The most important element in rural communications is that you have to integrate 3 things as you communicate: communication (the exposure to a message), trial or demonstration (convincing) and final sale. If these three elements can be integrated into one timeframe, the cost effectiveness then gets measured on different platform. When you measure the effectiveness of, say television, you don’t measure on these elements. So there is a concept of touch and feel within the communication itself that you have provide as you create communication for rural consumer...
When rural marketing started way back in 1982/83 in a focused manner, you could ask any advertiser, “Have you done rural advertising?” And the answer would be “Yes we have”. “What have you done?” Wall paintings, van advertising. Today there is hardly any van advertising. There are about 47000 haats in our country. In Maharashtra there are 4000 haats and there are 5 types of haats in broad terms. So you can create channels. Everything that we did over the last 4-5 years was for the first time. So channels are in plenty. Its a battle of the ability to notice, create, use and build on that...
RD: Mr. Raman I want to ask you something. One of the characteristics of rural consumer is the variability in income size and patterns. Somebody gets daily wages while someone else earns weekly salaries. Yet another might be paid on a monthly basis. Given this scenario, it is often said that if a rural consumer buys daily, he has 365 opportunities in a year to switch brands. In an advanced market like America where the product is brought only once a month, you get 12 opportunities to change the brand. Do you see that as an advantage or a problem?
Raman: Changing brands everyday is certainly a possibility among rural consumers. But that is due to a bigger problem of brand recognition. For example: there may be 20 varieties of LUX look-alikes and 82 varieties of Nirma and other look-alikes and so on and so forth (Like when find the ‘r’ missing and it say Nima). The challenge is to create communication that would help the rural consumer in recognising brands, logos, visuals, colours etc. so that he or she actually buys Lifebuoy and not something else. But I don’t think so that’s happening.
RD: Mr. Ganguly, while on the subject of distribution, when you look at the urban retailer versus the rural retailer, there are a lot of differences between the two. What role does a rural retailer play as compared to the retailer in urban markets?
Ganguly: In urban sector, by and large the retailer has become more of a conduit. The levels of influence vary from one category to another. For example, in color televisions category, the retailer still plays a very critical role. So you find that in consumer electronics, even in the urban sector, the retailer’s extent of influence can be as high fifty percent, when it comes to brand choice - and this phenomenon is observed right across socio-economic classes. Even a well read person who is abreast of the latest products, has seen the commercials and has also met people using those products, can still change his choice of brand at the retailer’s recommendations.
RD: I thought the rural retailer influences more and is more important than urban retailer because urban consumers are more educated, exposed to media etc.
Ganguly: Of course, he does. I mean in certain categories in the urban milieu the retailer has no role to play other than just talking the products and making sure its available and providing the value added services, whereas in the rural sector of course he plays the very significant role. He still does play a role in terms of whether the product is genuine. Philips as a brand has been around for about 70-75 years - but we still get the radios with a double “l” (Phillips). So duplicates or spurious products exist not just in FMCG but also in durables.
Balakrishnan: Also the retailer is influential in every single product category in rural India simply because in he extends credit to most of his customers. The customer buys from the retailer on credit - now the moment you have a ‘khaata’ with the retailer, he exerts an influence on everything he buys - soap, toothpaste, tea - everything. On the other hand, our learning has been that there is no effect of other influencers (like Sarpanch or other senior leaders) on consumers, especially in FMCG purchases.
RD: Mr. Bhattacharya, research suggests that a rural retailer tends to stock very few brands within each product category as against an urban retailer who keeps as many brands as possible. What does your experience suggest?
Bhattacharya: Well a lot depends on what the company stockist is doing. Recently we have begun asking the RSD (Re-Distribution Stockist) to increase his merchandise and extend more credit in the market by streamlining his inventory. So now we are also trying to dovetail our various products categories. Earlier our personal products salesperson would just go around, say once in a month, whereas the foods salesperson would go once in a week. Now we’re streamlining the entire distribution such that all the categories would be sent in one van. So the retailer has more choice. And also in a village, unlike in a city, if you extend credit, one shop will try to store as many categories as possible.
