India's massive rural markets are a new frontier for adventurous salesmen. Deep local knowledge is needed to crack the villages – of language, power structures and even folk art.
Businessmen learn to cultivate rural Indian markets
Vinod Nayak once spent his days organising fashion shows for India's wealthy urbanites. Now he finds the promise of cash in the countryside more compelling.
Today, Nayak has arrived in Kodahalli, a small village in rural Karnataka, to deliver a difficult pitch. He is here to convince a group of frugal farmers to buy the most expensive brand of tractor lubricant on the market. Nayak and his team represent Linterland Rural Communication, a company contracted to run a rural marketing campaign for Castrol India. Farmers here tend to change their tractor oil in March, and the team wants to make sure they get their client's message out there: "If you don't use Castrol, you will have to spend more later."
The marketing team unpacks a stack of 50 plastic chairs, setting up a makeshift outdoor arena in front of a television, and begins screening a video recording of previous Castrol converts praising the product for preserving engine life. Later, those present will be sold the brand's key benefits via a flip chart presentation. Finally, as dusk settles, it's time for the most unusual part of the charm offensive. The team unfolds a game that resembles Monopoly, except that the player who moves the Castrol trinket around the board invariably ends up winning. The spoils for the victor are small - a Castrol keychain - hardly as impressive as the wristwatches, school bags, and other freebies the company has distributed in other campaigns elsewhere in India. Still, the hubbub over the victory alters the usually sedate village's rhythm.
It's the first time that a mobile van campaign has descended on Kodahalli. "Urban people don't have the time to spend on this," noted Nayak. "But in the villages, they enjoy it."
Jawar Shettaru, one of the farmers who listened to the presentation, counts himself a convert: "I will ask my son to buy Castrol, even if it costs more. It's for our own good." Shettaru bought a tractor eight months ago to cultivate his fields of turmeric and onions. Luckily for him, both crops are fetching high prices this year, so he thinks he can afford to abandon his regular, cheaper brand. "They showed that if the oil is not good, it will cause friction," he tells me.
Face-time with rural consumers is the new corporate imperative in India. That means up-close and personal, not just a peppy voice on a TV screen. The exclusive courtship of urban dwellers is fading, as brand managers push for sales growth in hitherto untapped markets.
Companies like Linterland are not aiming at the "bottom of the pyramid". Marketers aren't exactly rushing into those bleak farming communities plagued with repeated crop failures, heavy loans for fertilisers and pesticides, and problems mustering school fees and dowries. Such villages have suffered an outbreak of more than 240,000 suicides from 1995 to 2009, in Maharashtra, Andhra Pradesh, and other states. Likewise, farmers who own less than two acres of land - or work on land owned by others - are hardly viewed as good bets for big-ticket items such as a refrigerator or a microwave oven.
But it is also true that India is learning to look beyond the binary stereotypes of urban wealth versus rural poverty. In the process, it is coming up with a more nuanced picture of frontier markets, and discovering some rosy prospects.
Take the research compiled by the Centre for Rural Information and Insights, a division of the Mahindra Group. Examining the income pyramids in rural areas, researchers estimate that 43 million households - out of a total of 144 million families who live in the countryside - represent a "market opportunity" equivalent to "72 per cent of the entire urban population of India."
Indeed, for farmers who own more than five acres of land - like Shettaru in Kodahalli - a recent research report suggested that "rural households are actually better off than their urban counterparts". And with small-scale service jobs multiplying in the countryside, many families are earning more from non-farm sources, rendering their income "less seasonal and more predictable".
Such optimism is also reflected in the data gathered by the National Council for Applied Economic Research, which found that 46 per cent of televisions are currently sold in rural areas, along with 32 per cent of cars and 29 per cent of refrigerators. Such products would be identical for both urban and rural markets. Yet others are being designed specifically for rural needs, such as solar lanterns, cook stoves, or low-cost reading glasses.
