Pradeep Kashyap, CEO and Founder, MART
In an exclusive interview with Ashish Jha of Pitch, Pradeep Kashyap shares his insights into the key opportunities and challenges in rural and small town markets in India.
How consumer behaviour has changed in small towns and rural markets over past 10 years?
The rich and middle class rural and small town consumers now have the same aspirations as urban consumers. Rural consumers also have similar awareness and exposure levels because of the rapid spread of television.
Earlier most families used a single brand in FMCGs. Not anymore. Not only are multi-brands used by many families but premium brands such as Dove soap are seen in many households. Another change is that youth have become tech savvy and are very comfortable sending SMS and e-mails.
Similarly, profile of shopper has also changed. Earlier, it was the male who did the purchases. In recent years, we have witnessed women’s empowerment through the 33 per cent reservation of seats for women in panchayats, women’s microfinance movement which has led to groups being formed in most villages. All this has led to higher awareness and mobility. Women have emerged as the new shopper in recent years.
What are the key product categories where rural India offers big opportunities for marketers?
Consumption and penetration levels of most FMCGs are much lower in rural areas. But with rural incomes set to rise rapidly, it is expected that by 2017 per capita rural consumption will equal the present levels in urban. This offers a huge opportunity in general but more particularly in specific categories such as shampoo, toothpaste, faces-cream, sanitary napkins and packaged food products. In the durables category the opportunity is even greater as the present ownership levels in rural are dismally lesser than urban. With rapid spread of rural household electrification and availability of consumer finance in the coming years, I personally see a spectacular growth in the demand for durables.
What are the key elements/factors on 4Ps that a marketer should analyse while approaching a rural market?
During my early days in rural marketing I realized that the 4As (Awareness, Affordability Acceptability and Availability) framework works better because of very low purchasing power in rural Affordability is a critical factor followed by the challenge of Availability in over half a million villages. The 4Ps framework looks at the market environment from seller’s perspective and does not capture the consumers’ perspective that in the case of rural is an unknown entity. We, therefore, need to put him at the center of our focus if we have to create winning strategies.
Making your product available in such a large number of locations is the first major challenge for any marketer because the very small off take per location makes distribution RoI unviable. To my mind FMCG companies should plan direct coverage up to the 2,000 plus population villages which add up to only 17 per cent in number but account for 50 per cent of rural population and 60 per cent of rural wealth. For durables coverage up to 50,000 population towns is sufficient. The other challenge is affordability which the sachet has addressed successfully for consumer goods. For durables payment in installments is the equivalent of the sachet for FMCGs.
What are five key trends that rural market is going to witness in next 5-7 years?
Five Key trends emerging in rural markets:
a) Rural infrastructure, especially road ,electricity. The rapid growth of mobile and internet connections, will continue to improve rapidly, making consumers more connected to marketing trends.
b) The rural market will continue to grow in importance and will become the single largest segment of the Indian market for all sectors –FMCGs, Durables, agri inputs, services and automobiles.
c) The shrinking dependence on agriculture will result in regularity and higher income through employment in the non-farm sector.
d) The rapid wealth creation in small towns will open up new job opportunities for rural people who can then continue to live in their village but work in the nearby town. This will result in substantially increased purchasing power as they will earn town level salaries but spend for a rural lifestyle.
e) The income pyramid which currently has a massive 400 million people at the base will morph into a diamond with the middle class and rich swelling to 650 million by 2017. This will make it easier for marketers to understand the consumer and sell to their country cousin.
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