Rural Marketing Seminar: Go Rural, don't wait for your customer to urbanise

By Dhruv Tanwar
10 May 2008

Mumbai: The concluding lecture at the 2-day Marcus Evans conference on proactive rural marketing strategies was addressed by Arun Malhotra of Mahindra and Mahindra.

Malhotra talked about his extensive experience with the Indian automobile industry in marketing four wheelers to rural India. Speaking largely extempore, and not using any visuals, Malhotra captivated the audience to how rural markets can be harnessed, by paying attention to details and thinking at the micro levels.

He said, ''We can't put all categories of rural markets as one,'' while going on to explain how different rural markets have their idiosyncrasies by product, and by district. He said that 52 per cent of 2-wheeler sales come from rural India, while sales f two wheelers in Delhi over the same period have slid 20 per cent. ''Product life cycles and penetration is changing,'' said Malhotra.

Clarifying that rural markets needs ''low end variants'' developed to suit their market conditions and needs, Malhotra said that India is one, and there is absolutely no divide in product profiles. The only difference is in volumes.

Taking the case of the auto industry, Malhotra said that in the initial stages, automobile companies appointed dealers only in the cities, and rural customers were expected to come to the city to buy, if at all they needed to. Thereafter, the industry started operating ''into the market'', by sending a sales representative into rural markets on tour periodically. Given that this visitation format didn't work too well for business, the industry evolved to an ''operate from the market'' model, choosing to recruit at smaller upcountry locations so that representatives could operate ''from'' that area.

In later stages, network penetration dictated that the economies of setting up a showroom in upcountry locations were non-viable, so extension salesmen came along with local representatives selling some stock. They were later followed by smaller showrooms belonging to the larger dealers of the district or area. However, business did not pick up to the degree anticipated, and the industry realised the need for ownership, or the ''karambhoomi'' concept against the ''jagirdari'' approach that it had been using thus far. Once this realisation dawned, sub-dealers came into being, though they were ineffective to a large extent as dealers under whom they were appointed were keen to ensure that they stayed below them. Thereafter, direct dealers were appointed in upcountry locations.