By Benjamin Mathew and Vijaykumar Mane.
The Indian subcontinent is a uniquely placed demography & geography. It has two important facets, particularly concerning the where India lives. Nearly 86 Crore or 68% of the population is living in rural India which we colloquially call the Bharat and the rest 46 Crore or 32% lives in the Urban. The urban markets have a well catered and competitive edge rural markets have emerged as the biggest opportunity area for business. The story is more of the growth that is going to come, and the solutions required to make it happen.
However, Bharat cannot be painted with the same brush or treated like a second cousin with retrofit urban contexts, it needs a different perspective and practical approach to reach these markets. For starters it is not a homogenous structure, rather differentiated by creed, dialects, behaviors, incomes and spending making it a formidable mountain to climb. Given the complexity of 50-plus Socio-Cultural Regions Linguistic diversity of 22 official Languages and 1650 Dialects, 55% of the population under the age of 35 years, inadequate infrastructure, per capita household income of $670, and varying literacy levels between 99% in Kerala to 62% in Bihar raise the entry barriers for businesses.
In addition, reaching the 6.4 Lac the rural villages typically signify complex logistical challenges that directly translate into high distribution costs not withstanding the fact that multiple points handling, transit and warehouse limitations, These eventually seems an unsurmountable and compounding the problems to marketers.
68% of India's Population
85% of Villages Connected
90% of HH have Electricity
Every 3rd Village has a PO
55% HH have Television
49% Mobile Penetration
Branches in District Towns
50% have Bank Accounts
It may seem that the business ticket sizes are smaller compared to the urban counterpart, but it makes up as the bigger market due to sheer size. Staying out of the Bharat Market is now not an option for most marketers in the established sectors. Almost every company is trying to capture their pie of business in rural. As the size of the market grows, for sure it’s going to be in double digit growth for all sectors in the coming years.
If you are an Innovative STARTUP with a well-defined business proposition or seeking to explore the opportunity of Bharat, we recommend you to follow the 3 stage approach specifically designed to capacitate the Entrepreneur with fresh pair of vision and direction.
Deep Dive to Go-To-Market Strategy Program
- Assess Relevance
- Define Geography
- Find Customers
- Lookup Market Size
- Evaluate Channels
- Tagging Influencers
- Context Setting
- How to Create Awareness
AIDCA Model of Working
- Instilling Affordability
Purpose of Fitting the Wallet
- Relevance to Acceptability
- Make Availability
Choices of Channels to Reach
- Pilot Play Design
- Evaluate Matrices
- Unit Market Proposition
- Rendering Scale
- Monitor & Manage
- Review Business
Assess is the stage one of the program. Assess tries to bring the rigor of understanding the entrepreneur journey by focusing the energies to business relevance, market, customer among other things. The construct of Assess is shared in the representation below.
Assess gives the tools in the anticipation that entrepreneurs don’t mistake the rural customer for being as same as the urban one. While you might solve the same problem for a customer, irrespective of urban or rural, both these customers have different buying behavior. Therefore, it is essential to ascertain the relevance of your products/services to rural customers.
Presuming that you have validated your target customers correctly in the rural markets, one of the first things you must do is understand your target geography. Bharat as a market has varying dynamics depending upon which State laws, the language, climatic conditions, culture, aspiration of the people, etc. For example, there are over 22 languages in India. Therefore, your sales-marketing collaterals cannot be the same for the market in Tamil Nadu and the market in West Bengal. Further, each language has distinct dialects. Thus, Startups must have clarity about the specific regions they are targeting, and all dynamics involved with those regions.
The next step would be to identify sales/distribution channels, making your products or services reach your prospective customers. The distribution channels vary from region to region, and therefore, it is crucial to identify the channels available in the specific market that you are targeting. For example, in Karnataka, the traders in the rural region have good reach, whereas, in Maharashtra, the cooperatives are highly active. Thus, based on your product/services, you must assess available channels to reach your customers effectively, efficiently, and economically. And these channels vary for different products or services.
In contrast to the urban customers, the rural customers rely on the trust they enjoy with the seller in their village. They follow a set of people belonging to their town or neighboring villages for their purchases. Influencers like Sarpanch, Teachers, Postman, Anganwadi Karyakartas and Asha Worker, Traders, SHGs, Social Workers, CSCs, Village Level Entrepreneurs, etc., play a significant role in educating and influencing rural people directly and indirectly in their purchasing decisions.
Create is the stage two of the program. Create envisages to tries to bring the contextual understanding into a definitive framework by optimizing the business journey to make things happen. The construct of CREATE is shared in the representation below.
Set goals in terms of timelines, region or sub-regions you want to cover, specific sales and distribution channels, the number of customers you want to acquire, projected sales revenues, etc. This exercise will serve as a goalpost for your rural market journey, and it will also help review actual results.
Based on the ‘Assess’ exercise, you will have several sets of information that will help in creating your execution plan. For effective execution, your plan should address four specific aspects, affordability, awareness, availability, and acceptability (4 A’s), which are the essential value propositions for the rural customers.
Affordability – Rural customers are highly price sensitive. You must ensure an affordable price for the end customers and ensure that your costing has adequate margins for the distribution partners and the logistics costs.
Awareness – The communication channels, style, and language differ substantially in the rural market compared to urban markets. The information to be made known to the rural customers has to be simpler than one used for urban, educated customers. Also, one has to identify the proper channels in specific regions for creating awareness. The channels/activities can include demos through SHGs, van announcements, wall paintings etc. The selection of channels depends on your product/services. Crafting perfect communication is vital for increasing awareness amongst customers.
Availability – Make your products consistently available in the right place. For this, you need to understand the effective sales channels available, which depend on your product/services and the geographical regions that you are catering to.
Acceptability – The customer should feel that your products are valuable to them. They should think that the product is designed
as per their needs. It should deliver a great solution to the customer. Ensure to address all the parameters that make your products acceptable.
Execute is the stage three of the program. Execute puts the entrepreneur in the shoes of an implementor of the strategy created. This stage tries to bring the intent of testing the hypothesis and making it workable on the ground. The construct of EXECUTE is shared in the representation below.
The Assess & Create processes would help you get prepared to enter rural markets. These processes also help you avoid mistakes that you might otherwise encounter in the execution, which can cause significant losses. Sometimes it can even be an irreparable loss. Hence, assess and create are fundamental processes that you must get correct. It is advisable to run a pilot or two before you go full scale.
Choose a small sub-region (maybe the size of about 5%-10% of the region you are targeting) and pilot your plan. Implement your 4A’s plan. The Pilot exercise will help you in keeping your costs lower. Monitor each stage of the action, collect enough data points to review the impact of the piloting exercise.
The evaluation of pilot should meet your desired goals. If the deviation between plans and actual results is acceptable, then launch your business in other parts of the targeted market regions. If the same is unacceptable, you need to relook into the specific areas of 4 A’s. Depending upon the outcome, you may even need to revisit the ‘Assess’ exercise or do a pilot in another region to validate your market assessment.
Scale, Manage, Monitor, Review
If you are satisfied with a pilot or two, you can then focus on scaling your business. Scale is again a very different action compared to the piloting. The required resources, funds, efforts are significantly higher. One must need complete preparation for scaling business. Assuming that you provide all resources effectively, you need to manage scale, monitor the results, and conduct periodic reviews.