India’s Rural Markets

India’s rural market has been discussed for long amongst marketers, researchers and academicians. Almost a decade ago, management expert C.K. Prahalad talked about the revenue potential of bottom-of-the-pyramid customers. In the past few years, many companies have started depending on the rural economy to provide a cushion for any slowdown or turbulence experienced in urban India.

A recent study by management consulting firm Accenture titled, “Profitably Selling to India’s Rural Customers: Hidden Lessons From the Masters,” suggests that more than two-thirds of companies in India are planning to rapidly expand their businesses in rural markets. 

Rural markets account for a significant portion of revenues and profits for many companies.  The key suggested in report for making profits from Indian rural markets in short term through building and maintaining efficient sales and distribution networks tailored to rural India’s unique characteristics.

Rural Performance Index (the degree to which rural markets are strategically important to a company’s growth agenda) and Rural Innovation Index( the level of innovation in a company’s product, packaging, pricing, channels and operating models) were identified in the report as key  measures of success in rural markets.

With the above two measures in mind, companies have been classified in four different success categories: 

• Rural Masters are profitable companies that have secured a significant rural market share by focusing on execution excellence, implementing novel strategies to serve rural consumers and drawing on a deep understanding of consumers’ cultures and needs.
• Rural Performers are profitable entities that have established a strong rural footprint by using conventional approaches or by emulating Rural Masters. They often lack an innovative streak.
• Rural Voyagers have adopted disruptive approaches to serve India’s rural markets. For example, they create unique products and services, customize pricing or packaging, or develop new channels to reach “the last mile.” However, they have yet to make profits.
• New Entrants are companies that have recently made forays in rural markets. Conservative in nature, many of these enterprises have limited operations and have not generated the profit needed to create economies of scale. 

The report highlights that companies that have been most successful in rural markets have also helped to improve the rural consumers’ standard of living in terms of  creating jobs, building social infrastructure or providing business opportunities. It suggests that to foster these kinds of improvements, companies need to align their long-term interests with the community’s development to gain its trust and commitment. This alignment builds synergistic relationships based on shared goals and aspirations.

Full report on Profitably Selling to India’s Rural Customers: Hidden Lessons from the Masters can be accessed from:

http://www.accenture.com/SiteCollectionDocuments/PDF/Accenture-Masters-of-Rural-Markets-Selling-Profitably-to-Rural-Consumers.pdf

Quick Response Codes for shopper initiated Digital Communication Strategy

Prof Mohit Maurya,  NIILM CMS writes about  Quick Response Codes

QR codes were invented by the Japanese firm Denso wave a subsidiary of Toyota in year 1994 for tracking parts in vehicle manufacturing. Though QR codes are not very demanding to execute, still awareness is low, and not everyone knows how they can benefit from them, thus limiting this experience for a limited few. Nowadays, technological advancements are facilitating increased website hits/page views originating from a handheld mobile device. By virtue of their ubiquity, utility, and portability, these mobile communication devices have attained “invisible” status for many consumers—being carried constantly and unconsciously. All this has prompted increased mobile advertising, which is now recognized as an opportunity for marketers to engage consumers in a targeted and contextual manner.

Of late advancements in exchanging digital data on mobile handsets and wider dissemination of 2G and 3G network communication has changed the entire communication landscape. Facilitating which has been Quick Response (QR) Code a simple, effective technological innovation. QR codes are a two-dimensional image containing information in both the horizontal and vertical directions and can be created by a software application using textual information. QR codes are fundamentally pictographic hyperlinks that can be embedded in the physical environment. Its content types include URL, text, phone number, and SMS. The codes can be placed on different media such as magazines, newspapers, posters, packages, labels, and receipts.

Quick Response codes, more commonly referred to as “QR codes” are changing the way marketers and consumers view print media. QR codes are the seemingly perfect bridge to mend the gap between the tactile and virtual worlds.  A  QR code, which is a two-dimensional square image is an open-source technology that is free to use, simple to create and capable of being tracked. They are able to bridge the real world to interactive media, with the help of a ubiquitous mobile phone. After following a simple process a prospect can find him connected to hoards of information offered by any marketers. Though the use of QR codes has not become widely accepted, there are several merits of the technology to believe that it will flourish soon. By employing QR codes, marketers can help expedite the adoption of their offerings by the target audience and can create competitive differentiation. 

The author can be contacted at : mohit@niilm.com

CavinKare and Airtel- Alternative communication medium: Jatra

CavinKare and Airtel

Alternative communication medium: Jatra

The article is an excerpt from the book "Marketing Management: Comprehensive text, Best practices and Corporate insights" by Profs.  Arun Kumar and N. Meenakshi.

The authors can be contacted at  nmeenakshi@niilm.com and akumar@niilm.com

In the north east, the media options are limited. The reach of media is poor, and the bulk of the population lives in the rural regions. Even entertainment options are restricted. Jatra or mobile folk theatre is an old tradition in the East and North-East of India. Visiting troupes of actors and crew members tour villages putting up shows, the themes of which have evolved with time, running the gamut from mythology and folklore to college romances. There has been resurgence of Jatra groups. Actors from cinema and TV also act in Jatra shows, and they even take a break from their screen assignments to do so. For some of them, it is an opportunity to go back to their roots.