No wonder membership of the Rural Marketing Association of India continues to grow or that nearly 30 Indian companies are now casting themselves as experts in marketing and consulting for rural campaigns. And that doesn't count the buzzing ranks of local contractors and subcontractors who actually drive the vans, prepare the banners, print invitations, thumb through the flip charts, hire entertainers, and otherwise implement these strategies.
While their ranks may be growing, rural marketers warn against raising expectations of quick pay-offs for clients: "You want to have patience when you work in rural India," insisted Pradeep Lokhande, founder of Rural Relations, a Pune-based marketing firm. "You are sowing the seed, and then must wait for the harvest."
Pradeep Kashyap, CEO of a consultancy known as MART, generally warns clients against mounting a one-size-fits-all campaign to address different regions and diverse consumer groups.
"It's very critical to do it in the local language and use visuals that reflect the local culture. If the faces are not from the local area, people find it difficult to relate," he said.
Kashyap, who also serves as president of the Rural Marketing Association of India, found it odd that the Castrol board game had been printed in English, instead of Kannada, the language of Karnataka. He considers India to be "20 different countries", each demanding familiarity with local norms and local entertainment, from puppetry and folk theatre to the hottest regional movie stars. In Karnataka state, Linterland's Nayak cited the different art forms used in a recent telecoms campaign in different regions: Yakshagana folk theatre in Mangalore, Dollu Kunitha folk dance in Shimoga, and Suggi Kunitha harvest season dance in Karwar. "Consumers have a better retention of the product if it is associated with a cultural show," agreed Santosh Singh, programme head for Rural Market Insight, a Chennai-based consultancy.
But while appeals to traditional attachments to folk art can help make a sale, marketers also have to remember that increased exposure to TV is shrinking the gap between the nation's cities and those who live outside them. India's rural heartland now boasts nearly 70 million TV sets, plus 14 million satellite connections.
All the same, marketers warn that it would be a mistake to rely on TV as the sole tool to fuel sales. An approach that pinpoints the decision maker in each village has previously yielded far more influence at the grassroots level.
One might assume that the "sarpanch," or head of the village council, would be the natural brand ambassador for a range of consumer products. In fact, his authority is eroding, and he's often seen as behind the times. The tastemakers are more likely to be college students who commute between their villages and nearby towns or cities. Indeed, even a village family's lively, school-going 12-year-old is more likely to be plugged into the aspirational zeitgeist than an ageing local farmer, and will often choose the brand after the father sets the budget.
Some companies are also cosying up to the three women who sit on each village council, valuing their mobility in the community and relatively extrovert personalities. And, as men migrate to cities to support their families, more women are becoming the key decision-makers in their households.
Of course, such outreach doesn't come cheap, and aside from the multinationals like Hindustan Unilever, who can afford it? The fragmented market structure "leads us to believe that the rural charge in any product category will be led either by large companies with deep pockets or small regional entities that cater on a local basis," says Rahul Sharma, head of Mahindra's Centre for Rural Information and Insights. "Medium-sized companies will probably form the second wave."
It's not just a matter of big brands venturing into virgin territory. For goods like foodstuffs, washing powder and personal care products, competition is increasing all over India, with the smaller regional firms scrambling to hang on to their customers. One local detergent company, for example, trounced the multinational competition by studying the hardness of the water in Uttar Pradesh and Bihar and adjusting their products accordingly.
Bigger firms can afford to run TV ads to stimulate the "pull" factor, while offering consumer freebies and retailer margins in tiny shops to add a "push" factor. But long-term relationships between local retailers and local companies are not so easy to rupture.
Such relationships can be crucial in determining shelf space, which in turn determines sales. In villages, especially, the shopkeeper can make or break the product. "What matters finally for the rural consumer ... is the display of products in front of you when you go to buy," concluded Singh.
