MART KNOWLEDGE CENTRE

RURAL GAME CHANGERS

A Knowledge Series Initiative

A talk by Pradeep Kashyap, CEO, MART at EEMA

July 30, 2012

MART
A-6, 1st Floor,
Landmark Building,
Sector-2, Noida-201301
www.martrural.com

Good morning.

I would like to thank EEMA for inviting me to this event.

The theme Time for Change is perhaps most relevant for
rural marketing. With your permission I will take the liberty
of being a little provocative in my talk because my
intention is to make you sit up and seize the big rural
opportunity.
Can anyone guess how big is the Indian rural economy in
terms of size or share of the total economy? Just the rural
economy of India is bigger than the total economy of
Canada. It is a one trillion dollar economy. Rural
contributes 50% of Indias GDP. The 7,800 small towns
with populations below one million account for another
25% of Indias GDP. So Rural and small towns account for
75% of Indias GDP. The 50 top cities account for only
25% of our GDP but attract 100% of the attention of
marketers and event agencies. What an irony?

The reason for this is there is very little understanding

about the rural market. There are a number of myths
which stem from ignorance among marketers and
agencies. The first is that rural is a homogenous mass.
Nothing could be further from the truth. We have 28 states,
56 socio-cultural regions, 16 official languages, 4 major
religions and varying levels of literacy across states. Rural
India is the most heterogeneous market in the world. But
unfortunately activation agencies follow a mass population
approach using a van. This does not create the desired
impact and the client soon loses faith in the potential of
the rural market. Later in my talk I will share the concept
of strategic activation* and show how it is very different
from mass activation and can therefore achieve much
better results. The second myth is that rural is all about
agriculture. So if the monsoon is weak we conclude rural
demand will be poor. The reality is that 60% of rural
income now comes from the non-farm sector and
services. So demand in rural India is not dependent only
on the monsoon. The third myth is that rural is all about
product marketing. The reality is that services including
retail, banking, insurance, education and health contribute
more to rural GDP than agriculture or manufacturing.
The fourth myth is that there is mass scale migration from
rural and very soon most people will start living in cities.
The reality is very different. Sixty years after
Independence two thirds of the population continues to
live in villages.

The 50 top cities account for only 25% of

our GDPbut attract 100% of the
attention of marketers and event agencies

* Refer Appendix 1

Rural accounts for more than half the countrys sale of

FMCGs, durables, services or vehicles. If this be the case
then why arent more companies engaging agencies for
activation, awareness generation, trials and conversion.

There are many reasons. The first is that marketers themselves have little understanding or knowledge about rural
markets. Remember when they attended Business School
years ago institutes did not offer a course on rural
marketing. The other irony is that all consultancy firms give
strategy on urban markets only because their MBAs too
do not have knowledge on rural. It is like the health care
sector. 70% of our population lives in rural India but 80%
of doctors practice in urban only.

Do you know that besides my organization MART there is

no full-fledged rural consultancy organization in India that
can recommend distribution models, pricing strategy,
communication plans and other elements of go to market.
So when a company decides to enter the rural market it
often invites MART to conduct a one or two day sensitizing
workshop on rural marketing. Thereafter the company develops its plan of action.

The first step is to identify certain potential geographies

and then commission a market study to understand the
rural consumer, her purchase behavior, lifestyle, brand
usage and attitudes etc. Most research agencies in India
usenumeric western tools for measuring responses
whichare not appropriate when interviewing illiterate rural
people. The other problem is research agencies do not
have deep knowledge of the rural sector. So their findings
do not give much direction to the company on the go to
market route. This is where things slowdown. The point
I am trying to make is that it can take a company up to 2
years before it is ready for the activation phase. Agencies
like yours can help to cut short this waiting periodif you
have knowledge about rural andproactively engage with
the company during the planning stage of the activation
strategy. Otherwise your wait as a passive agency as it is
today can be very long and frustrating? At this stage the
question I would like to ask all of you is what steps have
you taken to acquire knowledge? For example how many
of you are aware of the Rural Marketing Association of
India, a knowledge body. How many of you have contacted
our association? How many of you have attended training
programs on rural marketing? How many have a copy of
my book on rural marketing, a standard text at every IIM
and premiere B-schools?

Let us now examine the approach of agencies to rural

activation. For years event agencies have recommended
van operation as the only solution for all rural activation
needs. Have we made effort to innovate new solutions?
Sadly the answer is NO. 15 years back I conducted a
national study of haats, the weekly markets and found this
platform to be appropriate for promotion. For the next 15
years agencies recommended haat campaign to every
client irrespective of the nature of product, type of
consumer or her shopper behavior. I think agencies will
have to play a far more proactive role in evolving game
changing solutions.

