Technological advancements since 2005, including the uptake of the internet as well as mobile phones by consumers, has led to the strong growth of digital commerce in India. Urban consumers have started using mobile phones to browse, shop and make payments. While it is an accepted consensus that rural consumers are yet to catch up with their urban counterparts in many aspects, their aspirations remain the same. Increasingly, FMCG players are depending on mobile phones to be the channel of communication to attract rural consumers. Mobile phones are replacing TVs as an important marketing medium, alongside other traditional communication methods. While there are challenges in operating in rural India, creating brand awareness will be the first step to making in-roads. Given that by 2030, possession of smartphones will also exceed colour TV sets and mobile phones will top the chart, this seems the logical route to go down.
Possession rates in India, 2000-2030
Source: Euromonitor International
Out with the old, in with the new
Historically, companies have been using communication methods such as video on wheels, paintings on walls/posters as well direct contact programs in schools and colleges to reach out to rural consumers. They also participate in weekly bazaars, melas and fairs as most rural consumers shop once a week. Television adverts were also used, however, power shortages in rural areas continue to be a challenge. In the last few years, a few innovative marketing ideas have been tested, especially by large FMCG companies.
In 2013, Hindustan Unilever launched Kan Khajura Tesan, an on-demand entertainment platform for mobile phones. Consumers in media dark rural areas make a ‘missed call’ on a toll free number. They were then called back and could listen to Bollywood songs, jokes and the news. HUL used this opportunity to share relevant adverts of its brands with those consumers that were using the service. This enabled the company to create brand awareness for its products in these areas. Towards the end of 2015, the company announced that it had plans to allow other players to share this platform. FMCG players, increasingly aware of this consumer base, have also started providing talk time worth Rs10-15, if the customer sends an SMS with a particular code from the back of a product’s packaging to a toll free number. This bodes well with consumers who like to save on talk time. This has been extensively used by PepsiCo during the cricketing season in India, which is now almost year-round.
Aspirations of rural consumer will be key to growth
India benefits from growth in consumption. The growth coming from both rural and urban areas around the country is driven by aspirations of the Indian consumer. The thing to bear in mind is that the rural consumers have the same aspirations as their urban counterparts. Even within mobile phones, the shift from feature phones to smartphones supports this trend. By 2030, 58% of total households in India will still be rural, and this will continue to play a vital role. Furthermore, the number of rural households in India is much greater than the total number of households in many developed countries such as the US and UK.
This rise in aspirations will also drive the shift from unbranded/unpackaged products to branded ones as consumers will perceive branded products as value add. Hence, the availability of consumer goods in rural India is essential so that companies can tap in to the consumer’s interest and provide them with what they want.
Government investment in rural India will create further opportunities
Players hoping to sell to rural consumers need to be aware of the challenges operating in this part of the country. Agriculture is an important industry in India. Irregular monsoons or lack thereof will have an impact on household income. The informal economy is also high and there are always going to be challenges in establishing the true potential of the rural economy. While rural consumers’ aspirations might match those of their urban counterparts, their incomes will not.
Government initiatives will be important to push rural consumers to the front line. Increasing literacy rates of both men and women will be essential. Education will lead to awareness and that will, in turn, impact consumerism. Improved government spending on initiatives such as the Mahatma Gandhi National Rural Guarantee Act will slowly improve the quality of their life. Additionally, improvement in infrastructure, such as road transport, will provide companies with the much needed logistical connectivity to deeper parts of the country.
For FMCG players, the smart thing to do will be to identify the opportunity, customise marketing and use technology to benefit from the huge population in rural India. They can also increasingly use social media platforms such as YouTube, Facebook and Twitter to engage with this cross section of consumers.