Rural consumers are more demanding

The journey of brands usually transcends them from connecting with consumers on a transactional level, to engaging with them emotionally and perhaps moving from being Trademarks to Love marks. My view is that this journey is no different for urban and rural consumers. For example, T from Mumbai and L from Saharanpur might use the same shampoo. However, T might use it several times a week, while L may use it only when she wants to imbue herself with that special feeling ‘a treat’ may be a trip to the Mela or a film.

Essentially what we define as ‘rural’ is really a place which is difficult to access and reach physically — perhaps an urbanite’s definition. The Census defines urban as ‘All the places that fall within the administrative limits of a municipal corporation, municipality, cantonment board etc. or have a population of at least 5,000 and have at least 75 per cent male working population in outside the primary sector and have a population density of at least 400 per square km. Rural India, on the other hand, comprises all places that are not urban.

Rural India is home to 720 million people in 627,000 villages with 40% of the economy dependant on agriculture and 60% literacy level. Rural India is a significant contributor to our economy with 60% of consumption. It has a large number of credit cards and holds a huge potential for mobile telephony. In the future, the government is likely to spend upwards of Rs 300,000 crores on creating jobs, infrastructure facilities, irrigation, public works, roads, etc. creating a large and sustaining stimulus which augurs well for income and consumption generation in rural India.

Over the past few years, riding on 4 consecutive years of good harvest, rural India has seen sizeable increase in income and consumption levels. This year, industry analysts expect FMCG sector in rural India to grow at the rate of 40% as against 25% in urban India, an indication that rural India is relatively insulated from the current economic slowdown. There was a time when marketers limited their interaction with rural India to video-on wheels campaigns, cinema screenings, jatra’s, wall paintings etc. However, over a period of time companies have launched value pack versions to encourage rural consumers to participate in their brand franchise. These packs typically target a share of his pocket in an affordable manner and are perfect for single use or infrequent consumption.

One of the key influencers of this change and perhaps the integration into urban aspiration levels has been television — a medium which does not require literacy and transcends the language barrier. While the ownership of Televisions is 34% in rural India, the reach of the medium is much more at 44%. Thanks to television, today an illiterate consumer in rural India is quite brand literate. The combination of increased awareness, higher disposable incomes, mounting aspiration levels and higher mobility amongst rural consumers is generating a sizeable market especially in categories including house construction materials, apparels, durables and FMCG goods.

Most companies are now looking at the huge potential offered by the rural markets and recalibrating their focus away from the already saturated urban markets. A study done by Nielsen (April-Sept ’08), has indicated that FMCG sectors including skin creams and lotions, hair oils, toothpaste and candies have seen significantly higher value and volume growth in rural India as compared to urban India. The rural consumer is very discerning and in many cases, is far more discerning and demanding than his urban counterparts.

Brands complete their transaction with the consumer based on what they offer, his assessment of this value and his belief that the brand would deliver what it promises! The latter is the ‘Trust’ factor which is the result a long and arduous journey that companies usually undertake. For brands that consistently deliver to what they promise, this trust is built up and helps the brand to target the power in the consumer’s pocket.

Brands can consequently extract a premium based on the trust that the consumers have in them. Brands like Colgate Palmolive, Horlicks, Tata Tea, and Tata Salt have been building this trust over years and have reached a stage where they are able to enter the rural consumer’s purchase basket and preference set.

Companies like ITC, HUL have gone a step ahead to build trust through empowering the rural community. ITC through its E-Chaupal initiative has removed the middle men and has added value to the farmer through opening up the commodity trading terminals. This not only helps the farmer to get fair value but enables ITC to source commodity in a cost efficient manner. Programs like Shakti have lifted the lives of some rural women empowering them to contribute to the household kitty thereby improving their status.

Such programs which impact the daily lives of people take the product or service beyond the transaction level to an emotional connection thereby increasing the Trustmark quotient and putting brands on the journey to becoming Love marks.