RD: Interestingly, according to some findings, the rural retailer stocks few brands in each category. This may have important implications for a company and its managers because whoever reaches the market first gets the share of the market. The rural retailer may keep say x amount of area or space for a certain product category and he won’t keep more than one or two brands. So unless you reach there first and re-stock at frequent intervals, you have no scope.
Raman: I am not sure though that he keeps very few brands
RD: You think he keeps more number of brands
Raman: Sufficient number of brands. I think he is savvy enough to have realised over time which brands move fast and therefore would stock every one of those brands. He certainly ensures that the fast-moving brands are there. This therefore does not restrict his basket to one, two or three brands.
Balakrishnan: Another reason why his basket is not restricted is simply because none of these stockists ever reach the retailer. Nine times out of ten times it is the retailer who goes into the market and buys and therefore, he goes and buys what is moving what is prevalent and popular. These rural retailers hardly get any service from the re- distribution stockists.
Bhattacharya: The other important thing that has happened is - with SKU’s going down (obviously with the idea of reaching the consumers) the retailer today has far more shelf space than he earlier. For example, he can simply hang shampoo sachets around - all he needs is a string. In general, pack sizes are also shrinking, so he is able to stock much more.
Bose: There are different kinds of retailers. There are shops within the village and their stocking pattern, their clientele - people who buy from there - are very different from the shops which are not located inside the village, say, along the main road. Then there is a third kind of market which is called the kasba market or the tahasil market. For the shops within the village, their stocking pattern is very much dependent on the kind of investment the retailer can make in a one-time purchase. So if his average investment is something like Rs.1000 - Rs.1500 once in a week - this means that he spends this much to replenish his weekly stocks. A lot depends on what kind of product he is stocking in the village. So that is the problem - the basic difference between, say HLL kind of brands and anything else, is the margin. The pushing by the retailers depends on margins and the pushing by the wholesalers depends on retailers. The gap is very wide because the local manufacturers do not undertake investments either in terms advertising or anything. They are very fast imitators. For rural retailers, it’s the question of simple economics - I get more money and I invest much less on these brands, so that’s what I will stock and sell.
RD: But from the marketing companies’ point of view, they certainly do not want to be dictated by the whims of retailer....
Bose: True...so they should focus on building a relationship - they have to be in touch with the retailers at the rural level.
RD: Mr. Ganguly, India is a very large country with far flung markets, different socio cultural aspects, income levels, educational levels, poor CNS penetration, long distances etc. The rural retailer does not stock huge quantities so that you may supply him only once in a month. And you can’t block your money too. In such a scenario, how do you develop your logistics model? How do you solve this distribution problem?
Ganguly: This is something which people are still grappling with. Nobody has the perfect answer. At least FMCG companies like HLL have made in-roads and tackled this situation to some extent. But durable companies are far from being there because at the end of the day, the volume of investment required to buy colour television is huge. Rural credit is virtually non-existent. Today 80% of urban durable sales depend on hire-purchase. This concept of hire-purchase still hasn’t entered rural India. As a result, what is happening is the second-hand sets which, are exchanged in the urban market are .

I think one needs to be careful in choosing the kind of people who drive your rural programmes. D K Bose

finding their way (after refurbishing) into the rural market. On the other hand you have qualitative factors like the “shradh” month. Nobody in rural India buys any durables during the shradh month. You may offer an colour TV for Rs.3000/- but they still would not buy, because it is considered inauspicious to buy during this period. As a marketer you can’t let your capital get stuck for one month because the stocks will be just lying there.
Bose: As far as the durables are concerned there is still some hope because the rural mindset is to visit the nearer town and buy. This visit is not because they want to buy. Their visit is an occasion, a kind of a release from their routine. So in distribution terms, it is not yet absolutely necessary for the durables - refrigerators, fans, TVs, radios - to go right to the doorstep in the rural markets.
Ganguly: You need to cover your feeder markets - the feeder markets towns.
