Rural Marketing – 6 Laws to success

Introduction: I have been pondering over the subject matter of “Rural Marketing” for quite a while now. It has almost been eight months and over since I picked up my first book on rural marketing and got thoroughly confused. But, ever since then, a closer look at the subject matter revealed to me the importance it has in the present day context. During my discussions on the subject about six months back, one of my colleagues commented “I feel sorry for the rural folk, that they are differentiated by the marketing people. I feel that they are left out, while the urban consumer keeps on getting bombarded by message after message and product after product from marketing. The rural urban divide is most visible here as well.” Well affluence hadn’t hit the rural guy hard. Or is it that the marketer doesn’t know the rural affluence levels? The marketer seems to know practically nothing under the given circumstance. It was only when I started reading about ITC and its business strategy that I got very interested in this phenomenon called Rural Marketing. I am really awe struck at YC Deveshwar’s keen sense of doing business in the rural areas. Well, all players who come to India with the hope of selling their “taboo” to the one billion and odd people living around, find that they are all scattered in small groups and they don’t speak the same language. They also watch different TV Channels, read different news papers, vote for different parties, are employed in different means of livelihood, have different incomes during different parts of the year and so on and so forth. In short, one agrees fully that marketing to these guys is not at all the same game as that in the developed countries. Firms that have got global knowledge of marketing thought that they were better at it, but did not really get the point which we call “diversity”. A bit of history: The failure of traditional practices of marketing with rural folk of our country, have led many multinational companies to alter the traditional 4Ps of marketing to suit to the rural areas. This over time has come to be known as Rural Marketing. Innovations were made in the areas of distribution, packaging, branding and brand communications. The sachet revolution in the shampoos, stands tall as a classic example of product adaptation to rural markets. Similarly, the success of brands like Colgate, Dalda, Surf, Nirma, Amul amongst others led both academicians and the industry experts to consider the adaptive practices as a separate branch of study. But, yet the penetration that these companies have achieved through a few brands is very little. The hinterland still remains unconquered and the saturation of the urban markets is pushing most multinationals towards product adaptations for the rural markets. Present Scenario: One might get into the misconception that today that professionals are better off in doing marketing jobs. What with business education and with investments flooding in from global capital markets, one might easily get the feeling that its all there and we need to just say “Howdy Pardner?” to the average farmer. Believe me, the job is tougher today. The environment of carrying out business in the rural areas has become more complex, rather hostile. Look at what happended to Reliance Fresh retail outlets in Uttar Pradesh. Surfacially it might look as if it is the protest of a few mandi workers. Does a government succumb to a few protests by mandi workers and middlemen and order the closure of the outlets of an influential business house? All over the country, the industry is meeting the resistance of the rural folk, be it tribals occupying the native land or be it farmers who are unwilling to part with their traditional occupation (which they consider as sacred). The issues they fight on range from simple neglect of their rehabilitation to complex things such as rights and ownership of land and the minerals subsumed in the land. Some might call it a political gimmick, but I believe it to be true angst against the corporate practices that is taking the shape of violence in many cases. The support of Naxals in areas like Orissa and Jharkhand seems only incidental and the rural folk seem to be equally capable of showing destructive force even without their help. A small look at the statistics will tell us the whole story. Naren Karunakaran with Ashish Gupta and Rajiv Bhuva, reports in an article in Outlook Business, dated December 15, 2007 that “over 21 million people have been displaced from 1951 and 1990 in various projects across the country. Over 8.54 million were tribals, and of these only 2.12 million have been resettled so far – a poor record.” This means that a complete lack of trust exists in these areas on the industry, which further means that any brand backed by these industries is going to be seen in a suspicious fashion. The old style missionary model to show-case social responsibility will no longer work in these areas. What is needed is a solution to the problems being faced by people in the rural areas because of industrialization. The Hypothesis: The only way out of this conundrum is to view the “Exchange” process as involving two distinct transactions and not one. The “Buying” transaction and the “Selling” transaction. The hypothesis that one has to keep in mind is that the firm has to find out ways and means of participating and adding value to BOTH THE TRANSACTIONS instead of one. The following laws that I have framed help the firms to do the same thing. Through out I have used ITC as an example to show how these laws are going to lead to ultimate marketing success. Laws of the Rural Marketing Game Law 1: Don’t give’em a fish! Teach’em fishing! That is where ITC scored better compared to others. ITC used its e-Choupals to provide valuable information to farmers on the rates in the Mandi, the weather, knowledge related capsules on irrigation facilties and latest farming technologies. It also spend time, effort and money, in creating a network of farmers who can come together to make informed decisions and thereby directly contributed to their profits. Farmers are reporting more affluence in the villages