From hiring musicians to beefing up distribution, firms are doing everything to push their brands in rural India.
Bob Dylan and building materials have little in common, but for domestic cement firms out to capture a share of the fledgling demand in the hinterland, wooing the rural consumer means thinking out of the box.
Take, for instance, Star Cement. The company, which claims to be the single largest cement firm in the North East, has appointed local musicians to firm up its image in the seven states. So, in Meghalaya, Lou Majaw — the Dylan aficionado who hosts an annual memorial concert — endorses Star Cement. In Assam, Bhupen Hazarika lends his support; and in Mizoram, the (locally) wildly popular Mimi Varte has thrown her weight behind the brand.
“I have to increase my reach in villages because that’s where the development is happening. By using local musician icons in the North East, we connect better with the people because everybody loves music there, and that increases the TOM (top of mind) recall of our brand,” Star Cement Joint MD Sanjay Agarwal explains.
During 2010-11, the Centre has earmarked Rs 66,100 crore for rural development, inclusive of an allocation of Rs 10,000 crore for the Indira Awas Yojana.
After the monsoons, Star Cement will take branded vans with recorded music into the villages to take the message further and, clearly, it is a localised strategy tailored to the region’s preferences. In five years, the company has grown its market share in the North East from scratch to 20 per cent in five years with a turnover of Rs 430 crore last fiscal.
Others are also trying their best to go rural. Shree Cement, a major player in north India, also intends to tweak its marketing paradigm for getting maximum exposure in the rural areas. “Our focus will be on national channels such as DD (Doordarshan), as satellite services are not widely available in villages. Instead of hoardings, we will go for more wall paintings,” MD HM Bangur says. Of Shree Cement’s total advertising budget of Rs 40 crore this fiscal, Rs 25 crore will be spent in the rural market.
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But Agarwal believes that the bigger challenge is elsewhere. “The first step is to make your cement available locally,” he says.
Among the key differentiators between the urban and rural markets is that the latter has a higher concentration of individual home builders (IHBs), who pay a primary role in the purchase of cement, according to Madhumita Basu, Lafarge India’s senior vice president – marketing.
The urban marketplace, in contrast, has demand from large real-estate firms, smaller developers, recurring infrastructural development as well as IHBs, which add up to form the cumulative requirement for the commodity. Therefore, apart from effective marketing campaigns, the difficulty also lies in reaching the consumer.
“It isn’t a uniform situation nationwide, so you firstly need to understand the demand in a certain pocket. Then, you need to look at the kind of construction activity going on in the area and do a cost-benefit analysis,” explains Basu.
Typically, cement firms also need to decide on how much of the distribution network they want to do on their own and how much to leave for the dealers and sub-dealers. “Cement is a bulky product,” she adds.
It doesn’t help that the overall volumes in rural markets are low. “Per month, the cement demand in Mumbai alone equals that of Rajasthan. And in villages, if a shop doesn't sell cement worth at least Rs 20,000, it isn’t profitable. The challenge will also be in balancing the distribution channel,” says Bangur.
However, there are ‘influencers’, such as masons, contractors, engineers and architects, who as their name suggests can influence IHBs, and these individuals need to be convinced about a cement brand's technical strengths. “You need to meet them and talk to them. They want to know about things like service and quality,” feels Agarwal.
It is for this reason that firms such as Lafarge India are sending sales teams into rural areas for direct interactions with small target groups and is also facilitating meetings between individual home builders and sub-dealers to push for demand generation. “The rural campaigns are directed towards enhancing awareness and availability. As per our estimates, 33 per cent of our total revenues come from the rural market,” Basu says.
For ACC, India's largest cement producer, tapping the growing rural demand is part of its continuing strategy of looking at non-urban markets in the country. “This market is growing with the increase in disposable income, infrastructural inroads and government schemes. But one has to approach this market differently as the clients, and buying and distribution patterns are different,” asserts a company spokesperson.
But as Lafarge India’s research has shown, since a cement brand contributes to over 55 per cent in a consumer’s decision matrix, the primary focus will remain on the IHBs, along with the distribution network.
And if that means country music will sell cement in India, so be it.