Innovation in Approach to reach the Bottom of Pyramid

We all know that there is "fortune" at the bottom of pyramid, as rightly mentioned by Mr. C.K. Prahlad referring to rural markets as early as in 2004. The definitions and connotations may vary. Some may call it Non-Urban, some call it 'STAR' - ( Small Towns and Rural) etc. The Market size estimations also vary. In order to avoid bias towards any company, I am taking the facts from a well known Market Research firm, IMRB International. It estimates that Rural India contributes 70% of India's Population, 56% of Income, 64% of Expenditure and 33% of Savings.

[ Inference : You can see it , You can estimate it , You cannot ignore it -- Basically, its the Rakhi Sawant or Poonam Pandey of Indian Economy where everybody talks about them but dont know what to do of them]

Just to corroborate it with facts - In 2010, when world was still haunted by the ghosts of recession of 2008, the Largest order of luxury cars in India came from villages of Maharashtra: 250 Mercedes and BMWs sold in Kolhapur, Aurangabad and neighbouring areas.

[ Myth Busted : Rural India is not poor. they can buy cool and luxurios things]

Many companies from various domains like FMCG, Autombile, Tele-communications etc know this and hence have taken steps to capture it but nobody has been able to tap it completely. It is like all of them are trying to bell the cat. I believe it has more to do with Approach then Product and Reach (Distribution /Place). My focus for the blog is that this approach will make huge impact in the consequences of Marketing Mix for Rural India including Product, Price, Place(Distribution) and Promotion.

Approach: In 2012, Maruti played a masterstroke in reach and creating connect. Maruti with its mobile theatre, a Tata Van ,with 18 seats & split A.C. used to roam around villages screening movies with identifiable characters like Bimla, Dinkar, Choubey ji etc.

A simple plot which revolved around how rural Indian gets aspirational with Car and how it impacts lives of others in the villages.And there is a comic who cracks some jokes and mimics voices of Amitabh Bachchan, Shatrughan Sinha etc, after which he conducts quizzes and gives the audience cool stuff as prizes. The audiences are Sarpanch, School Teachers and respected individuals of their society who in turn act as Key Opinion Makers. In fact, it ended boosting Maruti Suzuki's sales in Rural Markets to 8 times.

Year        Rural Sales % contribution to Total Sales

2007-08  3.5%

2012-13  28%

That also gives the ROI. Lets not just jump to conclusion so early with just one example. HUL has done it again after the Lifebuoy Kumbh Mela Rotis (In case if you have missed the story, please follow the hyperlink). HUL runs Bihar's most popular Radio Station - 'Kan Khajura Tesan' / 'Centipede Station'. Infact, it reaches places like Gosaidaspur where no FM Stations reach.

How it works : Any mobile phone user needs to give a missed call to a specific number also listed on the back of HUL products and they will give a return call playing Kan Khajura Station for 15 minutes. Besides playing entertainment programs, it plays advertisements for HUL products.

Impact: HUL has stopped advertising on FM radios in Bihar since it sees better reach on its own radio station. The biggest advantage vis a vis any other Media Channel is that HUL knows its audience which it can use it for its customer profiling etc. Having acquired 5 Mn + subscribers, and interactions with about 1 lakh consumers everyday, HUL has about 25,000 hours of engagement daily with consumers in Bihar. And the company says it has more than 26 million ad impressions till date. This has been achieved in Media Dark villages with one of the most primitive form of media entertainment. It has received 16 Mn + missed calls in 4 months and, by the end of the campaign, brand awareness scores for some of its brands like Wheel had increased 25% and its sales jumped 3 times in the region. Having much bigger bang for its buck, HUL has plans to reach rest of the BIMARU states (Bihar, Madhya Pradesh, Rajasthan and UP).

There are many facts that are directed towards intelligent investment in approaching the customers. In Telecommunication business, Idea says ARPU ( Average Revenue per User) for a rural customer is at par with an urban customer#. The fact holds a fort when it comes from a company having 60% of its customers from Rural India. Also 70% of total capital investment for Bharti Airtel is dedicatedly cornered for Rural India*.

Product/Services: This innovation in approach impacts how products are designed. Mr.Vijay Govindrajan from Dartmouth's Tuck School of Business has written a book on Reverse Innovation which has sufficient focus on Products/Service tailored for rural markets. That's where he highlights how GE developed portable scanners boosting their healthcare business in India and struck gold with it. Similar business was done by GE in collaboration with Medtronics in China. This also hints towards Value not Price. Rural Customer must find value in product to buy it. The products may not be necessarily cheap.

Reach: There are about 600,000 villages in India against 300 cities and 4,600 towns. Companies like Dabur, HUL, ITC and Coke have attempted to  approach markets differently. The most successful of it being HUL's Shakti Amma and ITC's e-Choupal. In the farm equipment business, Mahindra has, to quite an extent, mastered this Reach along with the X-factor of Trust and Relationship with local people.

There has been change in the Target Group. Today, most of these villages are connected through mobile and by data. All those farmers children have grown-up and dont want to do farming but they tweet about Harley Davidson's Street 750 launch in India being manufacturing in Haryana ,thanks to mobile data plans. Still , the Decision making theory is true here where Farmer's son has a User Buying Influence and his father being Economic Buying Influence and Gaon ka Sarpanch can be Advocate since they still have a strong say in their decisions.

And we thought we were selling on Mars!!