in which the project has been carried out. This affluence has naturally pleased the farming community and is making them feel more contemporary, because of the usage of the computer and the internet. They feel they are a part of the contemporary world which resulted in a positive attachment with ITC as a corporate entity. Now, after the success of this model and its popularity with villagers, ITC has started the Choupal Sagars. The rural equivalents of gigantic retail outlets. It is surprising that the farmers all over the country protested the entry of Wal-Mart and Reliance Fresh, but have quitely accepted Choupal Sagars’. This is why “Corporate Brand Equity” become important for the rural markets. To trust you, they must believe that you are genuinely interested in their welfare. ITC silently demonstrated this fact through its e-Choupal and Choupal Sagar strategy. Instead of giving them a fish, they taught them the technique of fishing. Now, they are selling fishing rods to the farmers and buying the fish caught by them. Not all company’s can do this, but if you have to survive in the rural markets, then you need to figure out how you are going to participate in that community and add value to the lives of people. Only then, people might be willing to buy from you. It is hard to believe that, people in these areas would buy Tata’s cars, unless the Tata Group solves the local problems and adds value to the local community. Short-run push-to-the-rural-bugger strategies will no longer work! Law 2: Don’t block ‘em! Give a piggy back! Ever wondered what are sold in the Choupal Sagars. Right from farming equipment and ITCs’ own brands, ITC is letting others ride its distribution channel. Result, better shelf space utility, more customer value and a chance to partner strategically with some of the non-competitive brands. Ultimately, you can always claim that you add value to the customer who comes to your store, instead of posing as though your products are superior. This attitude is tough to develop, but that is what a “Retailer” really does. Many analysts feel that this is a dangerous trend, but one has to remember that one cant make all those things that the customer wants at the price he/she wants it. So, forming partnerships with others who can make them and using the same distribution channel to reach the customer, not only gives cost advantages to both the firms, but also allows the customer to believe that ITC is not pushing its own brands all the time. Law 3: Keep sourcing and selling “markets” separate Many organizations may find it lucrative to buy wheat from the farmers, process it into “atta”, brand it and sell it to the same farmer. This, might seem a very logical choice, but is dangerous. The seller of wheat is also, no doubt, a buyer of “atta” but, (s)he may not want to be your customer. If you offer to buy wheat AND sell “atta” to the same target group, your motives become very suspicious. Thus, selling farm equipment and house-hold appliances through Choupal Sagars is not as risky as selling finished atta or other types of farm related finished/prcoessed products. Keeping the markets for sourcing and selling as separate as possible is therefore a tricky job and the marketer has to be careful not to fall in the “consolidation trap”. Law 4: Integrate Logistics Logistics of your firm is invisible to both the buyer as well as the seller. You may use the same truck to ship agri produce from the farmer’s land to your factory and then send it back to unload a cargo at your retail-store. Better, if a farmer brings in his load to your factory, pay him to take back a supply of products to be delivered at your stores on the way home! Logistics & Reverse Logistics is going to result in a low-cost distribution network, which adds value to two groups. First, it adds direct value to the customer in terms of lower prices. Second, it also adds value to those who are piggy-backing on your channel because of the difficulties involved in building capacity of intermediate storage and transportation. The value addition for piggy backers creates a sort of an interdependence which is tough to break. Law 5: Frame the seller and the buyer It is essential to develop two profiles for the same person when riding on such a strategem. The buyer profile that details on what the rural folk are buying, where are they buying it from and why are they buying it there, would form the basis for taking well-informed decisions on what you are going to bundle into your channel. One has to always keep the “consolidation trap” in mind before deciding on the product mix. The seller profile, is also an important document, which keeps track of the earning patterns and income rises of those who are participating in the sourcing process. When both the profiles are combined, then a wholistic and accurate picture of the individual emerges which helps the firm to design suitable strategies to keep the buying and selling “markets” as distinct as possible in the minds of the people. It is also possible, if correct data is captured and processed, to achieve a cultural fit of the goods and/or services being exchanged between these two markets. Law 6: Let’em know that you are adding value on both the ends! Branding is a key issue in doing the above. The product/services you offer at the sourcing end when you are trying to buy rural produce, must be co-branded with the products/services you offer at the selling point. This lets the buyer/seller to connect the two faces using which you are adding value. This association is important because the investment that has gone into building trust with the community has to be realized in one or the other way. The relationship thus developed between the firm and the market, will be stronger because of this “dual” participation in the community. Nostalgically, this is why the “trading” communities that used sea-routes to ship goods across international borders thrived in their businesses. So, there we are! At the end, let me say, that this game is not upto all companies. Small firms and big firms alike have to figure out how they are going to put up their “dual” faces to the rural mass of the developing world.

