For tapping the huge market potential at the bottom of the pyramid, brand managers need to connect with the rural consumers, build bridges of trust, create value, communicate their brand proposition and also offer a personalised approach in their marketing.
These were the observations made by some of the leading corporate brand managers at Mercatique 2008, a national level marketing summit organised by MAXIM, the marketing association of the city-based Xavier Institute of Management.
“There are about 400 million people in India who earn less than $2 a day and together they constitute a huge market to be tapped by the different corporate organisations in the country. Today, rural marketing is the new buzzword and the focus of corporate entities is to get all the consumers at the base of the pyramid to buy their products”, said a top executive of cigarette to FMCG major, ITC Limited.
“The rural market is extremely fragmented and every individual that is being targeted in such a market has extremely limited purchasing power. For the big corporate entities, there is strong need to effectively communicate their brand proposition to the rural consumers as these corporates face a stiff competition from the unorganised retailers in the rural market who offer their products at cheaper rates”, he added.
Citing the example of e-choupal, one of the revolutionary initiatives taken up by ITC to make deep inroads into the rural market, he said that the company helped to improve the quality of farm produce and also eliminated the role of middle men who were not paying a fair price to the farmers.
In a bid to tap the burgeoning jewellery market in rural and semi-urban areas, Titan Industries rolled out the Goldplus stores, mainly concentrated in South India.
What the rural consumers were looking for is purity of jewellery products, a trusted player and an overall good retail shopping experience and Titan Industries catered to these needs through setting up of the Goldplus stores, said LR Natarjan, vice-president and head of Goldplus and jewellery manufacturing of Titan Industries.
The overall jewellery market in India is estimated at Rs 80,000 crore out of which the urban market accounts for Rs 28,000 crore while the rural and semi-urban market is worth Rs 42,000 crore. The jewellery market in the rural and semi-urban areas is expected to reach Rs 80,000 crore by 2015.
Titan Industries forayed into the rural and semi-urban market through a couple of pilot Goldplus stores in Erode (Tamil Nadu) and Ralam (Madhya Pradesh) in 2006. Presently, there are 28 Goldplus stores across the country and the stores posted a turnover of Rs 217 crore from the Goldplus stores during April-September this year.
To consolidate its presence in the rural market, Titan Industries has attempted to connect itself with the rural consumers through the Anant Loyalty programme according to which each Goldplus store educates around 1,000 customers per day on jewellery products. This apart, the company has also facilitated factory visits for its customers to enable them to see the process of gold manufacturing.
Natrajan said that the risks associated with the rural market include low margins of business and intense working capital with the rural customer more demanding than his urban counterpart and willing to pay a premium if he finds value in the products.
Commenting on the specifics of the liquor business, a senior UB Group official said, “In the premium segment, the liquor business enjoys high profit but less volume whereas in the regular segment meant for the lower income groups, the volume is high even though the profit margins are comparatively very low. It is this regular segment which caters to the bottom of the pyramid and lends stability to business.”
He said that the liquor companies had to grapple with several challenges in marketing their products in the form of ban on direct advertising of such products in the visual media and also excise regulations.
