Business Standard

There's a villager in you

Rational Expectations

Related News

Marketers run around the countryside looking for 'rural' consumers, but 28 per cent of is sold in the four metros

 
Delhi may be home to a minuscule 0.13 per cent of all rural folk in the country (according to the latest census, a little under seven per cent of Delhi's 13.8 million population is rural), but a whopping nine per cent of the all-India sales of 'Lal Dant Manjan', a toothpowder primarily targeted at rural folk, take place in Delhi alone.

 
In fact, 28 per cent of all Lal Dant Manjan sales take place in the four metros of Delhi, Kolkata, Mumbai and Chennai. And 32 per cent of all bidis, again a smoking habit you'd associate primarily with rural markets, are sold in the four metros and Hyderabad and Bangalore.

 
Makes you wonder a bit, doesn't it, about why hotshot marketers from companies like Coke and Pepsi are constantly running around to the interiors of India looking for rural markets when these markets are in their very backyard "" besides, these companies have hardly made a dent in even the urban market's drinking habits.

 
Ironically, Coke's winning jingle "" 'Thanda matlab Coca Cola'"" was conceived for connecting with the rural masses, but became a major hit in urban areas.

 
According to who used to head cellular phone Hutch's operations in India and now sells tobacco-free bidis, appropriately branded Vardaan (very literally, a 'boon' for nicotine-junkies from their fairy godmother or patron-saint), the research his company Dalmia Consumer Care conducted showed that 40 per cent of urban Indians were 'rural' in their mindset, or as he puts it, 'rurban'.

 
IRS data collated in the latest Marketing Whitebook from Businessworld confirms Banerjee's hypothesis for several top cities "" almost mirroring consumption patterns in Delhi, 25 per cent of Kolkatans and 22 per cent of Mumbai-ites use toothpowders, something typically associated with rural markets.

 
Not surprisingly, at a CII marketing summit where Banerjee made this point, Nestle India's chief was quite dismissive of the mad rush in search of the rural consumer "" three fourths of India may live in rural areas, he conceded, but finding and servicing these customers was expensive and hit your profit margins.

 
While Coca-Cola India chief refused to rise to the bait, or answer specific questions on Coke's margins for rural areas versus urban ones, he did concede that rural operations were an expensive business "" the disposable income in rural areas is usually half that in urban areas, and distributors often have to drive 200 kilometres to service five shops to drop off less than a case of Coke each time.

 
That said, Gupta chose to counter this by claiming that per capita consumption of Coke had doubled in rural areas last year, and that 80 per cent of new users were coming from rural areas once Coke came up with the Rs 5 bottle.

 
It is, though, difficult to understand why the same logic, of finally getting the pricing strategy right, shouldn't have led to a similar jump in consumption levels in urban areas.

 
(While on Coke, an interesting point that came up in the same CII summit, is that the majority of the world's top brands are those that have been around for a long time "" just two of the top 50 global brands are under 20 years old, while for India, the figure is a slightly higher six.

 
Coke, for instance, has been around since 1886. So, the question arises, if Coke's credibility is such a big thing, and has survived more than 117 years, why is it that its Atlanta headquarters is so unruffled about the fact that Coke products contain unacceptably high levels of pesticide in India, certainly many times more than those in its international product?

 
Possibly because global NGOs like Greenpeace and PETA haven't taken it up yet. That's a cue for Sunita Narain of the Centre for Science and Environment who first exposed the high pesticide content!)

 
Interestingly, companies like Hindustan Lever who also sell a lot in rural areas have moved beyond just the simple rural-urban division, or even the conventional SEC A1 to E2 classification of people.

 
Lever has devised its own Living Standards Measure (LSM) on the basis of attributes like what goods people own and has 18 LSM classes of customers as opposed to just 8 SEC categories "" LSM categories 5 to 7, for instance, are typically SEC B and C families but live in a four-room house and own a washing machine and a camera.

 
In addition to this already confusing classification, companies like Lever then bung in various types of psychographics of their product. Lifebuoy was seen as a brand used by people who needed self-assurance, according to Lever's director Aart Weijburg, and through some subtle repositioning using TV advertisements, Lifebuoy was seen as a self-affirmation brand. While that sounds like just so much mumbo jumbo to non-marketing types like me, the fact of the matter is that at a time when both the volume and the value of toilet soaps is falling, Lifebuoy's marketshare rose from 11.9 in 2001 to 15 in June 2003. Similar repositioning of Lux saw its marketshare go up from 13.3 to 16.2.

 
Given that profit margins for most Indian MNC arms, whether it's a Lever or a Colgate, are nearly double those of their international parents, perhaps those huge salaries marketing executives get paid for mouthing inanities are justified. Just perhaps.

 

 
suniljain@business-standard.com

 

Read more on:   
|
|
|
|
|
|
|
|

Read More

Thank you, Mr Bernanke?

Tightening of US monetary policy might actually force India's govt to be responsible

Most Popular Columns

T N Ninan

T N Ninan: Find the men for the job
T N Ninan

Can India's public sector come to the rescue of the Indian economy? That's the question which the government has asked, in the finance ministry's ...

Mihir S Sharma

Mihir S Sharma: Merry Good Governance Day
Mihir S Sharma

The truth is that 'less government, more governance' is a chimera. We need more government and less governance

Aditi Phadnis

Aditi Phadnis: From heyday to Mayday
Aditi Phadnis

The handling of SpiceJet shows that political power is one thing, business acumen is quite another

Advertisement

Columnists

Nitin Pai

Nitin Pai: Mr Modi's follow-through risks
Nitin Pai

For India to make the most of Narendra Modi's ambition and energy, he must get New Delhi to keep up

Abheek Barua & Bidisha Ganguly

Abheek Barua & Bidisha Ganguly: A glimpse of things to come
Abheek Barua & Bidisha Ganguly

The rise in US interest rates and associated change in the direction of capital flows, the fall in oil prices and the slowdown in China are ...

Katie Benner

Katie Benner: Microsoft and Google in a post-Snowden world
Katie Benner

US tech companies face a harsh reality now as global politics could obliterate the advantages created by superior innovation and high-quality ...

Back to Top