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Source: Times of India
Dated: 06-12-2010
Namrata Singh & Rupali Mukherjee TNN

‡ !emand for top-of-the-drawer FMCG

products is no longer restricted to
urban India. The rural consumer has
emerged as an important cog in the
sales growth of premium offerings.
Clever pricing, rising aspirations and
new marketing mantras are driving this
trend
‡ ºith rural consumers warming up to branded
products, the urban-rural divide is fading away
faster than one can imagine. There is now very
little difference between the aspirations of rural
consumers and their urban counterparts. Certain
growth statistics have shattered the myth that the
rural consumer is content with unbranded or
mass-end products alone and gives a strong
indication that rural market consumption has
picked up and is accelerating faster than urban
markets. This has led to their changing their
consumption pattern.
Dove shampoo, a premium-end product,
reported a growth of over 100% in the
rural market during January-October
2010 over the same period last year. In
fact, Dove grew faster than its mid-priced
cousin, Sunsilk shampoo, which reported
a growth of 14% in rural India during the
period. So it is not just mass brands like
Lifebuoy, Nirma or ºheel which have, for
decades, met the needs of rural India. Take
a look at the growth numbers of a beauty
care products like Pond·s ºhite Beauty
and the figures are mind-boggling. The
brand grew 4,200% in January-October
2010 in rural markets over the same
period last year.
‡ rlthough analysts explain that the high growth
is due to a lower base and that actual sales
number would be smaller given the recent
introduction of the brand, one cannot overlook
the fact that there is a demand for such
products and marketers can no longer
underestimate the aspirations of the rural
consumer.

´Gone are the days when the rural consumer

was content with using mustard oil and plain
soap. Today, he/she is seeking special branded
products for daily skin and healthcare needs.
Rural consumers across income segments are
showing a marked propensity towards
spending on premium high-quality products,
which are backed by strong brand values,µ says
Sunil Duggal, CEO, Dabur.
‡ 0or instance, take food products. Not only
has the demand for cream biscuits gone
up in rural markets, the sale of instant
noodles, too, is growing nearly twice as fast
in the rural market compared to the urban
one. ºhat·s more, one in every six rural
buyer of hair dye now uses colours other
than black³something, which would have
been dubbed ´indulgenceµ a decade ago.
Even seemingly urbane brands in
categories like deodorants and fabric
softeners are said to be growing much
faster in rural India than urban, says a
study by The Nielsen Company.
‡ ´Variety biscuits (creams, cookies) are growing
significantly faster than glucose even in rural markets.
They are taking away significant consumption from
glucose biscuits,µ says Vinita Bali, managing director &
CEO, Britannia Industries. rccording to a retail audit, the
share of glucose biscuits in overall market has changed
from 30% to 26% in the last 18 months. Clearly,
consumers are valuing superior quality and better delivery
in product experience and are willing to pay a higher price
for it. The trend particularly serves as a wake-up call for
those marketers who still do not have a deep rural reach.
It is also broad based, cutting across categories. The year-
on-year rural growth of premium soap brand, Cinthol
Original, during rpril-September was higher this year at
around 28% as compared to 12.5% in the corresponding
period last year. Similarly, the rural growth of mosquito-
repellent brand Good Knight coils was almost double that
its urban market growth this year.
 Rural spending may jump to $100bn
Lifestyles are changing across India and with economic growth and
increasing awareness, the rural-urban divide is getting blurred. There is
greater homogeneity and demand for high-quality products, and consumers
in both rural and urban markets are aspiring to live better, eat healthy and
have a better tomorrow,µ says Shivani Hegde, general manager (foods),
Nestle India.

