What are the “must-do” points while marketing to rural India?
The most important aspect while selling and marketing to rural India is to understand usage of products. Let me explain this with an example. Take for example pressure cookers. In urban India, most of the cooking is done on a counter top, whereas in rural areas cooking happens at the floor level. Therefore, cookers need to have two handles to enable easy handling. Just having one handle will not work. It is a simple aspect of a product, but it makes a huge difference in terms of usage. In order to understand the needs of rural India we need to resort to what I call ‘community embedded innovation’. Involving the community while building products will go a long way in creating the ‘right’ products.
Second, if any company wants to be successful in rural India, commitment from the CEO is absolutely essential. Rural India is a long-term game, it requires a lot of patience and commitment and support from senior management will make a huge difference.
Based on our experience in certain small villages in Tamil Nadu, there is not only demand for utility products (like tooth paste, washing powder etc.), but there is also huge demand for non-utility products (like cordless phones, DVD players). According to you, what products will sell in rural India in the future?
Major areas of growth from a consumer perspective will be entertainment and communication. I believe that more than 50% of the next 200 million mobile phones will be sold in rural India. Not many people know this, but there are more TVs in rural India than in urban India. Consumer electronics like DVD players just make pure economic sense. The cost of a DVD player can be recovered in around 5 trips to a movie theatre for the whole family. So, rural India presents tremendous opportunity for growth for durables. It is just not restricted to fast moving consumer goods.
But even here, we need to understand what works and what doesn’t. Something like a washing machine will not sell in rural India because of the lack of running water. Mixers and grinders don’t sell right now because of electricity problems and power cuts. It is not because the spending power is low. So the support structure needs to grow. Power and infrastructure problems have to be sorted out, but the good thing is we’re seeing improvement. Infrastructure is developing, roads are being built at a fairly good pace and the power situation is being addressed. If everything falls in place, rural India will be a huge market for everything from consumer durables to mobile phones.
Can you give us some information about the early stages of Project Shakti? It is a project that has been very successful from all angles: company, consumer and women micro-entrepreneurs. When MART co-created Project Shakti, what did you do right?
MART had actually been consulting in rural India for 10 years even before Project Shakti was launched. We were livelihood specialists; consulting with microfinance companies and helping women identify the right livelihood opportunities. It all initially started in a small village in Andhra Pradesh. Several women there were already micro-entrepreneurs selling vegetables and stitching clothes. But the market was very small and earning potential was even lower. That’s when we thought, these women could sell branded FMCG products and their earning potential would go up. That’s how Project Shakti started.
It started as a group approach. The aim was to create groups of 50 people in 50 villages and these groups would sell FMCG products. This approach had a few problems: not enough money per person and no responsibility. That’s when the idea of appointing 1 sales agent (called Shakti Amma) for 3-4 villages together was formulated. Today, 46000 micro-entrepreneurs sell FMCG products in 200 districts across 12 states, serving over a 100,000 villages. Along with eChoupal, it is probably among the most successful projects in rural India.
Clearly Telecom and FMCG have made inroads into rural India. What are the next ‘hot sectors’ in rural India?
The next hot sectors are going to be health, education, construction, insurance and banking services. All these sectors will have to evolve together. I strongly believe that 2012 will be the inflection point. Infrastructure is coming into place. Villages are slowly getting connected to Internet. And, most importantly, people in rural India have great aspirations for growth. They are passionate about work. I feel it is all coming together at the right time.
As rural India grows, it is going to be very important to hire people and teams that’ll focus on rural initiatives. How should companies approach hiring people for rural projects?
At MART, we hired around 50 professionals from tier-3 MBA schools. The only way people are going to stick around in a rural job is if they have a similar background. The other important thing will be to glamorise the sector. The Rural Marketing Association of India has recently initiated awards for best student projects done in rural areas. It gets entries from several top business schools including the IIMs. So we’re definitely seeing some progress. Now rural India is part of the core strategy of several top firms. From FMCG to banking, star employees are being thrust into rural projects.
Your thoughts about the banking sector in rural India?
According to a recent World Bank study, there are 190 million bankable people in India. So, that’s the potential. The problems some of the banks have faced is that they’re trying to approach rural banking with a brick-and-mortar model. But if Internet connections are in place, a virtual banking system with kiosks and ATMs designed for rural India will work. ICICI has been working on some ATMs for this market. So my suggestion is move away from the brick-and-mortar model and focus on virtual banking.
Can you give us a quick step-by-step plan to grow rural India?
One: We need to involve the private sector. They bring in the money, the expertise and the execution skills. Two: The government has to focus on facilitation and monitoring. They should move away from implementing. Three: Use technology. From virtual banking to virtual education, technology can play a huge role in uplifting rural India.