Bose: Yes. There are 7,000 odd feeder markets in India. But certainly FMCG brands are very important task ahead in terms of being able to build, create and sustain the relationship with retailers who matter. Currently there are largely in touch with the wholesalers.
Hindustan Lever covers about 70,000 retail outlets. It is not the coverage but a new innovative approach you must create. So what HLL may like to do is invest on mobile vending or invest into very unconventional, very new and innovative approaches, otherwise it will be very difficult because for every HLL brand there are 10 or 15 imitation products, and they cannot be fought because of the price difference. So it is accessibility, availability and visibility at the local shop.
Bhattacharya: Someone said earlier that it is very expensive to reach out to the rural consumer. As a matter of fact, it is not so expensive, if you look at it this way. In all these 800 towns, if you were to put 5 hoardings at five different points - railway station, bus station, or district magistrate court or a sub-judges court or main chauraha, the post offices etc. So if you identify 5 spots where a key message can be conveyed, I think that would be a very effective way of communication which won’t cost as much as television and print media.
Bose: See, in rural markets, brands are non-existent. They identify FMCG by three things -primarily by color, visuals of animals and birds and by numbers. So a 555, 777, pila hathi, lal saboon - these are the kind of terms with which they identify brands. They buy those three things: colours, numbers and visuals. So it is very important for us to understand that if you are talking about communications, media, marketing, branding - a lot needs to be done.
There are number of cases which suggest that to sell brands in the rural market, it is necessary to simultaneously educate the consumers. Foer example, villagers were found using shampoo for brushing teeth, toothpaste for washing hair, and these are real life examples, not stories being created. They don’t know what these shampoo sachets stand for. So if you have to create brand communication, marketing efforts must be supported by education.
RD: Do organizations which are traditionally focused on urban market need to have a different kind of organizational structure, management processes, systems (including MIS) to enter the rural market? Do you think that same organization can carry on even for the rural markets or do you need recognition, a commitment at the senior management level? Somebody should be looking at rural market separately. For example why do you think company like ORG-MARG and LOWE created a rural outfit? Or your company, why do they maintain a separate rural division - why not carry on with the existing set-up? Do you think that rural marketing needs a specialized division?
Ganguly: I don’t think at this point we need a separate cell within a company to look after rural marketing per say. What I would say is yes it definitely needs a long term vision because given the huge nature of the market and its diversity you need a long term vision you need a top management backing on the project, and of course you need resources because you will not get results overnight. But it can be handled within the existing system. I don’t see any reason to create another parallel system, which will address only the rural market.
RD: Let me ask you then why do you create a rural cell? Why not your organization carried on with the same structure? Do you need a structural commitment?
Raman: One, I think we need a paradigm shift in the thinking. We don’t think rural...any of us here. I don’t think rural. Two is that I think for many of us rural a geographical extension of the urban market. It’s not. It’s something else. So it has to be tackled very differently. The rural distribution value chain is entirely different from the urban value chain. The way consumers process communication there is entirely different the way its process by urbanites. I know they all are human beings and as such the communication process should remain the same. But because there is a cultural factor, I don’t think any of us talked about the cultural factors...because the more mature you go, the more urban you go, that brings in some homogeneity. I think the cluster itself makes it homogeneous. Whereas the more rural you go, it likely to get more and more heterogeneous. One rural village in the same district is very different from a rural village, say 5 districts away. So we are looking at it as an extension which its not. So to that extent yes it does require a different treatment. And it will require a paradigm shift in the way we think.
RD: Mr. Balakrishnan, why did your company create the rural cell?
Balakrishnan: You are right we need not have created: Two issues, one was that it’s a money-making cell. So that is a good enough reason to create the cell. The more relevant factor however is that when we started this cell about three and a half years ago, the company did not have the enough expertise on this market at that stage. So we realized that we need a set of people who understand the ethos of the rural market - people who understand the social fabric, who understand how the rural consumer interacts with the various categories because we believe that we do need a different level of understanding for tackling this market. Just to give you an example: when I started this cell, I was typically defining rural and urban like the way we have heard the definitions today - in terms of 75% agriculture and so on and so forth. But as I interacted with more and more clients in this country and with all respect to all my clients, I think in this country you have a maximum of 10 (on the higher side) companies who understand the rural market well enough to invest large amounts of money in them. Therefore, I have changed my definition of rural as I have to deal with these clients. My definition of rural to all these clients is: “Rural starts where there distribution ends”.