Companies are tying up with Jatra groups. CavinKare has tied up with the Bardoichila troupe to build the Fairever brand in Assam. Airtel has tied up with a number of troupes to cover various regions. It is an active platform to talk to the rural people and there is large local connect. Not only is it an awareness and education opportunity for companies but it also helps a folk form that has been cash-strapped and is looking for a revival plan.

Originally featuring stories from the Ramayana and the Mahabharata, Jatra plays are now set in modern times and themes are social and current, from Hindu-Muslim unity to college romances. The plays are staged after the monsoon ends, in September-December, but marketing starts earlier in May and June.

The village Panchayat, which pays the troupes an advance, considers past record before committing to a performance, and may even hedge its risks by inviting more than one troupe. Usually, a single troupe does not perform for more than two days in the same village.

The entire process offers a brand-building opportunity, through sampling, co-branding of banners and seats and of course, the script of the play. In Phase 1, when the Jatra is promoted in the village, the company undertakes sampling through vans co-branded with the details of the Jatra and the brand. In Phase II, which is usually a reminder to the village about the shows and a pitch, so that the village puts its money behind the Jatra, there is more sampling. Leaflets are distributed and the hoardings for the Jatra are put up.

In the final phase, when the play is staged, there could be another round of sampling, more visual branding and the message is dispersed through the content. The marketer does not get to see the script till close to the date of staging. The shows are quite technology-heavy as they use a lot of sound and lighting equipment. Tying up with marketers has also afforded the troupes a chance to be more sophisticated.

In the case of Fairever, the message to be communicated was that beauty will boost confidence.  Airtel, though the plays and in the environs, made consumers aware of the brand, and taught them how to send a message, and download a ringtone. This also doubled up as an education initiative for consumers. Airtel even put up its service counters at plays in villages where there was no such facility for customers.

The companies finance about 10-12 per cent of the show’s cost. Each tie-up for the whole year cost a couple of lakhs, and the cost of the collateral is about Rs 2-3 lakh. Collaterals include the co-branded T-shirts worn by the crew. All the vehicles – buses, trucks, are branded. There is branding on-stage and on the tickets as well. The troupe owner gets the sponsorship money. However, if agents are roped in to liaison and negotiate with the brands, they get about 30 per cent of that. There is a central agency to coordinate these deals.

The initial results seem to be good. The distributors and retailers are talking about it far more than earlier. Not only is there the benefit of repeat exposure due to the branding and sampling opportunities presented by the various phases of the Jatra’s planning, but as the brand message is presented through the entertainment medium, the consumer’s mind is more open to receiving it.

 “Digitally Influenced” Consumers in India

These are excerpts from the report published by BCG experts titled: From Buzz to Bucks

Digitally influenced purchases, or acquisitions by those who rely on the Internet for any part of the buying process (before, during and after), are estimated at nearly $30 billion in India, according to a Boston Consulting Group (BCG) study, From Buzz to Bucks, released on 25 April 2013. This is about five times the value of e-commerce purchases in India, BCG said, forecasting that such digitally influenced purchases will surge fivefold to $150 billion by 2016.

To determine how Internet use affects buying decisions, BCG’s Center for Consumer and Customer Insight surveyed 25,000 Indian consumers on their online activities during each step of the purchase cycle, in 101 different product categories. On the basis of the findings, BCG assigned each product category a Digital Intensity Index (DII). Categories with the highest DII have the most online activity among category buyers.

Some of the major findings of the reports are as follows:

·         Indian men are far more likely than women to be on the Internet (32 percent versus 12 percent) and more than three times likely to be digitally influenced (14 percent versus 4 percent). Although higher income levels are well represented online, even 18 percent of the lower-income “strugglers” (whose annual household income is less than $3,300) have Internet access, and 6 percent are engaged in commercial activity online.

·      BCG’s research also dispelled many misperceptions about Indian consumers. Only 30 percent of online buyers were drawn to Internet shopping for discounts. A higher proportion (37 percent) valued the convenience of shopping from home, and 29 percent said that they appreciated the expanded variety of products available online compared with what is available at brick-and-mortar stores. In contrast to more advanced e-commerce markets, digitally influenced consumers in India rely on company websites for detailed product information as frequently as they refer to third-party sites for comparative research and online purchases.

·      The report highlights that this rapidly expanding digital influence in India is a call to action for consumer products companies. By acting quickly and decisively, these companies can mitigate the risk of being disintermediated from their customers by e-commerce powerhouses as has happened in the U.S. and China. To capitalize on this growing market, companies must integrate their online and offline strategies, engage consumers and build their loyalty, refocus ad spending, actively manage the Internet channel, mind the gaps in which online activity is low, and optimize the mobile experience.

For details:

https://www.bcgperspectives.com/content/articles/center_consumer_customer_insight_globalization_from_buzz_to_bucks_capitalizing_indias_digitally_influenced_consumers/