Once upon a time, when someone said “the market,” he or she automatically implied the city. Ad spending, logistics chains, product rollouts, nearly everything was planned taking into account a consumer of the city. Rural markets were just an addition; they were considered something to target after the urban markets became saturated. Slowly but surely, this idea is fading away. In recent years or so, rural markets have ceased to be just another add-on in corporate strategies and have emerged as one of the hottest topics in business. Companies that used to ignore rural markets are now focusing on them exclusively. It’s worth asking why this shift is happening now, and not twenty years ago. Some of the best MBA colleges in Bihar are training marketing professionals to answer this very important question.
The Numbers Are Hard to Ignore
One thing that can be mentioned is simply demographics. In developing countries, a big proportion of people live outside large cities. And for a long time, it was believed that those people were poor enough and lacked the interest in branded and packaged products. It is a rather simplistic approach that looks increasingly outdated. The income levels in rural areas have been gradually rising due to various reforms in agriculture, various social policies of the governments, money transfers from urban relatives, as well as gradual diversification of jobs beyond farming. People who used to spend virtually all of their income on necessities can afford luxuries now.
And here is perhaps one of the most overlooked aspects of the story of rural growth: aspiration does not necessarily remain contained within city limits. An agricultural family’s son browsing through his cell phone in a village gets exposed to the exact same social media personalities, smartphones, and sneakers as another individual in an apartment in the metro. It’s not at all unusual for rural Indians (or rural consumers elsewhere in the world) to have the same aspirations as their urban counterparts.
What Has Changed Rural Marketing?
Two things, more than anything else, made rural markets accessible in a way they weren’t before.
Infrastructure is yet another area where there have been changes. The roads have been developed. Infrastructure development like electrification has reached villages that used kerosene lamps only a couple of decades ago. Even the logistics, meaning nothing more than the process of transporting products from manufacturing units to the village shops, has become relatively inexpensive and fast compared to before.
Secondly, mobile phones have had a great influence on the transformation of rural India. The use of affordable smart phones and the internet has not only helped rural customers to have entertainment options, but more importantly, have made information and comparisons available to them. For instance, a customer can watch video reviews, do price comparisons and even order products without going to the shop physically.
Meanwhile, cities have started to feel crowded, not just literally, but competitively. Urban markets in many product categories are saturated. Every big brand is already there, fighting for the same customers, spending heavily just to hold their ground. Growth in these markets is incremental at best. Businesses looking for their next real growth chapter have had to look elsewhere, and rural markets, still comparatively underserved, are the obvious place to look.
How Rural Marketing Differs from Urban Marketing
Here’s where a lot of businesses get it wrong. The instinct is to take an existing urban strategy, shrink the price tag, and call it a rural strategy. That rarely works, because rural consumers aren’t simply a poorer version of urban consumers, they’re a different audience with different constraints, habits, and expectations.
Take the case of the actual product itself. Something that sells successfully in an urban flat may not be appropriate in a rural household. Packing size is very crucial – a rural customer who earns at intervals and depends on crop production is much more likely to feel secure purchasing a packet of shampoo for a couple of rupees than going for the bigger pack, even though it is cheaper per unit.
The pricing system too requires a rethinking process. The earnings of rural household incomes are not regular but in spurts based on their crops or employment opportunities. Pricing that makes assumptions about regular monthly expenditure on the basis of urban retail patterns will fall flat when applied to the rural market context.
And then there’s the distribution chain, perhaps the most difficult element of this puzzle altogether. It’s easy enough for an organisation to cater to a concentrated urban market through just a couple of stores, but when it comes to catering to hundreds of scattered villages, many of which don’t even house enough people to merit a store, it becomes rather tricky. Organisations have to think outside of the box here and make use of various modes like vans traveling from village to village, setting up small local distributors, taking advantage of the markets called haats, and, in recent times, even e-commerce portals.
But promotion is not at all what you would see in your standard urban marketing program. Fancy TV and online advertisements prepared with the urban market in mind do not have much effect in the rural market. What works best in such cases is to communicate in the local language about an event that has some relevance to the lives of the people involved – a local festival, farming season, and so forth. The power of personal recommendations through word of mouth is tremendous.
How Are Businesses Actually Doing This?
There seem to be a handful of techniques that have become common for companies that have managed to penetrate rural markets successfully. Products are usually simplified and made sturdier by eliminating features that make sense for urban usage but not for rural usage; communication is conducted exclusively in regional languages; campaigns are based on the occasions that have particular cultural significance for a region rather than general countrywide ones.
The distribution network is always complex and multi-layered rather than having a single retail channel. Even more radical approaches have been developed as some companies partnered up with self-help groups and local cooperatives run by women, trained their members as micro-entrepreneurs and allowed them to sell the product in their community – something that no external salesman could do in the same manner. Another technique that is becoming increasingly popular is offering the product bundled with a loan or mobile payments system.
The Catch
It’s not easy at all, and it would be good to admit it. Logistics costs are higher in rural areas than in urban areas, just due to the distance and spread. The difference in languages in various regions is an issue of communication which can’t be resolved by a unified campaign across the whole nation. Unpredictable incomes connected with climate and harvests make predicting demand more difficult than in stable urban marketplaces. Trust, which makes rural consumers choose one brand rather than another, is formed gradually and not suddenly due to high expenses on advertising.
Conclusion: Where Does This Leave Businesses?
Rural marketing is no longer a secondary concern and a side business of some CSR activity appended to the main strategy of a business firm. For more and more firms, it is fast turning into something that is critical to future growth. Professionals holding an MBA from one of the top private universities in Bihar have an added advantage in understanding the need for rural marketing in the state’s evolving business landscape. Those who stand to gain the most are not those who try to sell their rural customers the same old urban marketing strategies, but those who can truly comprehend how rural customers make their decisions.