Business opportunity in rural market

The word recession brings up huge emotions – fear, anger, sorrow. However, many top business people are still very positive towards the future and see the economical recession as a turning point for their business in the rural market.

Recently, The Economist Intelligence Unit and Dubai Holding published a white paper based on the views of the people who own and manage the world’s businesses; 418 senior business people around the globe. They found that 53% think the economical meltdown would positively impact their business in the next 5 to 10 years.

It is also interesting to see that more than 50% of these executives would give priority to product and geographical diversification in the near future. They do not specify what would be the new geographical market place but we can reasonably presume that it would be the BRIC markets.

Economy is a state of mind. It is like mass psychology and the time people take to recover from an economical recession actually depends of their exposure to the global economy. If you look at where the economic crisis has affected the industry, it is only the export oriented sectors and particularly the IT industry. The export sector is mostly served by the middle class in metro-cities. They are well known for having a lavish lifestyle and craze for quality brand experience. Today many shopping malls are deserted and the urban middle class has come back to the old fashioned saving lifestyle. Many shops have closed down and others are proposing huge discounts to attract customers.



Atria is one of those happening shopping malls you can find in Mumbai. Hundreds of international brands like Reebok, Swarovski, Guess all under one roof. Today, many shops have closed down and others are proposing huge discounts to attract customers.

Sunday market in Pondicherry has regained lots of popularity for the past one year. In towns and villages, the economy is still very positive. Would you get any feeling of recession in such place?



In the same paper from The Economist Intelligence Unit, Martin Fitzpatrick, Microsoft’s regional controller for South-East Asia, explains the benefits of reaching consumers who depend from the local economy rather than global. Rural consumers are used to economical ups and downs and can recover faster than developed economies. He says “The boom-bust cycle seems to be more readily accepted as a regular part of the economic landscape. I have grown used to the concept, this being my fourth cycle of boom and bust in less than ten years. Most companies and individuals seem to have effectively written off 2009 and are instead gearing up for a better 2010.”

Going beyond globalisation

The concept of economical globalisation has probably reached its end with the economical meltdown. It would have an impact on the way companies invest their money and people consume. There is a regain of interest for local and national products. People’s lifestyle and consumption pattern has drastically changed over recent years hence companies need to keep their design strategy in tune with the evolutions of the society. Create products and services that serve the Indian economy and identity.

Our company, Kovent helps businesses to understand Indian rural consumer’s mindset and consumption pattern. Our approach is different from other market research companies who rely on data and statistics. Our researches are based on qualitative design research and ethnographic insights. They reveal rural consumers needs, behaviours and desires through lifestyle scenarios. These scenarios will help you to understand which product speaks to their social aspirations. How you can capitalise on social trends to enhance your consumer’s experience and brand perception.

Kovent is dedicated to anthropologic design research that serves companies business objectives. As social issues enter the minds of today’s Indian citizens, we are integrating ideas such as sustainability and social responsibility into our researches.

Ethnographic research in North India

Our ethnographic research took us to Siyana a small town located at 3.5 hours from Nizamuddin railway station. We were staying at my friend’s place whose parents live there. From the roof top of the house we could see the green belt that delimitates the town.

Most of the people in Siyana have small businesses; one of the main businesses was agriculture. Electricity comes few hours a day only. People who have better standard of living can afford to have invertor or generator to keep the machines and fans running. Of course, no one uses air conditioner as that would be too expensive. We had a walk around when we reached the town. We were not accompanied with any local fellow. People were looking very strangely at us since they understood we are not from the town. One person came and asked us where we are from? As we started speaking with him more people joined with 1000 of questions. We had to run away as our presence was generating traffic jam in the market. Still we had a nice visit and enjoyed interacting with the local population.

We started with our research the first day itself. The family who received us were very helpful in introducing us to people around. Being in a small town it was easy to reach a large diversity of profiles from business people to employees, teachers, workers, farmers, etc. In Siyana, people hardly get opportunities to speak with outsiders. So, they were very much interested to speak and know about us. Many a times it happened that youth guys came up to asked me to speak about my country. This made our work pleasant but longer since we had to establish trust and build relationship with people before starting any interview or field observation.

The first interview we did was in a small village around Siyana that caught the interest of everyone. Ayan the person we interviewed was comfortable in speaking in front of everyone. This type of interview shared with the community had an advantage.
It helped us in understanding the difference between individual motivations and what is commonly accepted by the group. More than anyone else, villagers need to justify their behaviour to the community they belong to. Ayan considered himself as a rich person since he worked for a corporate company for a couple of years. He explained to his community the social necessity of having a fashionable lifestyle working at ICICI Bank.

Villagers were explaining us the interest and necessity of having multiple sources of income in the family. Ayan cannot think of closing his business even if he gets a permanent job at ICICI Bank. “Job is a short term solution; you never know how long the company is going to run”.
Villagers have 4 to 5 regular businesses they pass on to each other as time and opportunities come. Basically, more you go at the bottom of the pyramid more the source of income is diversified. Since many people have lost their faith in the corporate world the small business thinking gains the interest of the overall population.

Middle class behaviour is quiet predictable in towns and villages. Being at the edge between modernity and tradition, middle class are pushed in developing strong ideas about what is good and what is bad. Mostly, they are well informed and leave less space to subjectivity.

At one evening we had the great pleasure to attending a party given for a new born baby. There was nothing traditional but Bollywood music, food and drinks… we all had great fun. Coming back home was an adventure since there was no light anywhere. We had to walk in queue behind uncle’s torchlight till we reached home.

After interviewing 34 people in towns and villages we went to Ghaziabad, New Delhi and Gurgaon. My wife Melina felt in love with Gurgaon shopping malls. The most happening place she found in India so far.

