Understanding rural markets

Companies tend to dump their inferior and outdated products in rural markets

M V Sasidharan

A Rs. 1,23,000-crore market, with as many as 700 million potential customers. That's the estimated size of the country's rural market for goods and services. And India Inc. is slowly but surely spanning its attention to the countryside. While companies, including the biggies like HLL, ITC, Godrej, Nestle, along with smaller players including Nirma, have kicked off efforts to get a toehold into this lucrative market before competition really sets in, the stumbling block for many still remains their inability to decipher the conundrum called the rural market and the buying behaviour of our village folk.

While it remains to be seen how well firms cope up to the challenge, what is clear is that it's still a long way off before rural India probably sees the kind of competition among players that is being witnessed in the metros and bigger towns. In the interim, apprehensions are being voiced about the possibility of manufacturers choosing to dump substandard products, which find no takers in the cities, on to the rural markets.

The main challenge before companies that have forayed into the rural markets is to comprehend the peculiarities in the buying behaviour of the average Indian rural consumer. Market research studies relayed at a recent seminar on 'The Challenges of Rural Marketing' found that Horlicks was being fed to buffaloes and hair dye being used to paint them.

With more players now chalking out their strategies for entering the rural markets, increasing number of firms are dedicating teams and funds to the rural markets the aim of re-learning marketing lessons. What is becoming clearer though is that rural India was not so "rural" and "illiterate" and "gullible" after all. MART, the specialist rural marketing and rural development consultancy has found that 53 per cent of FMCG sales lie in the rural areas, as do 59 per cent of consumer durable sales. Of two million BSNL mobile connections, 50 per cent went to small towns and villages, of 20 million Rediffmail subscriptions, 60 per cent came from small towns, so did half the transactions on Rediff's shopping site.

According to a study by Chennai-based Francis Kanoi Marketing Planning Services Pvt. Ltd., the rural market for FMCG is Rs. 65,000 crore, for durables Rs. 5,000 crore, for tractors and agri-inputs Rs. 45,000 crore and two- and four-wheelers, Rs. 8,000 crore. All in all, a whopping Rs. 1,23,000 crore, if corporates manage to comprehend the rural buying behaviour and get their distribution and pricing right.

Getting strategies bang on

Companies have started reinventing the sales and marketing wheel to cater to the rural consumers. Peculiarities in rural buying behaviour, including the propensity to buy in smaller packs, have been capitalized on by nearly all the FMCG firms that are present in the rural markets. The concept of sachets was launched by FMCG majors only aimed at the rural market. Then there are other issues including a perceptible brand stickiness demonstrated by rural buyers, where a consumer buys a brand out of habit and not really by choice.

Rural masses are also sometimes less price-sensitive as compared to their urban counterparts. For instance, the MART study shows that expensive brands, such as Close-Up, Marie biscuits and Clinic shampoo are doing well because of deep distribution. And many brands are doing well without much advertising support, like Ghadi - a big detergent brand in North India.

The peculiarities in buying behaviour has forced companies to innovate and rethink on ways to entice the market. Durable manufacturers have, for instance, launched hand-held vacuum cleaners, washing machines without driers to cater to the needs to a discernable, yet purse conscious rural consumer. Marketing efforts are also being targeted on mediums such as radio stations, cinemas, haats, melas, and village panchayat meetings, to effectively home in on the rural eyeballs.

Rural consumers have also started throwing their weight around, though in a rather limited way. A sugar co-operative in Maharashtra's Kolhapur district, of instance, asked Hero, TVS and Kinetic to stage a competitive demonstration so that they could order 400 mopeds. Villagers collectively asking companies to display and demonstrate their products at haats or other meeting points is also now commonplace.

TTK Prestige has achieved success in retrieving market share in the South by tying up with women's self-help groups and NGOs in Andhra Pradesh to market its pressure cookers.

The company is still perfecting a replicable model to adopt in other states whereby it can empower the rural people by providing them with some money and itself achieve its business goals.

A cooker brand exclusively for the rural areas is on the drawing board.

ITC e-Choupal initiative has given farmers the power of scale and better bargaining power when it came to selling their produce and buying agri-inputs. It de-linked information from transaction and bestowed the freedom of choice on the farmers.

Even as competition among manufacturers enters the countryside, the issues of sub-standard, outdated products finding their way on to rural markets could also be quite real. For instance, Black and White TV sets, phased out of most urban markets, are still being sold in the villages. Pricing could be another contentious issue, since the "sachet" concept, adopted by most FMCG players in the rural markets, proves to be more expensive as compared to buying a whole bottle or packet of the commodity. The prevalence of spurious brands in the rural markets is also a big problem.