The fact of the matter is that you need a different set of people who understand this. Or your present set of people need more exposure to this kind of market, largely the marketing people you have here would have spent 5 years, 8 years, 10 years in sales and even the sales people as we know them classically, will be in large towns in say, Madhya Pradesh, where he will be in Indore or Bhopal or he will be in Jabalpur at best. And his interaction will be with the regional distributor or stockist who is also in Indore or Jabalpur.
RD: How do you make things happen? You may have a team in place, it can be task force and not necessarily a separate department but unless you are able to measure performance of that team, it is not possible to progress further.
Ganguly: Your question was does a company need a parallel structure?
RD: yes - a parallel structure or a process...
Bhatta: No I don’t think it really requires a parallel structure
Ganguly: A project team is fine; a multifunctional project team drawn from the sales, even production, marketing. Or you have a multifunctional taskforce to head the project to draw up the charter.
Bose: I will give you an example: we worked for four years from 1994 to 1998 in the manner which Roopam is talking about. We had about 3 to 4 people who did lot of projects in rural areas. Since 1998 till today we recruited about 75 people. We worked with about 15,000 people. We have trained about 75 people, all of who are unfit to be in advertising. They have come from NGO’s or they have come from small towns after doing a rural management course. None of them would have found job with us. But they are absolutely crucial to do our job. The basic difference between regular marketing and rural marketing and communication is sensitivity. You need a certain amount of earthiness in you, sensitivity about rural people, market, environment, issues; concerns may be of a specific geography.
RD: I think we have come to an end of our forum...just about 2 - 3 minutes left. We have now understood that rural context is different, we need to be careful, we have to sensitize ourselves. My final question to all of you is: Can you tell us one area where you think we should be very careful while taking rural marketing decisions?
Bhattacharya: I think we should be sensitive to the requirement of the region that you’re planning to sell, especially in the case of FMCG goods. Like vegetarianism is a very big issue in certain rural areas. So marketers should be very careful with their product - which should be a green product and should be purely vegetarian in nature. This could be one way of innovation. Although right now the law only requires products consumed internally (like toothpaste) to be vegetarian. But you can ensure that this extends to other external-use products too...then I think you can reach the rural sensitivites.
Ganguly: What are you suggesting is lead propositions? I mean you create a proposition whether it is a calcium or vegetarianism - you can call it anything - and then you center all your products around that proposition. That’s what you’re saying?
Bhattacharya: Yes
Balakrishnan: If I was the marketing head of the company and had to get into the rural market, I am very clear about the first issue. I would not look at communication now. I’d look at only distribution. I would find a way of cracking rural distribution. Because all this talk about sensitivity and making him aware of the product etc. is fine but when he goes to that shop and he can’t find your product, then all that is useless. I would focus on getting logistics in place first. Since you are asking me to prioritize, of course others are extremely important and I think we should do it but first I would make the product available to that person.
RD: Mr. Raman what areas do you think need to be cover?
Raman: I think all areas are covered. I think I grant that distribution is something that marketers have to crack.
RD: Mr. Bose, what are your views about one area that urban marketing companies should be careful when looking to enter the rural market?
Bose: Very simple. Distance yourself from what you know. Learn everything anew.
RD: I think I too would like to present my views here. I think one needs to be careful in choosing the kind of people who drive your rural programmes. One needs a particular way of fresh thinking and a mindset that understands the rural context. That’s the starting point. Everything else follows. In other words, principles of marketing still apply here. Philip Kotler is as relevant as ever - just that you need to apply these principles differently.
Ladies and Gentlemen, it was a wonderful discussion. Thank you very much for participating.

Compiled by Manoj Khatri, Strategic Marketing Research Team.