Ameet Pal Singh Sandy, IIM I

Brands & Rural Marketing

“Corporate India has finally realised the worth of rural markets but the real challenge is how to sustain this geographically fragmented market.”

Rural India: Why Brands cannot ignore them anymore

Rural India consists of about 6.27 lakh villages and is home to around 70% of country’s population. It constitutes a market where life has evolved through deep rooted community values, social rituals, joint families and age old customs and traditions. The rural market is heterogeneous, fragmented, complex and remains largely untapped.

However, the statistics show a different picture altogether. The number of middle-class households in rural India is 1.56 Cr which is comparable to the 1.64 Cr middle-class households of urban India (NCAER Estimate, 2006). However, the per capita annual income in rural India is Rs 9,481, much less than its urban counterpart with Rs 19,407, but at the same time rural India doesn’t pay for rent or education as urban India does, making rural disposable incomes almost as high as urban ones. With growth in urban markets becoming stagnant, rural markets offer an exciting new blue ocean for brands to explore. After all, rural India contributes 50% to the country’s GDP and rural markets are growing at 25% annually.

The Rural Demand for Brands: Why Brands are a Reality now

The dynamics of rural marketing has changed over the years and so has the perception about brands rural India. This has been through media exposure via television, radio and print, increased literacy levels, and the mobile youth.

The rural youth generally move out of villages to nearby towns and cities for education and work. Due to this increased exposure of brands and products, the rural youth have evolved as influencers in the purchase decisions of households and they are gradually replacing the elders as decision makers. This mobile working youth has, in a way, created an indirect increase in disposable incomes and a surge in demand for consumer goods. The rural consumer is shifting to toothpaste and toilet soaps, to motorbikes and consumer durables and this transition is fuelled by factors like awareness, affordability, availability and acceptability. Therefore, today it is comparatively easier for brands to get noticed and accepted in the rural markets than before

How Products turned into Brands in Rural India:

The marketers of successful brands realized that the five major factors in creating brand awareness among rural consumers are communication through mass media, publicity through word-of-mouth & opinion leaders, experiential education, price sensitivity & value for money proposition and distribution reach & overcoming language barriers. Therefore, the brands that are doing well in the rural markets and have become a household name followed unique ways of communication and experiential education(also called as edutainment), apart from leveraging the best known broad casting medium, the TV.

For example, tooth paste brand Colgate-Palmolive entered the rural market at a time when Neem twigs and non-dentifrice products like ash, charcoal, or salt were the norm for brushing teeth. Colgate-Palmolive launched Operation Jagruti to educate villagers about oral hygiene and its benefits vis-à-vis traditional products like Neem. Through product trials and free samples, the company was able to generate awareness in this new market. Similarly, when Chik, a CavinKare shampoo brand, entered the rural areas in South India, people used to wash their hair with soap. CavinKare launched an aggressive campaign to educate people on how to use shampoo through live ‘touch and feel’ demonstrations and also distributed free sachets at fairs and community gatherings. Chik sachets, priced at Rs 0.50 were perceived as value for money. This strategy worked wonders in the rural areas of Tamil Nadu and Andhra Pradesh and Chik eventually became the 2^nd largest selling brand of shampoos. FMCG major HUL used a van laden with LCDs to educate rural housewives by giving demos on the ‘germ kill’ proposition of Lifebuoy to the grease cutting technology behind its dish wash brand of Vim.

Not just the communication style, but the language in which it is addressed has been customized to the local flavours, for example Dabur’s Lal Dant Manjan (Hindi) was rechristened as Dabur’s Sivappu Pal Podi (Tamil) for the Tamil Nadu market. Coca-Cola sensed the price sensitivity of rural consumers and introduced bottles of 200 ml priced at Rs 5 and targeted them through commercials shot in rural settings with tag lines like Thanda matlab Coca-Cola.

As of today, distribution and reach is arguably the most important yardstick in creating brands for rural markets. Even expensive brands, such as Close-Up, Marie biscuits and Clinic shampoo are doing well because of deep distribution. Many brands are doing well without much advertising support — Ghari, a big detergent brand in North India, is an example.

The Challenges to Building Brands in Rural India & the Road Ahead:

The biggest hurdle is low penetration rates. Distribution and not advertising is the key to generate sales. Brand builders acknowledge that income levels are going up, infrastructure is slowly improving and lifestyles are changing, but the pace of this change is slow. Hence, long term gains become more prominent but the golden rule to sell in villages remains the same: products must be priced low, profit margins must be kept to the minimum and the marketing message must be kept simple. Brands in rural India have a place in the consumer’s mind but they face real challenges as brands have to be profitable to sustain in this fragmented market.