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An Ethical Evaluation of Stealth Approach to Marketing

“Stealth” has become another approach that is attractive to many players in the Marketing arena. Maybe it’s the use of the word “stealth” or it’s the buzz that has been created around this word, marketing organizations across the world are calling it the new Mantra that could work magics. The same thing was said about WoM communications, Integrated Marketing Communications and Advertising, when they were first introduced. But yet the “stealth” approach has to be applied correctly, without which there might be trouble with the approach. How? Please read on….

Any communication must have three things. First a “Sender”, second a “Channel” and third a “Receiver”. For a communication to be effective the receiver must trust the sender as well as the channel through which the message is being conveyed. In most “stealth” approaches marekters cover up the “Sender/Source” of the message and use a neutral “channel” which the consumer cannot link directly to the source. Take for instance “Word of Mouth” communications. WoM has great effectiveness because the channel (friends, community members, etc.,) cannot be directly linked to the source. Or rather, the source of the message is confused with the channel. The primary question that one has to consider is the effect on the consumer when the link is ultimately made.

For instance, I might videograph the different uses of my product and publish them on popular web video sharing sites such as You Tube. In the entire video I might not say anything about my company and its intentions. The video appears to be plain, harmless and devoid of any marketing connection to the source. It is available to be viewed by milliions of users and it can be shared across a community, which creates a buzz about the product and its uses. So far so good. What would happen if the buzzers come to know that they have been subject to a marketing campaign without their knowledge? When viewers share videos with friends, family and other buddies online, they do so without a commercial intention. What would happen to these users if they come to know that the videos they have been sharing with each other have been made with some or the other commercial intention?

Let us investigate the question with a Deontological perspective in mind. Here the intention of the creator of the video and the one who shares it do not match with each other. The sharer of the video has been kept in darkness about the creators intentions in making and uploading the video. Therefore, from a deontological perspective the practice might be unethical. If the sharing of the video has resulted in increased consumption of the intended (by the creator) product/service then even Teleologically the approach is inconsistent with ethical practices. That is to say that the sharer of the video was not fully aware of the consequences of the action that he was undertaking and hence the creator of the video becomes logically responsible for what (s)he has done. The real danger with such an approach of “stealth” is the probability that is associated with the “bad” usage of the technique. In a world which is full of “myopic” and “quick-fix” solution providers, any form of “stealth” is going to be a very risky approach.

From this perspective I would like to say that “stealth” may not stand in the long-run as a strategic approach to attract, retain and delight the customer.

Will Stealth Create the Wealth?

You are sitting at a Café Coffee Day a tall smart guy walks carelessly to your table drops his mobile phone carelessly on the table and orders for a coffee. You notice that it’s a very famous brand that has been recently released into the market. You look at the brand and you look at him. He gets a call and he says into the phone “Wait a minute! I will send you the file right now! Don’t let this account go off hand.” He opens his cell phone to reveal a big LCD screen. He keys in the mail and sends it across to him, while you look at him with your eyes wide.

He smiles at you and says “Great phone! Keeps me mobile all the time. You know this sales job! You gotta collaborate fast and work. The guys at the desk need info fast, you delay the info and you lose the account. But with this I can collaborate with my team as fast. I have never lost a deal since I have this. Its expensive but you can get your investment back by improving your collaborative ability.” He sees you are interested and asks “Wanna see how it works?” you nod your head and he goes on carefully explaining the features of the product and the services offered by different service providers. What’s more, he sends an email to you giving you the address and telephone number of the dealer and the service providers right away from his phone.

You go to the website indicated in the e-mail, which gives you more product details. The website offers you a free gift if you forward their page to ten other friends who might be interested in the product. You fill the names and get your free gift. You just cant believe your luck! Just a chance meeting earned you a small prize. You shoot off a mail to your buddies indicating your experience and you keep talking about it for a week. Congratulations! You have just been a part of the “Viral Marketing” campaign by a very smart marketing organization!

What I have just described is a technique of “Under Cover Marketing” or “Stealth Marketing”. The very hot buzz in the Marketing Street. The one whom you have met is not the ordinary sales guy, who walks up to you and irritates you with his manners and pleads you to listen to his message. Then, either out of sympathy or because you have no other choice, you accept to listen to his message and then decline to buy whatever he is trying to sell you. This chap is one smart guy. He knows how to identify the right prospect, what exactly should be the set up that would interest him/her, where this prospect usually could be found out, what would lure him/her into a conversation and so on. Apart from that, the Internet and the company’s advertising complete the campaign and convert the interest into buy. Whoever said that in the AIDA model (The standard model followed in personal selling) all the stages have to be carried out by a single sales man at the same instance of time.

