At the grass roots level

The Hindu – Business Line, Catalyst, December 11, 1997.

After the Great Indian Middle Class, it’s now the turn of The Great Indian Rural Class. Rural marketing is in and companies are homing in on this market in the hope of finding the desired numbers. While fast-moving consumer goods, and agro-based companies have long been catering to the rural market, consumer durables and household appliances marketers are just about beginning to realise its potential.

Consumer durables major, Philips India, recently kicked off its pilot rural marketing project in Tamil Nadu. The campaign, Enga Veetu Superstar (superstar of our home), is the result of extensive research into the lifestyle of rural folk in this part of the country. This has been supplemented with the launch of the Superhit series of two-in-ones for the rural market. The research was conducted by Chennai based Francis Kanoi Marketing Services Ltd and the advertising agency is Anugrah Marketing & Advertising Services Ltd. Says R. Pisharody, Chairman. Business Group – Audio, Philips India: “Philips products, by definition, are equally applicable to both the urban and rural markets. But growth in turnover has been visible only in the urban markets. So, last year, we decided that we would develop the rural market since purchasing power is increasing there. The campaign that we have developed is not for the short term. We realise that the rural market will grow step by step since it is large and still untapped. ”

The campaign in Tamil Nadu is the first part of ‘Operation Green Berets‘. That’s what the team at Philips calls its rural marketing programme. The Green Berets were an elite group of soldiers of the US Army. They were engaged in various undercover and special operations, from the Vietnam War to Operation Desert Storm. Says V. Swaminathan, Senior Manager – Market Research, Philips India: “Our rural marketing programme is called Operation Green Berets because the rural market has huge potential and is unknown territory.”

“The trickle down effect is not the best way to address a market with huge potential. No durables company has attempted to go into the rural market directly. When we conceptualised our programme we wanted to address that need,” he adds. The company has shortlisted West Bengal, Maharashtra and Andhra Pradesh, apart from Tamil Nadu, to implement the campaign at a later date with regional flavour.

Philips‘ campaign is based on research conducted in 90 villages in six districts of Tamil Nadu. Says Pisharody: “Tamil Nadu is one of the very few states where development outside the state capital has been good. Our efforts are focussed on this State now. We propose to transplant the model to other states later.” Swaminathan lists three reasons why Tamil Nadu was chosen for the pilot project: “The rural index is one of the best, so is our dealership network. Lastly, the research and advertising agencies are based here and have in-depth knowledge of the market.”

The campaign, which will go on till January-February 1998 started off with the Super Show, held during September- October in Salem, Tiruchi, Tirunelveli, Coimbatore and Madurai. It consisted of an exhibition of Philips products and dealer sessions to which opinion leaders, Panchayat members and cable operators were invited. The campaign consisted of van operations (for video presentations and karaoke contests), advertising in mass media (cinema and press), wall paintings, and art contests. Says Pisharody: “We did a cinema commercial after 10 years which is being aired in 300 theatres all over the state. For residual impact, we are leaving behind lots of branded material in the village such as time-tables with the Philips logo, art material and audio tapes with remix songs at tea shops.” Over one thousand walls across the state are being painted in red and yellow, the “official colours” of the campaign.

The pilot project in Tamil Nadu is two months old now. While company sources say that the impact has been extremely satisfying, it remains to be seen whether the effort actually translates into volumes. It accounts for 30 per cent of the R 6000/-crore consumer electronics market in India. The rural segment is growing at about five per cent. Since the rural market outbeats the urban market by its sheer size, volume penetration will be larger than the urban market. There is always room for more. And this is what consumer durables marketers are eyeing.

Says Pisharody: “The traditional markets will continue to grow. We need to increase the consumption of the products and also get the share of the unbranded market.” For this, it will have to deal with three major problems: One, the dominance of small-scale manufacturers (for instance, only 20-25 percent of the audio products bought is Philips); two, drastic differences in tastes and preferences (for instance, in audio products, rural folk prefer conservative styles – large, rugged, and not-so-flat systems); three, prices have to be really competitive and attractive. Pisharody says: “All the taxes applicable to Philips are not applicable to the unbranded players. We are, however, working on reducing the gap in prices.”

Philips is in the process of developing its dealership network in rural areas so as to widen its market reach. Normally, rural folk go all the way to dealers in second-line towns to buy branded consumer durables. Philips appoints distributors who in turn will appoint small retailers to cater to rural markets.

Rural market shares of all-India consumer electronics market (%)
	Radio	70
	Mono Systems	45
	Stereo Systems	30
	Black & White Televisions	35
	Colour Televisions	19
Source: Philips India