In southern Tamil Nadu, one highly-contested product is the humble pickle. The story of what has developed into a "pickle war" starts back in 1958, when a lone entrepreneur set off by bicycle around Madurai city to sell lime pickle and mango pickle. The preserve was made by his wife and packaged in a pouch of plantain leaves. The brand, Pandian Pickle, caught on. As the business expanded elsewhere in Tamil Nadu, the enterprising couple handed it over to their four sons.
In 1996, these scions approached a group of technicians to figure out how to package their pickle in small sachets similar to those often used for shampoo. The process took plenty of trial and error, but the innovation eventually allowed much wider distribution. Today, Pandian Pickle Company churns out 1,500 tons of pickle per day, in 16 varieties. Last year, revenues reached approximately 30 million rupees (Dh2.45m).
Even so, for Pandian's managing partner, G Kandasamy, the future is not necessarily bright. His big rival is Chinni's, a brand also sold in sachets by CavinKare, the same Indian corporate giant that markets Chik shampoo. Pandian costs 1 rupee per sachet; Chinni's only 50 paisa. Having watched dozens of local biscuit companies in Madurai get crushed by heavy marketing plans rolled out by big firms like Britannia Industries, he is anxious to avoid the same fate. "We are fighting for survival," he says. (He claims that Pandian has 30 per cent market share in Tamil Nadu, compared to 40 per cent for Chinni's, but CavinKare says those figures cannot be confirmed.)
Meanwhile, CavinKare is pulling out all the stops to market Chinni's. It has TV ads featuring famous actresses, mobile vans running through the countryside, stalls set up in village fairs, and consumer giveaways.
"Food is a category where people are open to trying many brands," says Visvanathan, general manager of marketing for CavinKare. Rural markets represent "a very important contributor for the company's sales," but one major obstacle remains "the high cost of reaching out to these markets to service them."
Retailer loyalty looms large in Pandian's survival strategy. "The shop people trust us. If you don't sell it, you can return it," said A Subbaiah, Pandian's veteran pickle agent in the rural Dindigul area since 1973. Subbaiah casts a disdainful eye over freebies, preferring instead to dispatch his sales team daily to massage long-standing relationships with his retailers.
Some shopkeepers seem happy to toe the line. "Customers prefer Pandian because of quality," recited Suresh Babu, owner of Suresh Store, which stocks six varieties of the pickle. Although Chinni's is half the price, he dismissed it: "[CavinKare] approached us, but we don't buy. Our customers don't like it." Others, however, are not shy about providing Pandian agents with some sharp feedback.
"Earlier, if you bought one packet of garlic pickle, one person would consume half of it. Now, one packet is only enough for one person," reports Christi, a mother of three who opened a shop two years ago. In an appeasing tone, the Pandian agent Govindaraj tells her: "The price is fixed. The only way [to drop it] is to reduce the quantity."
Other dynamics come into play when prices start creeping upwards. For the Pune-based firm First Energy, which markets an innovative smokeless stove called Oorja, their female sales force halved from 3,000 to 1,500 people when customer demand started to cool. Some dropped out because the company was forced to hike the price of the stove from 675 rupees to 1050 rupees after the oil giant BP, the company's principal backer, suddenly withdrew its subsidies in 2008.
"BP's goal was to scale up first and fast and then drive profitability," explained First Energy founder Mahesh Yagnaraman. "We [now] have to make the venture sustainable on its own, without deep investment."
But no one likes to talk about these kinds of setbacks. The territory is still too fresh, too open-ended, too rich with possibility."There is no set pattern," emphasised Linterland's Samarth, the architect of the Castrol campaign. "You have to feel your way through it."
Nevertheless, one thing is clear: all companies must contend with rising expectations from those customers they court. "Earlier, they enjoyed getting whatever gift we give. Now they say, give me three," said Nayak, wrapping up a day's work in Kodahalli. "We can't avoid it. It's their village."
Margot Cohen is a writer based in Bangalore.