India Rural 2.0 – marketing to Rural India

Critics of the booming Indian economy argue that companies in India are targeting just the urban population – and in the process, the rural market – the biggest Indian demographic – is left behind. Well, they might be in need for some enlightenment. As the urban markets saturate, Indian corporates are realizing that they need to reach out and tap into rural India. Just look at the sheer statistics:

As per a research report by Hansa Research – Guide to Indian Markets 2006 – the percentage rise of consumer goods in rural India is just mind boggling. Color TV sales are up 200%, motorcycle sales are up by 77% and refrigerator sales are up by 31%.

Hello Indian Rural 2.0 !!!

Mobile operators are one of the first movers to be reaching out into the rural markets. Voice revenues are negligible, VAS revenues from ringtones etc. are dwindling, ARPU is as low as it gets. So, obviously, the next push is into the rural markets – to tap into this virgin market and get as much market share as possible. Some mobile operators are so keen on capturing these markets that when bidding for licenses began, some operators put in negative bids – meaning that they will pay the Government if they win the contract.

In the second round of bidding for rolling out mobile services across 2.5 lakh villages, held on Monday, operators including Bharti Airtel and Aircel have put in negative bids, which means that they will give money to the Government if they win the contract. This goes a step beyond the previous round where operators, including Reliance Communication, Idea Cellular and Bharat Sanchar Nigam Ltd, had put in proposals to offer mobile service with zero subsidy.

In an earlier post, I mentioned about ITC’s e-Choupal initiative – the largest IT initiative by a corporate entity in rural India. The initiative consists of setting up an Internet kiosk in villages. Farmers can logon to the site to order high quality agri-inputs, weather forecasts, best farming practices and also find out the best market prices for their crops. The initiative covers 38000 villages, empowering about 3.5 million farmers.

In its latest issue, BusinessWorld has a good article on several rural marketing initiatives and the hurdles that companies face in spreading their wings to rural India. I like the phrase ‘Developmental Marketing’ that they use below.

It is about creating a market from scratch by first developing it, solving its basic problems, figuring out what it needs and then designing a product or service built around that one need that a company could, probably, service. It sounds exhausting (and somewhat evident). ‘Developmental marketing’, as we christen it, is a long, hard grind. There may be no TV or print to reach out to people, there is usually no supply chain to manage because there are no roads or electricity. Yet dozens of companies are taking this exhausting route. The reason is simple: more than 742 million people (or about 65 per cent of India) with rising incomes and aspirations. According to IRS data, over half of the 145 million rural homes in India earn between Rs 1,000-Rs 5,000 per month. Estimates put the rural market in India at Rs 80,000 crore.

Several other interesting media snippets related to India Rural 2.0:

• As per a Deloitte survey, Drishtee is the fastest growing high-tech startup in India.

• Knowledge @ Wharton has a story on marketing to rural India.

• Drew Clark, director of strategy, emerging markets, IBM Venture Capital Group has a guest post on Venturebeat.

• BusinessWeek’s story on social entrepreneurship

Heck, even Google is now planning to push into the rural markets. Time to stand up and take notice ?

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