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How To Target The Right Consumer Effectively
India's robust economic growth and rising household incomes are expected to increase consumer spending to $ 3.6 trillion by 2020
Photo Credit : Reuters
Consumer is the be-all and end-all of any marketing activity, initiative or offering. A marketer of business is well acquainted with the importance of getting the right message to the right person at the right time. But too often marketers assume that what they offer is universally applicable and appealing for "everybody". Instantly, one of the biggest challenges marketers face is getting word out to an audience who will become a prospective customer. Further consumers belonging to different strata of the society have varied purchase behavior and consumption patterns.
Research has found that each audience is unique to a brand, so a brand must identify the factors that can be used to create a better connection between their potential needs and its own offerings.
A simple comparison between rural consumers and their urban counterparts can explain this well. Urban consumers are governed by a plethora of lifestyle driven choices due to a rising middle-class and improved purchasing power abilities. While incomes in rural India have been rising over the past few years as well, they are still not comparable with those in urban India. Low income levels and a conservative attitude make consumers resist expensive purchases. The rural population is often more inclined towards utility, convenience and value for money, against the urban ideology of selling lifestyle or indulgence to consumers.
Urban vs Rural
It is evident that what strategy works for one, may not be a perfect fit for the other as the market dynamics differ. The consumer is the king, and marketers of late have started realizing the untapped potential of rural markets that offer green pastures for companies today, as they are growing faster as compared to the urban markets. The below explains the successes and misses for each market:
1. Lifestyle: Penetration is not of concern in the urban markets and therefore a differentiating factor is necessary to be able to sell. Highlighting the 'lifestyle attribute 'of a product, newer variant over an old one can be a lucrative proposition.
2. Outreach: A company can install information booths outside colleges, hospitals and other places to effectively reach out to its target group
3. Time-based selling: Create hype about a product through time-based selling. This can be achieved by offerings sales and discounts at low prices for a very limited time during festivals, national holidays, remarkable incidents etc
1. Utility: A rural consumer looks for quality products that offer value for money. Due to a low purchasing power, rural consumer prefers products catering to specific rural needs with tangible benefits and appropriate pricing
2. Outreach: Since many rural markets lack product penetration, the best opportunity to sell products to them is weekly rural haats, melas and religious congregations. Such events ensure that a large section of the population witnesses the product
3. Local mediums: Rural India has limited or no access to traditional media platforms such as television and newspapers even today. Thus, communicating to them in their local dialect and using mediums like roadshows, radio, outdoor advertising, fairs and weekly bazaars would be more effective.
Rural marketing has already arrived and is one of the single largest segments of activity. Rural markets are most heterogeneous in nature. Unlike their urban counterparts, where the demand of goods and services are highly concentrated in nature, rural markets tend to be spread out across the country. It's the rural segment of market that contributes more profit than its urban counterpart. Consequently, though many rural markets look good on paper, in reality they are quite expensive to serve. Hence it is very difficult for the marketers to provide service to each rural market in a better way. While it is easier for an organization to market their products and services to urban markets and the top of the pyramid, the challenge faced by them is tapping the rural market potential. Marketing to the urban audience is easier due to their acceptance of media and its various forms that are present in urban areas.
Need for New Methodologies
Urban India has had optimal exposure to marketing tactics over the years. Marketers have experimented, implemented and succeeded in tapping the urban audience to influence their buying decisions. On the other hand, Rural India has some structural disadvantages vis-a-vis urban India: structural bottlenecks are harsher, transport networks sparser and distribution channels insufficient, a higher investment in rural infrastructure and meaningful agricultural reforms are needed to make growth attainable and put it on a higher, more sustainable path.
Further, most of the people living in rural parts of India do not have proper access to education, so the literacy level in these regions is very low. While devising campaigns for the rural class, marketers should be mindful of the awareness, knowledge and different language requirements of this segment.
On the brighter side however, more than 70 per cent of the India's population dwells in rural areas, with the market growing at 3-4 per cent per annum adding more than one million new consumers every year. This speaks of huge potential of the rural sector.
It will be pertinent to cite a few examples. A leading FMCG brand's multi-level rural marketing programme to inculcate good hygiene habits and effectively change villagers' attitude towards cleanliness, in 2010 in the rural areas of Uttar Pradesh, Andhra Pradesh and Maharashtra became highly successful with more than 28,000 villages getting directly benefitted and adopting the changes, thereby creating greater preference for the brand as well. Another marketing giant came out with an innovative nano refrigerator especially for the rural market. It was marginally priced and designed to withstand the erratic power supplies in the rural areas. It became quite a hit with the rural audience for the brand. A toothpaste company came up with variants to impress the rural customer by helping them identify with the tastes they like.
Gauging the rural potential, the government too is stepping in to aid villagers and farmers through subsidized loans, credit facilities and goods on instalments. Under the The National Bank for Agriculture and Rural Development (NABARD) scheme, government has announced around 200,000 point-of-sale (PoS) machines in 100,000 villages and will also distribute RuPay cards to over 34 million farmers across India, to enable them to undertake cashless transactions among other initiatives like infrastructure improvement, installation of WiFi hotspots, achieving 100 per cent village electrification etc
According to the last McKinsey report on the rise of consumer market in India, the rural Indian market will be larger than the total consumer markets in countries such as South Korea or Canada today, and almost four times the size of today's urban Indian market. A recent study by the McKinsey Global Institute (MGI) suggests that if India continues to grow at the current pace, average household incomes will triple over the next two decades, making the country the world's fifth-largest consumer economy by 2025, up from the current 12th position.
Also, India stood first among all nations in the global consumer confidence index with a score of 133 points for the quarter ending September 2016. India's robust economic growth and rising household incomes are expected to increase consumer spending to $ 3.6 trillion by 2020#. The maximum consumer spending is likely to occur in food, housing, consumer durables, and transport and communication sectors.
Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.