Rural marketing: Say no to price wars, relationships key

By Shonali Advani

Rural India has been in the spotlight for a while now, with growing consumption rates. Middle India, home to about 100 million people, is already contributing to 20 percent of the country’s FMCG consumption, as per recent media and industry reports.

Further, sector estimates say rural India has 31 million active internet users. This is a growth of 73 percent from 2.13 percent of active internet users in 2010 to 3.7 percent in 2012.

So a young population, rising income and low penetration of consumer durables makes these markets lucrative for new entrants. However, the consumer mindset here is quite different to that of the metros and A-class cities. Therefore, entrepreneurs must be mindful of a few important aspects in this regard, to ensure they market well in these regions.

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Create brand reputation

[caption id=“attachment_564328” align=“alignleft” width=“380”]  The bond between retailers and consumers in tier III and IV towns tends to be quite strong and often extends into the personal sphere. AFP[/caption]

While brands do have some relevance, in-store recommendation by store owners can override a lot, so a good retailer can sell an unbranded product with ease.

Retailers, in general, are seen as subject matter experts by a lot of consumers unlike in urban cities, where a store assistant is a mere facilitator of a transaction. So, the first thing you’d need to do is talk about your brand to this segment: store owners, traders or merchandisers, those who will be an active partner for the product or service you are selling. Get them to understand the underlying values.

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Build relations and partnerships

A lot of trade happens on credit and personal relationships and sales without providing a bill is almost a norm in these markets.

The bond between retailers and consumers in tier III and IV towns tends to be quite strong and often extends into the personal sphere.

So if you are setting up your own stores, you’ll have to work around processes that adapt to such nuances. Big and fancy stores used to intimidate consumers (as they tend to give the perception of being more expensive), but this is slowly changing. Similarly, if you are looking to partner with existing retailers and sell through their shelf space, then these are the systems that you would be experiencing.

So plan your inventory and supply-chain management accordingly. Needless to say, this depends on the vertical you are in.

Standalone stores work well for consumer durables; however, for apparels, personal care items and the like, selling through existing stores in shopping complexes are viable options too.

Franchise your way in

Franchising is a feasible option too, to create a network and reach consumers. Franchisees would be well-versed with buying patterns of consumers in these markets and for a retailer, this would be highly useful to know your consumer profile of that particular town. You will need to do lots of groundwork on where the customer is and how to reach them. However, remember, franchisees may not have empirical data but more anecdotal, and therefore you’ll need to conduct a well-mapped survey to understand the market and gaps therein.

Say no to price wars

As a first generation entrepreneur, without the weightage or backing of big names, it is advisable not to get into price wars.

Existing retailers have strong associations and can drive you out of the market. The key to beat an established retailer with sound reputation and influence in these markets is to do something innovative.

In tier III and IV towns, this is not a difficult deal to crack. Lure customers with nicely dressed promoters, a clean, neat shop with air-conditioning, and ample parking place.

Plus, they look for value for money and functionality of the product rather than the luxury or lifestyle element, so play on the former.

Contrary to what people think, real estate capital costs are high, so opt for rentals if you are setting up base.

Marketing mantras

You will need to do a bit of marketing to complement the above-mentioned initiatives. However, your modus operandi will have to be old-fashioned in some sense and social media is not the way to create awareness.

The plus side is cost of advertising will be less in comparison to urban markets.Hoardings and newspaper inserts work best, say experts. In addition, advertising through cable television and slides in cinemas are good options too as are fairs, small events and exhibitions to create some noise.

Customer relations are equally important here. Never ill-treat them as customers in these towns take things personally. If not treated well once, he/she would never re-visit stores or buy your product/ service, no matter what value you offer.

Brand ambassadors sell products and services well too. If you don’t have the big budget that is needed to bring in a Hindi film industry celebrity, you can also opt for television anchors to come and inaugurate the store or attend the product launch.

They will always draw in the crowds and ensure a better visibility for your brand.

Story was first published in the Entrepreneur India

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