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!!

Paper v/s Pixels.....A company's blitzkrieg for survival in the digital world!!

We all know that smartphones and tablets have taken market by storm. there is no doubt that it is just a dawn of digital era. Smartphone sales are expected to have crossed a billion units in 2013, a growth of 40% over a year ago. And, tablet shipments are estimated to grow over 50% to 221.3 million units*. These facts highlight the intensity at which we will be overwhelmed by these gadgets.

The Last Man Standing

It is not a surprise that every other magazine, tabloid or newspaper is shutting down or going digital ( ala Life magazine where Walter Mitty worked :p ). Not any more the print copy sales remain the bread earner, are they? But what is it that people continue to buy a premium range of notebooks (not digital but a black oilcloth binding hardbound notebook). I am talking about is Moleskine, a premium range of notebooks being sold across 100 countries with 30 exclusive outlets spread across the world.In 2012 Moleskine had revenues of € 78.4 million a growth of 16% over 2011 while profits grew at twice the rate to € 18.2 million. These numbers may not seem significant enough but for a notebook company they are strong. Consider these in the atmosphere of digital onslaught, they are spectacular!!

What keeps Moleskine hardbound?

Brand Equity

Moleskine is the apple of stationery world. World's best brands stand more for than the product they denote like Apple, Coca-cola, Mc Donald's etc. Whenever you think of an artists notebook or a premium notbook, you think of Moleskine People swear by Moleskine. It has its strong loyal following. Did I say Loyalty?? Yes, in today's world, Customer Loyalty is one thing that Moleskine takes pride in. In its 18 years of existence, Moleskine has got fiercely loyal bunch of followers who avoid sketching in any other notebook forget about taking notes.

Inheritance of History

Bruce Chatwin famous british writer who moans the death of his favourtie notebook in his book the Songlines as 'Paris Notebook', eponymously called by writer for its place of inception. Other famous users include Pablo Picasso, Ernest Hemmingway, Vincent Van Gogh and Henri Matisse to name a few. It was discovered that the guild of such notebook makers has gone distinct in Paris. Then, Arggigo Berni started delivering authentic 'Paris Notebooks' under brand name Modo & Modo which was eventually renamed as Moleskine after being bought by private equity major player Syntegra Capital in 2006.

Though investors have taken issue with Moleskine's "Faux History", Customers do not seem to care at all about it ->

CAGR 2009 -12
Revenue : 24%
Net Profits : 34%

Differentiation through Digital Media

For a strong digital presence, what most brands do is having smartphone and tablet apps. Moleskine has done much more that. It has used apps to its own advantage instead of seeing them as threat. It launched a collection of notebooks with the popular notetaking and archiving app 'Evernote' in 2012 where you can capture the content in the squared and ruled Evernote notebooks on the app's camera, which makes the text searchable and shareable.

This October, Moleskine joined hands with popular iPad design app 'Paper' by FiftyThree, which allows to create your own designs on Paper and then have 15 pages of your sketches on it printed on a customized Moleskine notebook for $40.Moleskine has a plan to get you to buy its books instead of just sticking to apps. Well, that could be the differentiator between itself and its competitors

No ATL (Above the line) but Thought Leadership & Word of Mouth

Marketing as we knew is over. ATL activities no longer hold significance instead are part of the game because of Game Theory. Instead to create mind share, firms are adopting to Thought Leadership and Word of Mouth. Arggigo Berni, CEO of Molenski did not use any ATL activities in its market penetration and market expansion activites stuck of ' Word of Mouth' due to its wonderful history and cult following. This was further consolidated by Thought Leadership demonstrated at events like Jaipur Literary Festival 2011 where Moleskine released a special edition pocket notebook designed by graphic novelist Sarnath Banerjee

*http://www.idc.com/getdoc.jsp?containerId=prUS24461613

Hamaari itni phat ti kyun hai?

 
 A rhetorical question put by my senior in the office: "Hamaari itni phat ti kyun hai, yaar?" {What are we so afraid of?} But the question I am going to ask is not rhetoric. Its simple to ask: "Why are we so afraid?" Does being afraid change the consequences? Here comes The Good , The Bad and The Ugly of it.The Good: Good continues to be afraid of doing any bad; The Bad: Evil continues to be ruthlessly fearless; The Ugly: Normal continues to be unbothered.Thats the philosophical touch to it. The part that I want to lay emphasis on is: "What our lives would be if were not so afraid?"

   We will be fearless to leave our academic courses, our jobs, our bindings that we dont like.Please dont mix fearlessness with foolhardiness. One should be passionate enough guided by the inner light to achieve.And pursue what we really want to do in our lives. Wouldn't this symbolise that we have more faith in ourselves, our abilities, our beliefs. So, I come to some derivation that Fear can be killed by Faith. Faith should not be misconstrued as faith in some traditions created by humans but in self. I have a belief that Almighty is in US. In You, In Me and In All of US  We are all same, endowed with beautiful gifts in US... Each bound to become great. Then, why dont we all achieve greatness?

  We have inkling to the answer of these questions.
Marianne Williamson said "Our deepest fear is not that we are inadequate. Our deepest fear is that we are powerful beyond measure. It is our light, not our darkness that most frightens us".
Ralph Waldo Emerson said "Every Man is a God but playing a fool"
  That says that all of us have fire within but with fear we douse the fire under us to achieve our greatness.What would have happened if Captain Gopinath would have continued to be afraid and serve in the army, he would not have made possible flying to the common man in India. What if Milkha Singh had continued to do petty jobs, He would not have become 'Flying Sikh'. It is only us who has to break our shackles and be free