According to manufacturers though, the sales of products such as B&W TVs and strip-down versions of washing machines is taking place in rural markets since there is a demand for such products. Also, it is sometimes cheaper for a rural/semi-urban consumer to buy durables in a city because the margins given to a big retailer there were better than those given to a distributor closer to home, they argue.

What is encouraging, though, is that along with the manufactures and service providers entering the rural market, there is new breed of players who are developing rural Indian as their niche and playing a role in unraveling the rural marketplace.

Chennai-based Anugrah Madison Advertising Service Pvt. Ltd., for instance, specialises in rural strategy and communication and has the skills to conduct campaigns in several languages. MART is involved in rural research, strategy and distribution.

A firm called Rural Relations is emerging as a big player in rural customer relations management and it has a huge database of opinion leaders in six states. Sampark is engaged in managing rural van operations and other events.

Bhitarkanika’s problem of plenty?

Rajat Ghai/Bhitarkanika

The crocodile population in the park has increased many times. The human-crocodile encounters have mostly ended with tragic results for either side.


It is a tiny piece of heaven on the Odisha coast. The Bhitarkanika Wildlife Sanctuary is where the world's largest living reptile, the estuarine crocodile, is thriving amidst sylvan surroundings after having been brought back from the brink. But now there is trouble with the reptile population booming, posing a threat to the natural balance.
From a strength of 96 crocodiles in 1976, the population now stands at 1,646. A boat ride in some areas can yield crocodile sightings as frequent as one croc a minute, according to a conservationist.
An increasing number of cases of saltwater crocodiles straying into human habitations have been recently reported from Bhitarkanika, in Kendrapada district about 130 km from the Odisha capital Bhubaneswar.
"In Bhitarkanika, some areas are well-populated with crocodiles since on a boat ride you spot a crocodile every minute. In other parts of the sanctuary, you don't see crocodiles at all," said Bivash Pandav, scientist at the Dehradun-based Wildlife Institute of India (WII).
The human-crocodile encounters have mostly ended with tragic results for either side.
In the latest incidents, a crocodile that wandered into a village killed a 13 year-old-boy while in another hamlet frightened villagers hacked a 7.8 metre crocodile to death.
It all boils down to space, feels Pandav. "Around 1,646 crocodiles now inhabit nearly 175 sq km of forested habitat in Bhitarkanika. But if you critically analyze their distribution, you will find them densely packed in the Bhitarkanika river system. Abundance of crocodiles is much less in rivers like Maipura and Baunsagada," he says.
Indeed, it is this confinement of the crocs in the 26 to 30 sq km of water bodies in the sanctuary that is leading to conflict.
"The crocodiles regularly stray out of the sanctuary, not because of food but due to overpopulation. There is no problem of food here. This is a very rich estuarine river ecosystem. They are well stocked with fish. Every village near the sanctuary has aquaculture farms and small ponds. The crocodiles usually enter these areas. Conversely, people enter the forest and wade in croc-infested waters and get into conflict with crocodiles," explains Pandav.

Silence is bliss

Sopan Correspondent / Kochi

Minimising the human intervention is the best way to preserve Kerala's Silent Valley

Silent Valley is the best assurance that a forest can speak through human beings." said the environmentalist MK Prasad. The tourists and visitors to Silent Valley cannot disagree with him because Silent Valley gives an unusual experience of silence while in the midst of nature. It gives one the rarest of the rare experience of being with nature, becoming one with it.
Silent Valley National Park is located in the Nilgiri Hills, Palakkad District in Kerala. The park is one of the last undisturbed tracts of South Western Ghats rain forests and tropical moist evergreen forest in India. It is the core of the Nilgiri International Biosphere Reserve and is part of The Western Ghats World Heritage Site.
The area is locally known as "Sairandhrivanam" literally, in Malayalam: Sairandhri's Forest. In local Hindu legend, Sairandhri is Draupadi. The Pandavas during their exile wandered into Kerala and came upon a magical valley where rolling grasslands met wooded ravines, a deep green river bubbled its course through impenetrable forest, where at dawn and twilight the tiger and elephant would drink together at the water's edge, where all was harmonious and man unknown.
Botanist Robert Wight in 1847 made the first English investigation of the watersheds of the Silent Valley area.
The British named the area Silent Valley because of the perceived absence of noisy cicadas. Another story attributes the name to the anglicisation of Sairandhri. A third story, refers to the untouched nature of the valley, i.e., without human noises.
Silent Valley is home to the largest population of Lion-tailed Macaque, an endangered species of Primate.
The Silent Valley National Park is a unique preserve of natural rainforests. It houses a rich mosaic of varied habitats. Out of these springs the amazing variety of life forms some of them endemic to the Western Ghats.
The Kuntipuzha River drains the entire 15 km length of the park from north to south into the Bharathapuzha River. The river is characterized by its crystal clear and perennial nature. The number of tree species computed for the Silent Valley (118 vascular plants of 84 species in 0.4 ha) is very high compared to a range of 60 to 140 species that characterise the other known tropical forests.
The Mudugar and Irula tribal people are indigenous to the area and they live in the adjacent valley of Attappady Reserved Forest. Also, the Kurumbar people occupy the highest range outside the park bordering on the Nilgiris.
The limited studies of the fauna of Silent Valley reveals that its rich resources as rare and unique - rare because many species which originally inhabited the entire belt of the Western Ghats have been lost due to destruction of their habitat by human beings or for other reasons. These faunal resources however are still available in Silent Valley, because of the relatively little human intrusion. It is unique because what little has been collected and studied has already proved to be of immense scientific interest from the taxonomic, zoogeographic and ecological points of view.
A number of species, which were available in the Western Ghats 50 to 100 years ago still exist in Silent Valley. They include insects, fishes, amphibians, reptiles and mammals.
Upto 1970 it was an unknown forest area, unexplored and untouched. Announcement against a hydroelectric project proposed in the area resulted in the creation of the park in 1984.
Since then, a long-term conservation effort has been undertaken to preserve theSilent Valley ecosystem. In order to ensure better protection of the area the buffer zone of the Park was created and made an integral part of Silent Valley National Park.
Now there are two zones for silent valley. The core zone (89.52 sq.km) and bufferzone(148 sq km). The core zone is protected and wild life is undisturbed. Only forest department staff, scientists, and wildlife photographers are allowed.
The story of Silent Valley National park is the struggle and thought for environmental protection in the country. The struggle for protecting the valley proved that human beings still care for nature.

