Thursday, March 01, 2007

Rural Marketing

This term we have this very interesting course called Rural Marketing. An external consultant who does a lot of work in the rural sector is handling this class. As part of this course, we go to a village and spend time with the people there trying to understand the customers there.
For a lot of people, this will be the first time in a village. For me, it will be a refresher. I was born in a village, and my grand parents and relatives still live in a village. I've spent long summers at my mum's village and have had fun. Of course, that has been a long time back. These days a trip to my village, usually involves just short visits to my relatives' place. It will be good to see if things have changed and how things have changed over time.
Coming back to the course itself, we were given an example of how powerful the rural markets can be.
Did you know that less than 22% of the urban women in India use lipsticks? Did you know that more than 11% of the rural women in India use lipsticks? What does this mean to a marketeer? Well, considering that Urban / Rural divide is in the ratio of 30% to 70%, it doesn't take a rocket scientist to figure out that 11% of 70, is bigger than 22% of 30!

Surprised? Well, thats not all.

Think of all the lipsticks brands you know.. None of these are the market leaders in India. Not Lakme, not L'Oreal, not any other of the well known brands. Raja lipsticks have the largest market share in India. This brand has 79% of the Rural market. International brands would kill to get that kind of a penetration in the 1 billion population!
Apart from this, here are some other aspects of this lipstick market. The application factor of lipsticks by Urban women is 1.1 (that is.. on an average, they apply 1.1 layers on their lips). Rural women on the other hand have an application factor of 2.5 (2.5 layers on their lips). This number directly translates into higher usage of lipsticks.
So, what people may consider as a negligible market on first sight, is bigger than what you might actually be in! I guess this is an example of the Bottom of the Pyramid concept by Dr. C.K.Prahalad.

On a personal note, I think I'm driven more to marketing because of the personal traits I develop. The more I get involved with marketing, the less judgmental I become about people. I become impartial and learn to put aside my personal opinions about their habits. I guess it's a way to develop an attitude of "live and let live" and learn to see opportunities in different habits! A good example would be this whole lipstick deal. Urban people buy expensive ones, but try not to make it glaringly visible. Rural people buy expensive ones (expensive to them), and they try to make sure that it's seen. Is there one right way to use lipstick.. probably not. Is there opportunity in the alternate way of doing things.. definitely yes!

Edit : The best way to learn to be impartial about market opportunities is to probably read the Harvard Business School case on ODC. ODC has invented contact lenses for chicken, and shows what a huge potential there is for it! (Yeah, I'm sure you're wondering who the heck would want to buy disposable contact lenses for their chicken.. but trust me, you'll change your mind after reading the case)



Blogger Siddhi said...

Yeah, but because the rural population is distributed widely, isn't it more expensive to setup the distribution network to reach them?

If I set up a distribution outlet in a village of 100 people, I'm only reaching 11 customers. Plus the cost of getting the goods there.

But, if you have good distribution in the metros, you reach all the urban women at a lower cost.

5:56 PM  
Blogger pratima said...

Wow! this is really interesting!! Now i feel i shudnt have dropped this course :(

12:02 AM  
Blogger Rhapsoder said...

Yeah Siddhi,
Definitely it costs more to reach the Rural Markets. I think most of the markets today are reached through partnerships. Basically, share the burden of reaching the masses. ITC and HLL probably have the widest reach and most companies are using their distrib. channels to reach the masses.

9:17 AM  
Blogger Siddhi said...

Would be interesting to find out what distribution network Raja lipsticks is using

2:01 PM  

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