3 Brands that successfully cracked India's rural market - Lessons in Rural Marketing

I remember a statement that my undergrad Economics professor used to often say - There are 2 different Indias. One exists as India in the metro cities, and the other exists as Bharat everywhere else. The point that she would be trying to draw our attention to was that India's rural towns and villages are a totally different ball game for marketers. The customer psyche, purchasing power, societal structure which influences the life there etc. are all so very different as compared to metro and urban areas. Marketing tactics that work in urban and metro cities don't tend to work as-it-is in the rural areas.

Typical rural and semi-urban retail outlets selling FMCG products

FMCG brands contribute to about 20% of India's GDP, making it the 4th largest GDP contributor. And traditionally, most of the FMCG brands have focused their strategies on India's metro and urban areas. There was a sound reason for it as well - deeper pockets of urban consumers, better discretionary spending power, heightened brand and product awareness due to the consumption of media, and higher literacy rates. However, only 30% on India's population resides in non-rural areas. With almost 70% or over 800 million of India's citizens residing in rural areas, FMCG companies have realized that it offers huge potential if one is willing to adapt and make rural-specific strategies.

The FMCG industry has been steadily growing every year at a CAGR of 9-10%. This year, despite Covid-19, it is expected to grow at 5%, driven primarily by rural and semi-urban markets. While these rural and semi-urban areas take up 36% of an FMCG company's expenditure, they contribute about 45% of their overall revenues. There are several factors which will lead to a robust growth of FMCG in rural markets, and they include migrants moving back to their hometowns, an increase in MSP for the farmers leading to better incomes, and the rise on MNREGA wages from Rs. 185 to 210. It is going to benefit a lot of companies like Dabur, Hindustan Unilever, Colgate Palmolive etc. who have already adopted a "Go Rural" approach since a decade now.

These leading FMCG companies have done some stellar innovations in the rural Indian markets, providing several valuable lessons for their competitors to learn from and replicate. Here are 5 rural marketing innovations that earned these companies huge market share and brownie points -

Coca Cola - Chota Coke

Coca Cola had a rather miserable 2000 with its Indian subsidiary HCCB posting losses over $367 million. In 2001, the situation improved but the growth figures were negligible. Therefore by 2002, they shifted their focus to rural India in order to exploit the available potential. Rural India's average household income was Rs. 100 (~USD 1.5 at today's exchange rate) per day back then and the smallest bottle of Coke, i.e. 300 ml, cost INR 10. Spending 10% of the daily income on a beverage seemed like a luxury, and therefore people in the rural markets would often buy 1 bottle occasionally and share it between multiple people. As such, Coke's sales weren't really picking up in rural India.

Coke used this insight to come up with a 'Chota Coke' (Small Coke). This 200 ml bottle was priced at INR 5, which was half the value of the 300 ml bottle. They came up with a series of ads directed by famous Bollywood director Ashutosh Gowariker, starring his Lagaan hero Aamir Khan. The ads were set in different regions of India and Aamir played characters ranging from a UP-ite to Bengali, and a Punjabi to a Nepali. This directly resonated with people from various backgrounds. It was a smart move, because a single ad wouldn't have created that connect given how many languages and dialects exist in India.

They also implemented various rural marketing tactics such as having pop-up stores and hoardings at over 47,000 haats (weekly markets) and 25,000 melas (village fairs). They effectively used wall paintings as a medium of communication.

Coke not only opened happiness for millions of rural customers by giving them an affordable alternative, but also for its shareholders.

ITC e-Choupal

At a share of 26%, agriculture remains India's biggest GDP contributor. However, this industry has to grapple with some serious issues which can leave the farmers helpless. Lack of training, under cutting by middle-men, no source to access weather data etc. all go against the farmers. ITC, one of India's largest FMCG brands and also a huge dependent on India's agri industry, recognized this and came up with a solution.

They created e-Choupals (choupal means a village meeting place), which were internet kiosks operated by a sanchalak (operator / facilitator) who was an ITC agent. By visiting these kiosks, farmers could access all kinds of data ranging from update on Government schemes, latest crop prices in the market, soil condition to weather data. But that was not all! These farmers could actually sell their produce directly via ITC created hubs instead of selling them to middle men who often pay peanuts to these farmers and end up selling for huge margins in the market-place.

