Rural Marketing – where are we headed

A few years ago, a brilliant mind Dr. C K Prahlad wrote a book called ‘Fortune at the bottom of the pyramid’. It wasn’t without a good reason. While it is impossible to write a commentary on Rural markets in India, the genuine attempt is to highlight the importance of focusing on rural India and also some innovations that have been executed till date.

Census 2011 may throw data which may startle us no end. While I do strongly believe that the UID project and its success may spell a complete revamp at the way we look at rural data, it is true that many marketers are shooting in the dark today. Just a small comparison – Technology changes have leapfrogged in the last 10-15 years and I have read somewhere that the innovations and technology inventions in the last 50 years of the previous century is five times that of history of mankind till 1950. If that is the pace we grow in, census once in 10 years is a bit of a mismatch. I do hope that the UID project taken up by Mr. Nandan Nilkeni would help track every citizen of India and the state of the rural markets in the country.

According to me, about 70 KMS from Bombay would be the beginning of rural India. And this doesn’t change drastically from any other large city / metro in India. Why? You drive 70 KMS away from Bombay and you will find that people don’t answer you if you converse in Hindi. They speak only Marathi. Hinterland begins. India is a country of countries bonded together by a thread – call it religion OR way of life.

Little surprise then, that a large organization like LG treats anything other than 7 large cities as ‘rural’. I must admit that I was shocked initially, but a bit of thought behind the process gives a clear mandate.

Here’s how Rural market currently looks:

1971 1981 1991 2001
Total Population (in Mn) 548.2 683.3 848.3 1026.9
Rural Population (in  Mn) 524.0 628.8 741.6
As a proportion of total population 76.7 74.3 72.2

Source: Census 2001

It is important to note that this data is at least a decade old and may not be true currently. However, we are just about working on our next census. My comments on that have already been shared.

The National Unique Identity Project embarked upon would hopefully clear the following:

  • Provide a clear definition on what makes a market ‘rural’.
  • Population trends in each of these markets
  • Earning potential of people living in rural India
  • Trends on which parts of the country are doing well as against the other
  • Trends is employability of skilled and unskilled work force
  • Trends on dependent population
  • And many more

These solutions that emerge from the UID project should act as fodder for Rural marketers in India.

Notwithstanding all this, there are many companies which have done some path breaking work in Rural India. I am highlighting a few here.

Coca-Cola started bottling plants across the country, which started providing work opportunities for the rural youth (predominantly unskilled labour) and entrenched themselves firmly in their minds and pockets. By starting a smaller SKU (Stock Keeping Unit) of 200ml for Rs.5/- Coke was amongst the first to reach out to the throats of the rural Indian.

They had tweaked their communication also to cater to the rural sensibilities. The Aamir Khan TV Commercial in a paddy field is a case in point. Even today, Coke employs more than 9 languages in their communication. So it is hardly surprising that Coca-Cola is growing at 37% in the rural markets as against 24% in urban markets (Source: Guide to Indian Markets 2006, Hansa Research).

ITC E-choupal is another initiative which though looks like a social responsibility project it has proved to be a very successful venture. It is a win-win situation for the farmers, the buyers and ITC. It is an initiative which helps the farmers find the right price for their produce. They have very beautifully linked basic internet connectivity to mobile which triggers an SMS to the farmer’s mobile phone. So this is how (crudely put) it works.

The farmer over the year makes a produce of say 1 quintal of potatoes. During the earlier days, they used to carry it to the market where middlemen used to buy the produce as a bulk and would store / sell to the cities. It meant that the middlemen used to decide the price at which they buy the potatoes, which may or may not be a fair price. The farmers used to sell it at whatever price they used to get because they preferred getting rid of the produce than taking it back home!

Today the farmer toils through the year and makes a produce of say 1 quintal of potatoes. He holds it at home and is registered with ITC’s e-choupal. The e-choupal today has replaced the middle man. The system tracks the rate of potatoes in the city and quotes accordingly to the farmers as an SMS on the mobile phone. If the rate is palatable to the farmer, he brings the produce to the e-choupal center and sells it. So there is a fair deal for all, isn’t it?

I would be dealing with a few more concepts on Rural Marketing in a subsequent post.

Note: Apologies for today’s post at this hour. It was almost a race against time. I had way too many things happening today and I had to meet the deadline of a post before it’s midnight. I hope I have done a decent job. Please comment. Thanks

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