Wednesday, June 11, 2008

Strategies for rural Indian market

Recently Anisha has shared her insights/experiences in her new job. Some of those points I would like to mention here.
Till recently, a large part of marketing was done targeting the urban consumer, and with most marketers having no prior exposure to the rural audience, they are applying the same rules to connect with this completely different segment. The mistake that most companies make while chalking their rural strategies is to treat the rural consumer as an extension of their urban counterpart.
You can't do this because their life style is entirely different from the urban counterparts.
The other common mistake is to treat rural consumers as a homogeneous mass without segmenting them into appropriate segments. The most relevant point to note is that this segment is extremely fragmented and spread out over a large geographical base. The cultural and behavioral differences vary not just from state to state but from village to village. Mapping out this difference in consumer behavior is the key to any successful rural strategy.

From buffaloes to beauty parlours:
Farmers verging on retirement, sensing the decline of their own profession, are encouraging their children to enter different vocations. Around one-fifth of rural households now generate their primary income from a salaried job or a small business. Besides small village shops, loans are being taken for novel business ideas like beauty parlors, popcorn machines, spice factories, tailoring shops et al. A villager equals farmer is true no more as life has moved beyond farming and agriculture.
Farming is one of the source of revenue however, it is true that rural youth are looking at alternate sources of revenues (because farming is a seasonal activity and so, during the other seasons they take up other revenue generating activities). However, most of them are employed with unorganized sector.
Don’t just sell dreams, tell them how to live their dreams:
Thanks to the television having made substantial inroads into rural homes, villagers have also learnt to dream. Everyday they are exposed to images of ordinary people scaling extraordinary heights. This has given them enough hope about their own future, but where they flounder is the way to go about it. It is here that measured approach consisting of small actions, one step at a time, finds better acceptance and credibility. Actions where outcome can be measured from time to time and results are visible in the near future. So, go ahead and sell them dreams, but at the same time give them a solution and a formula for it to materialise.
Yes. Let us say, if you wish to a sell a insurance policy for a farmer. You can sell it only when he understands how to make use of it at its best. This is where social aspects also comes. While training the farmer, you need to relate the service to his social life.
Not just economic but emotional security:
Even though they are receptive to new ideas, they do not readily dash into new ventures. They do not only want economic security but also emotional security. They are likely to welcome innovation that satisfies their sense of security. If they feel that a particular idea will help them improve their economic position or their social relationship, they will accept it. Selling a product to them is not a cold commercial transaction (but) an agreement of trust between the marketer and the consumer. And companies that live up to the trust that this consumer places in them will benefit immensely in the long run.
Rural people are much more social than their counterparts and this makes the difference. This is the reason you need to have local alliances.
Their children are like stocks in a portfolio:
It’s always known that family ties are very strong in hinterland, but the difference is in the proportion of family budget that is being allocated to children, especially the male child and his education. Son’s education in a private school is like a stock market investment that is bound to yield returns far greater than any other investment. Any marketing effort that appeals to this agenda is bound to catch his immediate attention.
This is a recent transformation. As farmers do understand that there is not much money can be made from farming. They shifted their whole investments on children education. Particularly, southern states are much more advanced in this regard compared to northern ones.
Sharing risks and rotating savings:
This insight is the basis for the success of all micro finance ventures in rural India. A simple model that lends on the back-up commitment of small groups has minimised risks and reduced bad debts to near zero percent (certainly doesn’t need the intervention of the finance minister to help institutions recover their money)! Some of the other industries that can leverage this to their advantage are insurance schemes that offer group products and innovative saving schemes.
Particularly health insurance is a low hanging opportunity here. Rural Indians have to be treated as families rather than individuals. Most services are shared among the family. For example, if one member purchases a mobile, it is like whole family purchased it. Rural marketers should get this point while putting their business models.
Community empowerment & inclusion:
The rural communities have not been empowered in the past. So they do not participate in the development process. A participatory model that mobilises the community and makes it responsible for its own well-being is bound to find greater success. The attempt should be to turn villagers into entrepreneurs and keep the ownership of the various projects with the community. Given the vastness and diversity of the geographies involved, marketers would do well to leverage the potential of villagers themselves by creating entrepreneurial communities. Make them an extended team of your business and let them grow with you. A last word of caution, the companies entering the rural markets must do so for strategic reasons and not for tactical gains.
This is in order to maximise the market. We have to ensure that development aspects of our efforts should be implicit.

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