Tapping the rural opportunity: Paper#1
Why the rural market is different
JWT, 2009
Rural markets, particularly in emerging Asia (Indonesia, India, China and Vietnam) represent the last frontier for global brands looking to expand into newer geographies.
The recent slowdown in growth in the broader economy has made rural markets more attractive as marketers try to restore top-line growth. However, the enthusiasm for rural markets needs to be tempered because of the complexity of these markets and the scale of investment required to achieve penetration. Marketing strategies that worked for urban markets do not necessarily work for the rural ones.
This article seeks to identify how the challenge of rural marketing is different from that of marketing to urban consumers. Rather than extend their urban marketing program and practices brand owners should recognize the key differences and adapt their strategies accordingly. Here are some of the important characteristics of rural markets that need to be addressed:
- Intra community influences are relatively more important than inter-community ones.
Being geographically scattered, rural communities are relatively detached from the mainstream population. But they are significantly more close-knit, with relationships largely within the community rather than without. This makes intra community communications rather critical.
Generating positive Word of Mouth, particularly from local sources of authority, is as critical as mass media advertising. It is therefore important for marketers to understand rural hierarchies and tap into local opinion leaders to help brand adoption and diffusion within a rural community.
Winning over key opinion leaders is key to penetration in rural communities. For example, young people are early adopters of technology and tend to be the key opinion leaders within rural communities for mobile phones.
Similarly, doctors for healthcare products, or progressive farmers for farm inputs could be tapped as opinion leaders.
Colgate taps into school teachers to reach kids (early adopters of more expensive toothpaste) through its "Bright Smile. Bright Future" program.
In China, migrant workers are seen as early adopters and influencers as they adopt categories and brands in their urban working environment and then effect diffusion through their families who live in predominantly rural communities.
Rural microfinance organizations tap into the close intra-community links by leveraging peer pressure to ensure low default rates (through 'collective responsibility' self help groups).
- Scarcity of media bandwidth. But abundance of attention.
The key challenge for marketers in rural markets is reach rather than attention. Unlike urban consumers who are exposed to a proliferation of media channels but suffer from an attention deficit, the key issue in communicating to rural audiences is media access.
Though penetration of TV is increasing (and urban targeted communication spills over to rural consumers) there are few exclusive rural channels of any significance in most markets.
However, on the plus side, once they are reached, rural consumers are more receptive to advertising than their urban counterparts.
Pioneering marketers have used innovative means of creating their own channels. Hindustan Unilever's micro marketing program in India tapped into women's Self Help Groups to reach consumers in inaccessible rural markets. Besides selling products these women help transmit brand communication within rural communities.
Many marketers use publicity vans, which travel to remote and scattered communities with portable communication devices (audio visual shows, live demos etc).
Colgate has created a powerful touchpoint with its Oral Health Program, which draws rural consumers who are lured by the promise of a 'free oral check up'. The program provides Colgate with a captive audience for communication, trial and brand building.
- Slow to adopt brands. Slow to give them up.
Being relatively closed societies, rural consumers are slower to adopt new brands and categories than their urban counterparts. Generating trial becomes more difficult than gaining loyalty - whereas in the more mature urban markets retention is a bigger issue.
Marketers therefore have to front-load their investment, and probably plan for longer lead times before their investment yields returns. However, the higher level of loyalty that can be expected (as rural consumers are slower in giving up brands once they have adopted them) helps justify the initial brand investment.
Many MNC brands that have long since vanished from shop shelves across the world can still be found in rural India, indicating the longevity of brands once they are adopted. Newer brands will need a lot more on-the-ground effort to convince rural consumers to try them as mass media input alone is seldom enough to get consumers to try.
- Expenses are year long; income is seasonal.
A unique feature of the rural market is the seasonality of demand. Being predominantly agrarian, rural incomes tend to be skewed towards a couple of months in the year (post harvest). Thus demand (particularly for high value items) is highly seasonal and concentrated on one or two points during the year. It is therefore important that marketers focus their marketing activities during times in which incomes peak rather than distribute them over the year, as they would do in urban markets.
- Information hungry; but entertainment starved.
Rural communities have limited entertainment options, which makes it easier for marketing communications to generate higher levels of involvement by making their communications more entertaining. Packaging brand information in a very entertaining manner not only makes the communication more involving, but can also -- if well designed -- can improve understanding and absorption of key brand information.
Edutainment is a proven model for rural markets. Nokia has successfully used a highly engaging radio drama to communicate its 'one year warranty' in South Africa, and has deployed a series of 'slice of life' films to sell the category benefits of mobility to first time buyers in India.
- Higher receptivity to advertising, with lower persuasion.
Rural consumers are more readily persuaded by marketing that touches them directly, such as personal experience, seeing others using it, or live demonstrations of the brand in action.
It is important for mass media to be complemented by BTL activities aimed at real life demonstrations of the brand in action.
Unilever's Lifebuoy soap used a 'germ glow box' as part of a demo kit to highlight the importance of washing hands in an anti-bacterial soap (the brand's central proposition). The glow within the box helped highlight the germs in hands and make consumers aware that 'visual clean was not safe clean'.
Retailer education also plays an important role as the retailer in rural markets is not just a distribution node, but also a communication channel. With the right training and incentives retailers can help endorse the brand, educated or even demonstrate to consumers on its benefits.
- Commercially profitable; and socially acceptable.
Commercial enterprises (particularly MNC's) should be vary of being seen to be too aggressive or mercantilist when dealing with rural consumers, or they could potentially face a backlash. Rural consumers are seen by the non-commercial world as being more gullible and therefore in need of protection. So building the rural marketing thrust around a social platform helps make it more acceptable to governments, NGOs and other stakeholders.
Hindustan Unilever's micro marketing program in India clearly links corporate interests (getting rural women to sell products to their communities) to a larger social agenda (giving rural women an income generating opportunity).
A similar model is being used by Nokia which works together with microfinance organizations to sell mobile phones as a means of income enhancement in rural communities.
Colgate's rural programs have a strong Community Oral Health thrust but also help build Colgate as an 'oral care expert' and help drive adoption and usage of the category and brand.
Similarly, Hindustan Unilever created a public health platform through its program to promote Lifebuoy anti bacterial soap. The key element of this program involved 'hand wash with Lifebuoy' as a means of preventing infections and illnesses like diarrhea.
The key is to ensure the brand's commercial agenda is aligned with a broader social one.
This is the first in a series of papers on tapping the rural opportunity by Ratan Malli, strategic planning director, Northeast Asia, JWT.