The guy at the café gets your Attention to the product and raises your Interest, the website maintains your Interest in it and through the email contact the organization can trace that you are the guy who met their sales guy at the café and may give you a preferred customer status and offer you a special offer that stimulates your Desire to buy and propels you towards Action. And in the entire game, the consumer is left with the feeling that a “Chance” meeting has given him/her a golden opportunity. No personal selling effort has ever been more successful.

The type of approach followed above, can be effective in the short-run for organizations. The question is will it lead to long-term result? Will it stand as a standard technique in the industry based on which organizations can build their “Brand Equity”? Or is it just another “fad” which would stay for a while and leave the market place. To answer these questions we have to examine a few facts related to marketing and the perception of it in the society.

The first issue we need to examine is “Why this approach?” There are several reasons why such a “stealth” approach has to be adopted by organizations. First, in general the society has grown skeptical about the traditional marketing communications which come through mass-media[1]. Second, the public has in general lost interest in commercials, which is visible in the “zipping” and “zapping” behavior of consumers while watching television and reading newspapers. Third, the media explosion has made the audience fragmented across several networks and channels[2]. Fourth, growing consumer awareness about marketing activity has lead to law that governs advertising and the promises that are made to the consumers through advertising. Fifth, technological developments such as the invention of “Digital Video Recorder” and brands such as TiVo have furthered the difficulties of marketers in reaching the target audience with marketing messages[3].

Thus from the developed world there have been a lot of alternative techniques for reaching the consumer with marketing messages. Non-traditional approaches like “Word of Mouth”, “PoP Sales messages”, “Buzz Marketing” etc., have been made use of by different marketers and brand builders over a period of time. Belonging to the same category of responses is “Stealth Marketing” or “Under Cover Marketing” or “Viral Marketing”. The primary motive in all the three approaches (which might vary slightly from each other) is hiding of the information from the consumer that the communication that is happening is actually a marketing communication[4].

The second issue we need to examine is “Will this approach stand?” There has been a lot of theoretical support from several researchers for this approach[5]. Moreover the increased use of this approach by marketers with some success has shown to the marketing community about the usefulness of this approach. Therefore, we can see that more and more organizations are devising one or the other form of Under Cover Marketing techniques from time to time. The increased use suggests that this approach is preferred by the industry and hence would stay for a long while to come. Moreover, the approaches cannot be copied, since the very definition of this approach says that one has to hide the marketing intent behind the messages. Thus, a given technique once used, cannot be used again in the same way at the same place with the same type of consumer again and again.

The third issue we need to examine is “Will the consumers love and accept such experiences?” The impact of stealth marketing on consumers once they come to know that they have been subject organized marketing communication has to be estimated. The consequences of such actions, when positive would lead to increased “trust” with the customer. Negative reactions and responses of consumers would lead to consumer activist organizations taking up this issue not only to increase consumer awareness but also to bring forth the technique under the cover of regulatory framework. Thus, the marketing community would be trusted lesser than before and would be forced to employ resources in search of newer approaches to gain the consumer back into the “trust area”. The experiences of organizations are varying in this aspects. Some organizations have experienced increased trust with the consumer groups while some have had to apologize sheepishly for such actions. For instance Burger King in the USA had to stop its “Cock Fight” campaign because of consumer activist action[6]. The issue needs serious examination as the number of cases “for” and “against” under cover approach are piling in every day.

References:
1. “The image of marketing – splendid… or plain awful?”, Business World, 1st August 2005, Pp. 44.
2. “Marketing to the No Logo generation”,Nirmalya Kumar and Sophie Linguri, Business World, 1st August 2005, Pp. 68.
3. “CSR and Marketing Communications – A case of stealth marketing”, Roy Langer, scholar.google.com, Pp. 4.
4. “Undercover Marketing – The method which lies beneath”, Karolina Stenberg and Sabina Pracic, Bachlor’s Thesis, Jonkoping International Business School, Pp.24
5. Langer, R. (2003). New Subtle Advertising Formats: Characteristics, Causes and Consequences. In Hansen, F. & Bech Christensen, L. (Eds.), Branding and Advertising (pp. 232-265). Copenhagen: Copenhagen Business School Press.
6.“Undercover Marketing – The method which lies beneath”, Karolina Stenberg and Sabina Pracic, Bachlor’s Thesis, Jonkoping International Business School, Pp.21

Long Desired Move

I had thought about this long back. Wanted the world to know about what i think and do in marketing. Formal research is alright, but there are several issues that require informal thinking before formalizing them. Some ideas cannot be expressed in formal language though and i wish to share them on this blog. Let me see what i would be doing in the near future.