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As we explained in our first article, India's rural markets are outpacing urban markets. Since 2001, GDP growth per capita has been considerably faster in the rural markets compared to urban markets. And the total size of those markets, as measured by consumer spending, outstripped urban centres by around $14 billion between 2009 and 2012. Most executives are aware of the opportunity, but they also identify a variety of obstacles in the way of success. For example, rural consumers today have higher expectations from the products and services companies attempt to sell to them than they did in the past. To meet those demands, companies need skilled sales people -professionals who understand rural customers' needs and know how to appeal to their aspirations and motivations. However, finding qualified sales staff is a major hurdle in rural markets. In an Accenture survey, 38 per cent of the respondents identified "sales force competency" as a key challenge. Urban talent usually won't relocate. Local salespeople often lack the skills or attitudes to succeed, at least initially. Successful employees must be able to operate in complex, closely knit communities, where purchase decisions are based heavily on personal bonds and mutual trust.
Through our research, we identified a group of companies we call 'rural masters'. Those companies garner a significant portion of their revenues from rural areas, often using innovative approaches to do so. We saw that they use several strategies to acquire new customers in rural areas.
Building an ecosystem of stakeholders
If companies are seen to care only about profits, they will fail in India's rural markets. They must show that they are also forces for widely shared good, and to bring that about, they must engage a broad set of stakeholders in an "ecosystem." A successful ecosystem will bring together influential locals and decision makers and create significant social value. Novartis' Arogya Parivar ("Healthy Family") initiative is a prime example. To launch this programme, Novartis established networks of small hospitals, physicians, chemists, diagnostic centres, and patients. Each network includes health educators and supervisors. Health educators are recruited and trained to raise awareness of diseases and preventive health measures. They also refer ill people to doctors and work with local non-governmental organisations to further raise awareness of health issues. Since the initiative focuses on women's and children's health, Novartis recruited local women to serve as health educators, so female patients would feel comfortable talking with them about personal concerns. Health supervisors serve as the initiative's sales force, ensuring that medicines are available in India's most remote locations. The programme has helped improve healthcare for 42 million people living in 31,000 villages in 11 states.
Encouraged by its success, Novartis is expanding the ecosystem by partnering with major medical equipment companies to make affordable equipment available to rural markets. For example, the company is working with banks to provide equipment loans for doctors. Everyone wins: Families get better medical care. Partnering companies gain credibility among rural doctors through association with Novartis, which has reach and reputation with local physicians. And Novartis deepens its engagement with rural consumers while also demonstrating its ability to open new doors for country doctors.
Offering unique value proposition for rural customers
Rural masters understand that consumers in India's hinterlands aren't one monolithic market - they're highly diverse in terms of market size, buyer needs, values, and spending power. Masters also know that to succeed with these markets, they can't offer the same value proposition to rural consumers that they offer to urban consumers. Instead of emphasising products' functions and features, these companies show how a product or service will meet unique needs. Experiential marketing is one solution. It can help improve the customer acquisition rate by allaying customers' scepticism and allowing them to test and experience the product before purchasing it. Thanks to Ashok Leyland's Mileage Muqabla programme, prospective truck buyers can test the product while participating in a contest. A route is identified, and management can send their drivers or participate themselves. Contestants are given a fixed amount of fuel to drive a certain distance. The contestant who gets the maximum mileage wins a prize. The company also helps drivers finance new vehicle purchases so they can work for themselves instead of driving for some other business owner.
Engaging the right influencers
Most brands have a relatively short history in rural India, so positive word of mouth plays a much stronger role in brand building there than it does in urban markets. By engaging respected, credible individuals in rural communities, rural masters can reinforce key brand messages and capture market share without spending more on marketing. To connect with the right influencers, companies rank key stakeholders according to how influential and supportive they can be. Accenture research suggests rural masters are looking beyond traditional influencers (sarpanch, doctors and teachers) to stakeholders across their value chain who can help shape customers' opinions and attitudes.
By identifying and engaging the right influencers, companies can shape rural customers' perceptions of their business and offerings and build up a repository of local market knowledge. Smart use of influencers can become a powerful means for boosting brand image and customer satisfaction while reducing customer acquisition costs.
Tata Motors' passenger car business is a case in point. In addition to a strong feet on-street outreach model, the company has introduced a new referral programme five months back called "Motor Dada" which engages people who have nothing to do with buying or selling vehicles, such as freelance health professionals, teachers and even mechanics, as village influencers. The company provides them with a detailed product manual and a "Motor Dada" shingle that they can hang outside their homes. Motor Dadas are assigned to a dealer to recommend new and used vehicle purchases. Tata Motors plans to recruit 1,500 Motor Dadas by March 2013.
India's rural markets pose a unique set of challenges to companies seeking to take advantage of the growing opportunities in these areas. The same approaches used to acquire urban customers won't work in the rural hinterlands. By engaging with the right stakeholders and right influencers, companies can provide the kind of value that rural consumers have come to expect.
Sanjay Dawar
MD, Accenture management consulting
