In an exclusive interaction with vareen ray & neha saraiya, Pradeep Kahyap reveals the secret code to crack India’s vast rural market
4Ps B&M: You are the first person who perhaps understood the real potential of rural India. How difficult is it to convince companies?
Pradeep Kashyap (PK): When I started talking about rural markets 10 years back hardly anyone was interested. It took me close to five years to just convince companies. I had to dig a lot of information, data and even write a book on rural marketing and conduct seminars and workshops because people kept doubting whether there was actually a market or not. So, we organised many programmes and even took corporates to villages to make them understand the potential of rural markets.
4Ps B&M: Can there be a single strategy for a company to succeed in the rural market?
PK: All big companies have an export division and have a country specific strategy. If that be the case then states like UP & Bihar are countries or subcontinents in themselves. Then how can companies have a pan India strategy. So my point is that on one hand for urban consumers companies have so many segments like physiographic, demographic but for rural consumers companies just stick to one strategy.
4Ps B&M: Any segmentation example?
PK: Lot of regional companies have done that because they are focused around one state or two states and that is their market, as they have already segmented and rejected the other areas. Companies like Unilever are now getting into segmentation. But it has to be around affordability, distribution, et al. The companies which are doing it are reaping the benefits.
4Ps B&M: Sectors still to realise the potential of rural markets...
PK: Undoubtedly, the durables sector. Several studies have shown that ownership of durables in rural India is one- third the average ownership of urban market. The reason for it is not affordability, but lack of electricity. The rural ecosystem is not conducive to the usage of durable products. If companies can get consumer finance in place then that market is waiting to be explored.
4Ps B&M: Is rural India brand conscious?
PK: In rural India there is concept of ‘Brand Stickiness.’ If a consumer in rural India is satisfied with the brand he uses, then he is reluctant to change that brand. And because of lack of education rural consumers are unable to differentiate between brands. Moreover, rural consumers are still deriving the core benefits of the brand and not the peripheral benefits of it.
4Ps B&M: How is the rural youth different from the urban youth?
PK: Rural youth is driving brands as much as urban youth. Rural youth who were earlier dropping out from school are now finishing college and are more aware than earlier. They are the ones who are exposed to outdoor communication and hence have information about the brand. Now these guys go and purchase the brand, which they see and give them the best deal.
4Ps B&M: How is India’s rural market different from China’s?
PK: Oh, it’s very different. The Chinese market is not uniformly developed. They have used the Porter’s principle to see the strategic areas, which provide the maximum advantage and developed that area accordingly. So they have rationalised their costs at better rates. Whereas India is a democracy. The India rural areas have more consumers than the Chinese. Fortunately the rural consumer base is growing much faster than the urban consumer base.
4Ps B&M: Was rural India affected by the slowdown?
PK: Rural India was least affected during slowdown. Sectors largely affected by the slowdown – real estate & financial – have very little impact in the rural markets, as in rural India nobody buys a house for speculation and they don’t invest money in shares.
4Ps B&M: And what about the role of NREGS?
PK: About 40 million families have benefited from it. NREGS has ensured that one member of each family gets 100 days of work, which makes a huge difference in rural areas. So a multiplier effect builds up in community itself. And along with the loan farm waiver, NREGS helped tremendously to boost the rural economy.
For more articles, Click on IIPM Article.
Source : IIPM Editorial, 2010.
An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
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4Ps B&M: You are the first person who perhaps understood the real potential of rural India. How difficult is it to convince companies?
Pradeep Kashyap (PK): When I started talking about rural markets 10 years back hardly anyone was interested. It took me close to five years to just convince companies. I had to dig a lot of information, data and even write a book on rural marketing and conduct seminars and workshops because people kept doubting whether there was actually a market or not. So, we organised many programmes and even took corporates to villages to make them understand the potential of rural markets.
4Ps B&M: Can there be a single strategy for a company to succeed in the rural market?
PK: All big companies have an export division and have a country specific strategy. If that be the case then states like UP & Bihar are countries or subcontinents in themselves. Then how can companies have a pan India strategy. So my point is that on one hand for urban consumers companies have so many segments like physiographic, demographic but for rural consumers companies just stick to one strategy.
4Ps B&M: Any segmentation example?
PK: Lot of regional companies have done that because they are focused around one state or two states and that is their market, as they have already segmented and rejected the other areas. Companies like Unilever are now getting into segmentation. But it has to be around affordability, distribution, et al. The companies which are doing it are reaping the benefits.
4Ps B&M: Sectors still to realise the potential of rural markets...
PK: Undoubtedly, the durables sector. Several studies have shown that ownership of durables in rural India is one- third the average ownership of urban market. The reason for it is not affordability, but lack of electricity. The rural ecosystem is not conducive to the usage of durable products. If companies can get consumer finance in place then that market is waiting to be explored.
4Ps B&M: Is rural India brand conscious?
PK: In rural India there is concept of ‘Brand Stickiness.’ If a consumer in rural India is satisfied with the brand he uses, then he is reluctant to change that brand. And because of lack of education rural consumers are unable to differentiate between brands. Moreover, rural consumers are still deriving the core benefits of the brand and not the peripheral benefits of it.
4Ps B&M: How is the rural youth different from the urban youth?
PK: Rural youth is driving brands as much as urban youth. Rural youth who were earlier dropping out from school are now finishing college and are more aware than earlier. They are the ones who are exposed to outdoor communication and hence have information about the brand. Now these guys go and purchase the brand, which they see and give them the best deal.
4Ps B&M: How is India’s rural market different from China’s?
PK: Oh, it’s very different. The Chinese market is not uniformly developed. They have used the Porter’s principle to see the strategic areas, which provide the maximum advantage and developed that area accordingly. So they have rationalised their costs at better rates. Whereas India is a democracy. The India rural areas have more consumers than the Chinese. Fortunately the rural consumer base is growing much faster than the urban consumer base.
4Ps B&M: Was rural India affected by the slowdown?
PK: Rural India was least affected during slowdown. Sectors largely affected by the slowdown – real estate & financial – have very little impact in the rural markets, as in rural India nobody buys a house for speculation and they don’t invest money in shares.
4Ps B&M: And what about the role of NREGS?
PK: About 40 million families have benefited from it. NREGS has ensured that one member of each family gets 100 days of work, which makes a huge difference in rural areas. So a multiplier effect builds up in community itself. And along with the loan farm waiver, NREGS helped tremendously to boost the rural economy.
For more articles, Click on IIPM Article.
Source : IIPM Editorial, 2010.
An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
TSI exposes b school ranking scamsters Mahesh Peri of Career 360 and Premchand Palety of C fore. - For Complete Sting Operation Video Click Here
Pioneer Exposes the fraud called Mahesh Sharma and Mahesh Peri of Career 360 and Barbel Schwertfeger of mba-channel.com
IIPM: An intriguing story of growth and envy
Prof Arindam Chaudhuri of IIPM on MF HUSAIN
IIPM Related Links
IIPM, GURGAON
IIPM 3-year full-time Integrated (MBA BBA) Programme
IIPM 2-year full time Programme (leading to the award of the MBA degree from IMI)
Exclusive In chat with Society Magazine - Prof. Arindam Chaudhuri