In towns and villages people’s lifestyle evolutes in a linear way. It is always a kind of compromise between tradition and modernity and the whole family follows a similar pattern with different level of understanding.

But in New Delhi people follow a pattern that is much more based on their individual life experience. People’s lifestyle is the fruit of a long process of individual liberation where personal reflection matters a lot.

“I have reached this level of thinking because of…”
“I had to change something about myself and I did it…”
“Knowledge is painful you can never stop rethinking the world around of you”
Etc.

People have no fear in experimenting themselves to access to a better way of being. This long process for discovering the “Who am I?” is very much influential on their way of living.

Kovent’s North India consumer trends will speak about how the “Who am I?” attitude influences consumption pattern in North India. What are the keys factors to implement innovation and respond to consumer’s aspirations? Innovation always question consumers; our next report will provide you the right question for the right user group.

Family continues to occupy a central role in people’s pre-occupation. But, there also we found new behaviours in all layers of the society. We used a set of pictures representing Bollywood actors and actresses in different roles and personality. It is interesting to see how people reinterpret family values in today’s society. How they project their role model from the past to the future.

Our North India trip was a wonderful experience. We interviewed 83 peoples with 62 hours of recorded interview. There is a report available on http://www.kovent.com/

Colgate's Suraksha Chakra growing strong in rural India

Rapid change in lifestyles, improving infrastructure and rising income have altered consumption patterns not only in urban but also in the rural areas. Growing demand for high-quality personal care products has been one of the main reasons for the shift in consumption patterns. In the past, product marketing has remained primarily an urban phenomenon, but in recent years due to the increasing education levels and increased awareness created through media, the rural market has been growing as well. Increasing brand consciousness and expanded disposable incomes are jacking up the appetite for these products.



Companies have long realised that to increase sales volume they will have to reach outside big cities. In several categories, rural India accounts for the lion's share. Rural households form around 72% of the total households in the country. Spending in this segment is growing rapidly and consumption patterns are closing in on those in urban areas.

Today, no consumer goods company can afford to forget rural market which is a very big part of the Indian consumer market. You cannot build a brand presence in India until you have the strategy for reaching the villages. Companies that have figured this out are doing better in villages than cities. The potential is huge for companies that develop effective rural marketing strategies. Up-gradation of products is being witnessed on fast-emerging consumption pattern in rural areas. Local and branded products are getting replaced by national brands and low priced by high priced.

Several European and US companies have been making inroads into rural India for years. Among the U.S. firms, Colgate is one such company that has made considerable headway. The company has been long known to dukaandaars and merchants in rural India.

Colgate is one of the leading providers of scientifically proven oral care products in India, including toothpastes, toothpowder and toothbrushes. The company is spending on advertising according to its market share and leadership position it enjoys and is conscious about what it costs.



For marketing to rural consumers, you need to persuade them to try and adopt products that they may have not used before. A company like Colgate has to convince people to change to toothpaste instead of using neem twigs to clean their teeth, which was the traditional practice. This is difficult to do and requires patience and investment by the company. It's not like getting someone to switch brands.

Rural India presents huge opportunity for the company to grow its market. Therefore, Colgate continues to focus on expanding its rural distribution. They keep conducting various programmes with massive rural sampling and seeding exercise for Colgate, targeted at non-users and infrequent users of dentifrices.



In rural areas, people use neem and other substances for cleaning their teeth. Even after keeping the products low priced, people were not willing to use the toothpaste. Hence, Colgate conducted a research to show that neem sticks don’t do much for oral health as they only massage the gums, which even a toothbrush can do. For upgrading these users to use toothpaste, which also generates demand for toothbrushes and to penetrate deeper into rural households, Colgate is constantly conducting oral care awareness programmes. It also actively participates in local festivals.

Colgate resorted to keep their products low priced than its arch-rival, Hindustan Lever. As a result, Colgate Gel, Total, etc. are priced marginally lower than similar offerings from HLL. Colgate's dominant position in toothpowder and lower-priced products has helped in increasing sales. This is significant as rural market growth rates for FMCG products have been higher than urban market over the past years.



Colgate has been also quite active on the new products front. The company launched Cibaca Top and Colgate Herbal, two low-priced brands targeted at the semi-urban market. Colgate's low price offers have also helped to enhance usage levels. The shift in consumer preference from gel-based to white toothpastes, has also worked in Colgate's favour, since the company has traditionally been the market leader in this segment.

Colgate’s commitment to deliver superior quality products and their aggressive investments in brand building has been well received. To be continually rated as one of the top brand in an increasingly competitive environment, is a reaffirmation of the trust, loyalty and confidence reposed in Colgate by millions of consumers across India. Today, every second user of toothpastes uses Colgate and one out of every three toothbrush user’s brushes with a Colgate toothbrush.



With rapidly evolving consumer preferences, Colgate has been spearheading changes across different product categories through a series of product innovations. The company has launched a series of superior quality oral care products with trend-setting innovations at affordable prices. It includes technologically advanced toothpastes, a herbal toothpowder and a series of specialty designed toothbrushes. All these products are having strong consumer acceptance.

Today, Colgate has become an essential part of daily oral hygiene and therapeutic oral care. It is one of the most widely used and recommended brands by dentists.

Gandhi, the father of modern India, believed that the country's future lay in her villages. These days, every major business group that plans to move into the hinterland would agree. However, the level of affordability in rural India is low. For consumers to buy products, you have to first put more money in their pockets. Create a virtuous circle of raising rural incomes which leads to increase in consumption. This new business culture I am talking about is not charity or philanthropy. It is about doing business with social benefits. It will help us to sustain the economy and bring in lots of human satisfaction to all of us. You can't think of success just in financial terms. Getting goodwill and recognition in the rural market is also not a small asset for any company.