in the rural households. It is estimated that of the total expenditure on consumer goods in a rural household, approximately 44% is towards food articles such as biscuits, tea, coffee and salt, 20% towards toiletries, 13% towards washing material, 10% towards cosmetics, 4% towards OTC products and 9% towards consumables. It’s not that only local and cheap products are finding a presence, but, branded products from organizations such as HUL, Nirma, Colgate Palmolive, Parle Foods, Nestle etc have carved inroads into the rural markets. Maslow’s theory of “Hierarchy of Needs” is at work. And so are “The Bunty-Babli Syndrome” and “The Dhoni Effect”, as referred by Mr. C.K. Prahlad.

The rural youths are more informed, more aware, better earners compared to their elderly family members and are also open to fresh concepts and ideas. This has augmented the penetration possibility of the FMCG, apparels and consumer durables into the rural households.

A study has revealed the realization of the aspirations of Rural Indians for urban lifestyles as follows:
• Consumer of 53% of FMCG products
• Consumer of 59% of all consumer durables
• Have 60% of Rediffmail signups
• Purchaser of 55% of the policies sold by LIC
• Have 44 million+ Kissan Credit Cards & 42 Million Bank Accounts

They too want Surf and Ariel, Denim and Pond’s Dreamflower Talc, Pantene and Clinic shampoo. The sachet culture has made acquiring quite a few of these all the more convenient.

Do we see a call for FMCG Cos. here?

Reaching out for consumer durables
As per a survey by NCAER, Rural India’s market for consumer durables is estimated at Rs. 4500 crores with an average annual growth rate of 8%. Colour TVs, Refrigerators, Washing Machines, PCs
-once thought to be a characteristic of urban population are making rapid inroads into rural households. There is also a growing demand for 2-in-1 music systems, Fans, sewing machines, Wrist -Watches, Pressure Cooker etc. Growth of LG, Samsung and many more companies is augmented by leveraging this rural India facet. Even the health care industry is not far behind and has already started operations in the rural belts.

Do we see a welcome-note for Consumer Durable Cos here?

On Driver’s Seat
Traditionally restricted to tractors and two-wheelers, rural India is witnessing a shift towards modern four-wheelers. Maruti Suzuki is coming up with rural stations and generating 10 per cent (about 32000 cars) of its domestic sales from rural sales. Be it Maruti’s marketing campaign for rural India “Ghar Ghar Mein Maruti” (Maruti in every Household) or Hyundai’s promotional scheme for Santro -“Ghar Ghar ki Pehchan”(Identifying every Household), providing special schemes for government employees in rural areas and members of gram panchayats, both substantiating the above-referred trend of going rural. But still high investment, lack of finance facility and lack of service network are the hindrances for foray of passenger cars into the countryside. It’s likely that Tata’s Nano – the 1 lakh car would remove the “High Investment” bottleneck. Despite the recent controversy, Satyam has had some laudable initiatives to its credit. For example, last year it created a mobile auto showroom cum service center, which can be taken door-to-door in a bus, called “Edow”. Initiatives such as Edow, equipped with everything an auto dealer needs ( a display area, a workshop, a sales office and systems, hi-tech display systems and high speed connectivity) can certainly overcome major bottlenecks. Even in two wheelers, the penetration in villages is only 10% as compared to 25% in urban areas, leaving ample scope for growth. Hero Honda, the two wheeler market leader, intends to cover 1 lakh villages under its “Har Gaon, Har Aangan” (Every Village, every Household) campaign. Also, Mahindra & Mahindra is being heard of planning to foray into the two-wheeler segment.

Do we see an offer of a lift to Auto companies here?

Technology Touching Lives

Sam Pitroda’s once said: “Technology is for problem solving at personal, community and national levels. It is about doing things differently. It is about change in mindset, processes, products and preferences. Technology is about opportunities and experiences”

IIT Madras has come up with an innovative technology meant towards driving services through Rural Internet Kiosks (@ Rs 55000/Kiosk) and innovative business models such as n¬Logue/Drihtee/e-Chaupal. Apart from income generation and greater awareness and access in terms of education and health, the system is aimed at bringing various services such as financial, markets (Exchanges/Trading), e-Governance, water management, energy, communications and transportation to the rural doorsteps.
Do we see a possibility of Online Marketing and Rural BPOs here?

Mobicom. Calling

Mobile Communication (Mobicom.) -India is experiencing the fastest mobile subscriber growth in the world. The figures say-“80 million mobile subscribers in 2006 to over 300 million subscribers today, adding approximately 10 million every month”.
Government initiatives since National Telecom Policy 1999 have been bringing down the economic burden of taxes and charges on the telecom operators. The call tariffs in India today are one of the lowest in the world and what earlier seemed a remote possibility with wired telecommunication is now becoming a reality. The rural masses are getting connected to the mainstream through the mobile communication network at an unprecedented rate.Further, while TATA Indicom is roping in village panchayats as its distributor, Airtel is providing differential advantages through lower tariffs and value added services.

Can we say now that almost anyone in Rural India can afford it?

The opportunities galore, apart from the aforementioned and much are left to ponder over. But still, can we say that the lines I referred to at the beginning of this article, are also relevant to Mahatma Gandhi’s India, “that lives in villages”.

If the answer is “Yes”, then, are the unaware marketers listening?

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