Villages set to expand India’s consumer market

Market researchers are crisscrossing rural India as companies, domestic and foreign, compete for the country’s next, big emerging market.

Battling the heat and dust in this remote village, a market researcher showed up at farmer Abdul Rehman’s door, plying him with questions about which brand of shampoo, toothpaste, hair oil, television, stereo system and cellphone he uses.

Then the researcher asked Rehman, 35, something most companies want to know about the rural Indian consumer: “What new products do you want to buy in the next six months?”

Rehman perked up and said, “I want to buy a refrigerator, and my wife wants a microwave oven.”

Rural India used to seem like Mars to market researchers, but now they are arduously combing through the countryside to scrutinize the consumption habits and aspirations of villagers like Rehman. Their findings, gathered over the past three years, promise a new frontier that could transform the way domestic and foreign businesses look at the Indian market and could offer them hundreds of millions of potential consumers.

Already companies from South Korea’s LG Electronics to U.S.-based GE Healthcare are starting to tailor their marketing strategies and even their products to reach this rural frontier.

Rehman’s village, in the southern state of Andhra Pradesh, has no high school for girls, and most residents have bathrooms made of dried palm fronds. But hundreds of dish antennas sprout from thatched-roof homes. Rehman rides a shiny, black Honda motorcycle, watches soaps and pro wrestling on his flat-screen television, and has switched to a low-fat cooking oil after watching a TV commercial.

Analysts say that with rising rural incomes, new roads, better education, televisions and cellphones, India’s sleepy countryside of 740 million people is ready for takeoff.

“Rural India is the real emerging market. A number of favorable factors are falling into place now. It’s going to catch everybody by surprise. Many will say they were not prepared,” said Pradeep Kashyap, who heads a consultancy called MART and is regarded as the guru of rural marketing in India.

Tailoring of products

About 70 percent of India’s villages are now connected by all-weather roads; more than 200 million villagers use cellphones; and 60 percent of rural homes have electricity connections.

According to the National Council for Applied Economic Research, rural India accounted for about 22 percent of computers sold, 29 percent of refrigerators, 32 percent of cars and 46 percent of televisions. Average rural family income is expected to rise by 27 percent in the next five years, most of it from non-farm sources.

“For a long time, researchers felt that researching rural Indian consumers was not worth the effort,” said Ashok Das, managing director at Hansa Research India, which specializes in studying rural India. His company jettisoned urban-centric research tools and developed a new grid to map and measure rural aspirations. “Understanding rural India is no longer difficult. Sampling is easier because census data and voter lists are now available online. You can even do phone-based interviews and sampling.”

As marketing efforts in big cities near the saturation point, many companies are reworking their strategies to tap rural markets.

“Earlier, the villagers traveled several miles to the nearest market town to buy our TVs. But six months ago, we began displaying our TVs, refrigerators and washing machines in the rural grain markets where villagers come to sell their harvest. They have cash in their hands at this time,” said Y.V. Verma, chief operating officer of LG India, a multinational company that sells consumer appliances. He said that the urban consumer mostly buys on credit but that the villager pays cash.

Companies are also tailoring their products for the hinterland.

Last April, GE Healthcare launched a hand-held, portable heart-rate monitor at $500, a fraction of the price of its large, premium machines.

“We predominantly sold products made in the Western world, but could I take the same thing out to rural India? We have to bring health care to the masses at the prices they can afford,” said V. Raja, president of GE Healthcare South Asia.

‘Sachet revolution’

In the mid-1990s, Indian companies began packaging shampoo in small, plastic single-serve sachets for rural consumers who could not afford to pay for the whole bottle at one time. In what came to be called the “sachet revolution,” products such as toothpaste, hair oil, skin cream and cooking oil took on the same packaging.

But researchers now say the rural consumer has moved beyond the sachet.

“The war for the consumer’s wallet is far more intense now with so many brands available across categories in India. Where is the next huge wave of growth going to come from? The small-towners and villagers are watching the same movies, soaps and product advertisements as the urban consumer now,” said Amit Rangra, associate vice president of the advertising agency JWT, which set up a separate rural business team seven months ago called Rootmap.

The agency conducted a nationwide sample survey of rural markets last year. “Until recently we had data that told us about what the villagers had access to — drinking water, roads, electricity, a bank account or a post office. But now we want data that tells us about their aspirations as well,” Rangra said.

Rangra’s team learned that the male in the village family is still the dominant decision-maker. But rural consumers also like to emulate the brand that the village chief uses — they are not blinded by celebrity endorsements. And more and more people want non-farm jobs, but they want to hold on to their family farmland, too.

A few years ago, an advertisement for a car emphasized that it was tall enough inside to accommodate a villager wearing a turban.

These days, Rangra said, that sort of advertising is no longer necessary, with products more likely to be marketed using aspirational images of young people wearing Western clothes.

Rama Lakshmi has been with The Post's India bureau since 1990. She is a staff writer and India social media editor for Post World.
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