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 2nd 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.