This brings me to strategic activation which by definition

focuses on unconventional and innovative solutions,
unlike the one size fits all van campaign. Strategic
activation goal involves not only targeted activation but in
addition designing last mile distribution models (like
Project Shakti that MART co-created with Unilever where
50,000 individual women from micro finance groups were
appointed dealers in the unreached <2,000 population
villages. Or the bicycle entrepreneur model we created for
Colgate where young men buy stocks from the nearest
sub-stockist and sell in 20 designated villages and 4 haats
on the basis of a permanent journey plan finalized by us.
Behavior Change Communication, Experiential marketing,
Public Private Partnership models are other aspects of
Strategic Activation. It also focuses on Affordability,
Accessibility and Awareness.

Let me explain how strategic activation works with the

example of Asha Project we implemented for Pepsi which
addresses iron deficiency among girls in the 10-16 age
groups. We tied up with the government ICDS and midday
meal programs to create awareness and focused on
EDUTAINMENT in schools where girls were specifically
targeted. We appointed Asha workers as Behavior
Change Communication agents in every village to target
individual households. They distributed free samples to
induce trial. We set up last mile distribution by appointing
entrepreneurs in the 2,000+ pop villages and linked them
to the companys last leg distribution. In other words we
addressed many aspects of marketing through an
integrated approach. A post evaluation research showed
impressive results -34% of target group tried the iron
fortified biscuit or puff and 95% of them made repeat
purchase. You will perhaps appreciate this strategic
activation approach has gone much beyond conventional
awareness generation to include behavior change and
distribution. This project won us the WOW Gold Award.
You all know better than me that BTL is growing over ATL.
In rural it is largely BTL because of limited availability of
electronic and print media. And BTL is your core strength.
So you have a great business opportunity provided you
enhance knowledge of the rural sector.

Strategic Activation goal involves not

only targeted activation but in addition
designing last mile distribution models.

Let us now see what companies are doing in rural. The

first fact is that nowadays the decision to go rural is taken
at the CEO level. Companies are therefore more serious
about their rural initiative. Let me give you the example of
Hero MotoCorp. Six years ago I was invited to address
their top management on the rural opportunity. The
audience included the Chairman and other members of
the Munjal family. They took the advice seriously and
acted on it. Just 6 years later they have 2500 touch points
in rural through authorized representatives of dealers and
1,000 sales and service outlets. The combined dealer
sales force in rural is around 10,000 people. Not surprising
a whopping 45% of their total annual sale of 6 million units
comes from rural where as six years back it was
insignificant. The story of Maruti is similar. Three years
back when they launched their rural initiative only 3% sale
came from rural. Today they have a workforce of 6,000
rural representatives who network with Pradhans,
Panchayat members, small businessmen and salaried
people in villages. Last year 22% of their car sales came
from rural. Cadbury, GSK, Marico, LG and a host of others
have a strong focus on rural now. It may not be out of
place to say that companies are perhaps more proactive
than agencies when it comes to rural. Till a couple of years
ago we used to follow up with companies. Now more and
more companies are approaching us themselves. They
are much more proactive now.
In conclusion I would say the time for change is here and
now. If you want to fast forward the rural business
opportunity you should become the change you seek.
My advice - acquire knowledge, become proactive and
embrace strategic activation. Go for it.
Thank you and God bless you all.

The time for change is here and now

My advice acquire knowledge,
become proactive and embrace
strategic activation.

APPENDIX 1
Strategic Haat Activation: MARTs Approach

Haat Selection Criteria:

Haats to be customized on nature of product, type of
consumer & shopping behavior. For example haats
selling categories/commodities like FMCG, Grains,
Appraels etc are suitable for corporate participation but
haats predominantly catering to vegetables/grains are
not to be prescribed for brand promotion & salience
Haats in > 5k population villages as these cater to
audience from 25 30 villages resulting least cost per
exposure
Haats attached to a permanent market for larger
footfalls

Selected with active participation of companys

distribution channel. This ensures catchment area is
directly fed by companys distribution system and there
is a buy in from them
Haat Participation Criteria:
Branded stall to be placed at the haat entrance
alongside category retailers. For example stall for an
FMCG client to be placed next to grocery/kiryana
retailers

Presence of dealer representative to handle product

queries and also book orders
Haat Day Planning:
Haat campaign to be restricted to peak hours. Non peak
hours to be utilized for village /feeder town campaign,
on route to haat
Fliers with perforated discount coupon and seal of
nearest dealer to be distributed to track response and
increase conversion

Contact: shivani.bhatt@martrural.com