RISE OF RURAL CONSUMERS IN DEVELOPING COUNTRIES
Harvesting 3 Billion Aspirations
Vijay Mahajan
Sage; 168 pages; Rs 795
The massive global trend towards urbanisation is calling for a review of the definition of the terms “rural” and “urban”. “Rural” continues to be used in the sense of “not urban”, which is to say, without access to services and goods that are taken for granted in the city. Travelling through a dozen countries with the largest rural populations in the world, Vijay Mahajan encountered overwhelming evidence of the overlap of definitions, whereby predominantly agricultural communities are accessing modern communications, financial services and, most importantly from the standpoint of this book, modern consumer products.
In particular, the stereotype that rural correlates with low income is decidedly out of place. Mr Mahajan notes that in India alone almost a third of non-urban households fall into the middle-class or higher-income segments and, in general, due to a reduction in absolute global poverty levels, the rural middle-class segment is growing at the cost of the rural poor. This has large implications for companies that wish to expand their markets. Many companies have developed successful marketing strategies that help them access the huge latent demand in non-traditional, non-urban segments. In particular, accessing these segments requires companies to reconsider their advertising media and messages and to incorporate a larger share of local cultural content. Successful companies are forging partnerships with non-government organisations and tapping into the trends that are increasing rural incomes. Graphic representations are provided to illustrate rural spending cycles linked to agricultural patterns, religious festivals, and so on. Many factors enhance the ability of the rural consumer at all levels to spend, including better infrastructure, more income-enhancing opportunities, more inward remittances from family members working elsewhere, and more philanthropy-driven programmes for skills, services and small businesses. But, equally important is the ability of companies to create demand and aspirations, leading to a shift in consumption patterns, even where income may not have altered much. The book documents both types of developments with a wide range of examples.
The book is well-supported with data, both systematically reported and anecdotal. The data reveal very interesting patterns. The top 20 countries by rural population include the US at the ninth position with about 60 million people, as well as India at the top with about 900 million and Mexico at the bottom with 26 million. Due to population growth, the global rural population of about 3 billion is expected to remain approximately robust over the next three decades despite urbanisation.
The examples of successful marketing and consumption growth that are documented most often come from global fast moving consumer goods (FMCG) companies such as Unilever, Coca Cola, P&G, and so on. These multinationals are leading the way in accessing new consumer bases. Advertising and brand communications are key to the success of companies who wish to make significant and successful inroads into this domain. Each of the multinational examples cited here shows the power of large advertising budgets and the freedom given to the local business to develop and run communications that connect with their customers. The same global brands are visible across the rural world, be it Coca Cola or Pert or Dove or even L’Oreal.
This is not to say that there are no local players. Examples are given of Airtel reaching out to small farmers, Marico promoting Parachute coconut oil in the un-differentiated coconut oil market, and examples from other countries. The author communicates palpable excitement in discussing the size and vibrancy of the rural world and the diversity of approaches towards garnering a share of the spending power. However, many of these practices are well-known and some of them are already eliciting other kinds of responses. The Lifebuoy hand-washing campaign for example, has a strong advertorial flavour. Similarly, creating salespeople for FMCG products in rural areas is a very effective low-cost model for last-mile delivery, with inevitable spin-offs in terms of income gains for the salespeople concerned. The conflation of necessary business growth activities with corporate social responsibility (CSR) is not a settled issue among CSR theorists or practitioners. These issues are not discussed.
The overwhelming focus on non-essential goods in the most successful rural marketing campaigns is also a matter that may attract comment. The growing focus on sustainable living is already altering consumer preferences in urban areas. Should this not also reflect in rural business strategies? The most moving stories in the book come from the smaller local-scale programmes such as the Taobao village-based enterprises in China, the “Infolady” IT-by-cycle initiative in Bangladesh, and the World Health Partners model for rural healthcare. Many of these are supported by philanthropic rather than marketing budgets. These issues, however, remain unexplored.
Nevertheless, marketing professionals the world over would be interested in reading this book because of the wealth of stories it documents, and the great blend of data and description.
The reviewer is an academic and a business consultant