The e-Choupal initiative has benefitted both ITC and the farmers tremendously. It has been running in over 40,000 villages, with 4 million farmer participants. For a company that depends so heavily on agricultural inputs for its range of products (including food), ITC is able to firstly improve the quality of produce by providing farmers with the right kind of insights, inputs, and support.

Secondly, it is able to procure the produce directly from the farmers instead of middlemen, thereby creating huge cost savings. This is a win-win situation for both the farmers as well as ITC. The farmers are able to realize a higher price for their output whereas ITC is able to get it at a more reasonable price. In the coming future, ITC intends to expand this program to 70,000 villages, and will upgrade its infrastructure to start providing AI based insights such as monitoring crop health through imaging, early disease recognition through predictive analytics etc.

HUL's Project Shakti Amma

Just like ITC's e-Choupal, HUL's Project Shakti Amma falls in the realm of social rural marketing. While the underlying reason was to gain access to a greater rural Indian market share, it also aimed at empowering women in the process. The concept of Shakti Amma is simple - to identify women in villages who can be turned into micro-entrepreneurs through training and channel HUL's sales through them.

These women, known as Shakti Ammas (Shakti stands for strength or in this case, empowerment, and Amma is a respectful term for an older lady in South India) are trained about HUL's offerings, coached on soft skills, and then asked to put in a minimum investment of Rs. 20,000 (~USD 300,) following which they receive HUL's goods worth the same amount. These ladies then either go door-to-door or setup a temporary shop inside their homes where they invite women from within the village to come and have a look. HUL provides a 10% commission on each sale.

Thankfully for HUL, they had recognized long ago that they can't market the same SKUs to rural audience as they do to their urban counterparts. They came up with much smaller and more affordable SKUs.

HUL's Shakti Amma has been a raging success. Firstly, it helped turn homemakers into micro-entrepreneurs and made them self-sustainable. Shakti Ammas reportedly generate INR 2,000-3,000 per month. It gives them feeling of financial and emotional independence that they so dearly love. Secondly, with over 120,000 Shakti Ammas and Shaktimaans (male sales reps), HUL has entered over 3 million households directly.

A slightly older image

HUL's success in India has propelled it to replicate this model across other countries in the sub-continent such as Bangladesh, Sri Lanka, and Pakistan. In Pakistan, these micro-entrepreneurs are called Guddi Baajis (roughly translates to doll sister).

Rural Marketing Lessons

Rural Markets are remarkably different from their urban counterparts, and it takes thorough market research to be able to crack them. The challenges faced in a rural market are unique, and mostly around low literacy rate, limited financial means, lack of supply-chain and last mile delivery etc. As seen above, some of these leading FMCG brands were able to break these barriers through their innovations and gain access to a larger market share. And according to strategists, the growth of FMCG in the coming decade will be driven by rural markets. So it is up to the brands to adapt or turn a blind eye.

Think Small

Sounds counter-intuitive especially when we are talking about business? Actually, brands like Coca Cola have shown us that smaller SKUs work better in rural areas. HUL also has special packaging of its personal care products like hair oil, face cream etc. ranging from INR 2 to INR 10. If you can viably produce SKUs that are affordable for the rural audience, you can gain a much wider acceptance.

Go Beyond Digital

Digital Ad Spends have been outpacing every other medium. And with Covid-19 having imposed several travel curfews, media channels like outdoor ads and radio don't make much sense in any case thereby giving further impetus to digital. However, rural India is a different ball game that can't be tackled with digital advertising.

In one of my earlier blogs, I had covered HUL's Kan Khajura Tesan, an innovative rural marketing campaign that was born to reach the media dark regions of India where let alone internet, even TV isn't as widely accessible. By urging people to give a missed call, HUL would call them back and deliver 15 minutes of entertainment based content such as jokes, songs etc. per person directly to their mobile or landline phones. Of course, this content was interspersed with ads of HUL's products like Ponds, Close Up, and Wheel.

In order to reach the rural audience, brands need to think of the various touch points that are accessed by them on a daily basis. Creating a day-in-the-life of a rural person map can help tremendously in identifying these touch points.

Don't Retrofit

India is a land of diversity. It has over 1,900 languages, of which 122 are considered as major languages (spoken by at least 10,000 people), and at least 30 of them being spoken by over a million people each. As such, simply making a marketing campaign and trying to retrofit it to different markets will not work. Brands need to carefully identify their markets, and develop campaigns that speak to the cultural nuances of those living in that region.

Have any favorite rural marketing campaign? Leave a comment below!

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