ºhat·s fuelling this trend is a steady growth in income level in rural

India. Thanks to a spurt in commodity prices, employment generation
schemes and fiscal sops announced by the government, rural consumers
today have more money in their pockets. Nielsen pegs the opportunity for
retail spending in the next 15 years at $100 billion. rt present, the rural
market is worth approximately $9 billion in consumer spending in the
0 CG space annually. 0ood categories are expected to drive the bulk of the
additional $91 billion into the marketplace by 2025.
 rnd it·s pricing, which is key: The average rural
consumer may have become brand-conscious, but
he/she continues to be value conscious. Her
aspiration levels have risen, but she wants her
brands at a certain price point. Companies, which
continue to offer products at low-unit price points
(sachets), are also graduating to other price points
like Rs 5 and Rs 10.
 Hence, Godrej Consumer Products (GCPL), whose
Cinthol soap regular was available at the lowest SKU (stock keeping
unit) of Rs 23 in Tamil Nadu, has decided to introduce a smaller
SKU of Rs 6, especially for rural markets. The plan worked for the
brand. rccording to Tarun rrora, executive vice-president
(marketing), GCPL, the rationale behind introducing this offer was
that although people in smaller towns aspire for a brand, they
cannot afford to buy it because of the high price point. However, at
Rs 6, the product was within their reach. ´If we look at categories
like soap, they have penetrated deep into the hinterland. But there
are a number of opportunities in the hair colour and the household
insecticide categories. Introduction and focus on smaller SKUs has
been one of our strategies to increase our thrust in the rural
market,µ says rrora
 rccording to Hegde of Nestle, products may
need to be adapted to meet the specific needs of
different segments of consumers as affordability
varies across the income pyramid. ´Take the case of
aggi. The two-minute-noodles is a favourite across
markets and the Chotu aggi at Rs 5 makes the
same high-quality product affordable to many more
consumers,µ she says.

Similarly, Dabur rmla is available in a Re 1

sachet and Rs 10 pack, while Dabur Red toothpaste
is available in a Rs 5 SKU (stock keeping unit).
 ew strategy
0or nearly half of the largest 0 CG categories, rural India now contributes
more to their growth than urban India. In a bid to fan this new-found rural
consumerism, fresh strategies are being formulated to connect with a more aware
consumer. Dabur, which draws half of its sales from rural and semi-urban
markets, has moved beyond traditional media options like radio, television and
cinema, and entered into a direct engagement with the consumer with special
initiatives like a rural beauty and talent contest with Dabur rmla hair oil.

The company took Dabur rmla·s association with beauty a step further
with a rural beauty pageant christened ¶Dabur rmla Sundar, Susheel, Yogya
Pratiyogita, rb Banke Dikhao Rani·, which also sought to empower women in
rural India. Direct engagement through non-traditional media like haat activities
enabled Dabur to provide rural consumers an opportunity to experience Dabur
products. Dabur already has a strong rural footprint with a pan-India network of
over 3,000 stockists and super stockists.
 This year, Hindustan Unilever (HUL), which is considered to be the
pioneers in terms of developing markets in rural India, launched a rural
marketing and activation initiative ¶Khushiyon ki Doli· in three states³Uttar
Pradesh, rndhra Pradesh and aharashtra³through which over 14 million
consumers would be contacted in over 35,000 villages. The main objective of the
campaign is to reach out to remote villages with HUL brand messages and to
engage with consumers to rapidly change brand adoption metrics.

This year, HUL has also set itself a target of tripling its rural direct
coverage by adding 500,000 new retail outlets in direct coverage in rural
markets.

Similarly, Britannia is putting more emphasis on interaction and

engagement with consumers, and on understanding them as people ³not just
as biscuit consumers. These interactions provide new insights and learning
which are harnessed to shape offerings and communication.
 Nestle claims that its growth trajectory has been
good across the portfolio because the company has
immersed itself in the consumer's life and understood
their specific needs. ´Of course, as we go deeper into
the heartland, the nature of markets and buying habits
could still be very different from other markets.
Therefore, increasing our market penetration will also
require innovative thinking and non-conventional
routes to markets,µ says Nestle·s Hegde.
Nestle·s aggi, too, has adopted routes such as
mobile vans, product demonstrations and
unconventional but relevant outlets like vegetable
vendors for stocking its products.