Down with ecotourism

The centre’s policy to promote eco-tourism is fraught with dangers

Sankar Ray/ Kolkata

In 2002, the International Year for Ecotourism, set out by the United Nations, overwhelming majority of environmentalists in this subcontinent were inexplicably silent, remaining somewhat unbothered about the very concept of ecotourism as if the traditional tourism is ecocidal.

Almost all the tourist spots you figure out, you will find the habitation of adivasis who have for ages been caressing the nature and the nature-human symbiosis. This scribe wrote a scathing critique of ecotorism, defining it as 'silent ecocide' in a Bangalore-based daily. The debate needs to be revived when political leaders and ministers from the erstwhile Union minister for culture and tourism Ambika Soni to the maverick West Bengal chief minister Mamata Banerjee have been taking up cudgels for ecotourism.

Banerjee under the ill-advice by a Bengali newspaper group whose owners thrive on corruption and manipulations in loading and unloading business in ports and collieries, has been unabashedly jockeying for an ecotourism project alongside a 1000 megawatt thermal power project at Nayachar, a sand dune that was afloat in 1932 and is regularly inundated by tidal incursions in Purba Medinipur district.

Soni in a speech on 17 December, 2007 inaugurating the 6th Annual Convention of the Adventure Tour Operators Association of India stated that the existing national eco tourism policy needs to be revived in the light of the ongoing international debate on climate change.

She said she has often come across complaints that by-diversity is being eroded further on account of adventure, world life and eco-tourism but mildly warned that adventure tourists were not only polluting the place but have little regard for conserving the existing natural resources. But her emphasis was on adventure tourism, the main thrust of ecotourism.

"We all in the Ministry of Tourism consider adventure tourism extremely important in taking forward one of the important niche tourism segments of the country. India is richly endowed with the natural diversity consisting of mountains, wildlife, natural parks, rivers and beaches which provide ample opportunities for pursuing adventure sports such as white water river rafting, paragliding, hot air ballooning, skiing, mountain biking, scuba diving, hiking-trekking and rock climbing and rappelling. All these add to the multi-dimensionality of our tourism potential which is not very common in many parts of the world. I am glad that Adventure Tour Operators Association is fully realising the potential of adventure tourism. You all must be aware that Ministry of Tourism through its various publicity campaigns both through print and electronic media gives vast prominence to the potential of adventure tourism in the country. These campaigns help in enhancing the awareness of this fascinating sport. The North East is a paradise for adventure tourism and there is so much that we could do in that region. Apart from the fact that North East is very well connected, helicopter service is also coming up very fast in this region. I feel this connectivity facilitation would enable adventure tourism develop fast."

She took up cudgels for ecotourism arguing , "the existing National Eco Tourism Policy needs to be revived in the light of the ongoing international debate on climate change" but cautioned narrating his own experience, "I have often come across complaints that our bio-diversity is being eroded further on account of adventure, wildlife and eco tourism. There was a genuine concern that adventure tourists are not only polluting the place but have little regard for conserving the existing natural resources. Last year when I took up the matter of reviving licences of adventure tour operators with the Uttarakhand Government, these were the very issues that the Ministry of Environment of Uttarakhand was highlighting."

Unlike Ambika Soni, the WB CM - also her counterparts in other states such as Mayavati and Narendra Modi - seems conceitedly unaware of the menace of ecotourism. They appear to have ignored warnings in magazines like New Scientist in 2002. A team of research workers, led by Kathleen Alexander, a senior wildlife veterinary officer of the Government of Botswana, made very pointed observations on the destructive experience in ecotourism "The first clear-cut case of a primarily human pathogen being passed to wildlife. They have discovered two outbreaks of TB in banded mongooses at Chobe, and one that wiped out a group of meerkats in the Kalahari Desert". Chobe is the second largest national park, an attraction for international tourist community, especially from the western countries. The annual revenue from park fees alone used to cause an inflow of US $ 1.5 million a year. But the more the tourists, the more the possibility of development of TB among mongooses and meerkats in Botswana and researchers doubt that the Mycobacterium tuberculosis passed on from the human beings.

David Nicholson-Lord candidly defined in an article in the US journal, Resurgence (June 2002) ,Green tragedy: the blight of eco-tourism blasted the concept , "Eco-tourism, as defined by the World Tourism Organisation, represents only 2 to 4 per cent of international travel spending. Suppose it grew to the point where it dominated the tourist industry. Could such a large-scale industry be managed in a small-scale way? Can anyone who has flown half way around the world in a jet powered by subsidized fossil fuel and puffing out greenhouse gases qualify as an eco-tourist?"

Elaborating his point further, Nicholson-Lord wrote, although theoretically, eco-tourism is to be on a small scale, eco-friendly and attuned to Nature, the reality is that no one has properly defined eco-tourism, and in this vacuum the marketing men, greenwashers, corporate developers and government spin doctors flourish. I have heard a casino in Laos described as eco-tourism because it was sited in untouched countryside."

Eco-tourism came somewhat synergistically with the introduction of Structural Adjustment Programme during the tenure of P V Narasimha Rao as the PM. Tanzanian scholar whom this scribe, had met accidentally in Calcutta during an international seminar, organized by the Confederation of Indian Industry, stated bluntly. "Tourism can develop if and only if the natural habitat and natural surroundings are kept intact", he said. Theoretically, eco-tourism ensures the biological continuity of flora and fauna. But the fact remains that proliferation of concrete structures takes place even where pristine beauty draws tourists for a tranquil and blissful pastime".

Eco-tourism drastically minimises the contact between animals and people if it is to be genuinely environment-conducive. But in that case tourist attraction may wane.

A UNESCO report in the last decade observed that the World Heritage site of Macchu Picchu in Peru has become almost saturated. The people justly want a greater share of tourist revenues. They are forced to do so and are blocking roads to prevent tourists from going to the 'heights of Macchu Picchu'.

Sue Wheat in an essay, Sold Out in Guardian (London) on 22 May 2002, narrated how rapid growth in ecotourism affected indigenous peoples. "Earlier this year, 250 Filipinos were evicted from their homes.

Their lake-shore village of Ambulong, in Batangas province, was attacked by hundreds of police, who demolished 24 houses. Many people were reported wounded, four seriously and one with a bullet wound. Cesar Arellano, of Pamalakaya, a Filipino human rights organisation, said: 'The people are not leaving - they have set up camp. They are going to fight for their land."

The intention of the authorities was to clear people to make way for a major business venture - not oil, logging or mining, but ecotourism, which is growing massively around the world and is now backed by governments, world bodies and international banks.

This year has been declared by the UN the international year of ecotourism and this week, a world summit is being held in Quebec to consider the problems and potential for the fastest growing sector of the world's largest industry."

She went on, "Ecotourists are thought to spend considerably more than mass tourists and for debt-strapped developing countries, having people visit, look at things that require minimal investment and pay lots of money for the privilege, can seem manna from heaven. Nature is a money spinner. Ecuador earns over $100m a year from 60,000 visitors to the Galapagos, for instance, and Kenya as much income from its safari holidays. But the stakes are now getting higher and the dispossession of people from their land is increasingly associated with ecotourism.

The cases are widespread. In the Moulvibaza district of Bangladesh, over 1,000 families of the Khasi and Garoare indigenous groups face eviction from their ancestral lands for the development of a 1,500-acre eco-park. "We were born here and grew up here. We have been living here for hundreds of years . . . we will not leave this forest," said Khasi headman Anil Yang Yung in a public demonstration during a hunger strike in Dhaka last February. "We cannot survive if we are evicted from the forest."

It's time to work for awareness against ecotourism at a time when environmentalists and responsible economists are for sincere implementation of Forest Rights Act that acknowledges the traditional rights of forest-dwelling populations in India.

They have been unjustly treated by denying them rights to the lands and resources they use.

Several hundred million people in India are dependent on forests for various direct uses; a portion of them also live on forest lands, or are in settlements that are within or just adjacent to forests.