Rural and bottom of pyramid (BOP) markets are being considered the next big thing after a considerable saturation in urban markets. According to a report by research firm Evalueserve, India’s rural consumption will grow at a combined annual growth rate of 5.1 per cent to reach Rs 26.4 trillion by 2025 from Rs 9.7 trillion in 2005.
The report further states that the immense growth potential of this market has forced major companies to explore the rural market in spite of challenges such as lack of distribution network, prevalent attitudes and habits, promoting brands invernacular languages and varying mindsets of price-sensitive consumers.The fact remains that consumer behaviour pattern is not homogeneous across income and social groups.
Companies are now increasingly realising that conventional marketing strategies alone are inadequate to penetrate the unique BOP market. Promotions through word-of-mouth have emerged as a key strategy for building and promoting a brand to this segment.
Moreover, companies are increasingly focusing on customising their products to the needs of consumers; the major challenge being the identification of a perfect blend of size, price, quality and innovation, as the purchasing decisions of Indian rural consumers as well as those at the BOP continue to be primarily influenced by price vis-à-vis size of the product. Thus price remains the most dominating tool for companies to penetrate deep into the BOP.
The FMCG industry has found an easy way around this by relying heavily on sachet marketing, providing smaller quantities of the same product (20 ml product packs), at affordable prices to induce product trial and thus increase penetration at the BOP. Sachet marketing has also found favour as it not only makes products affordable, it also helps build brand loyalty.
Moving ahead, technology will have a key role to play in product customisation as innovation and out-of-the-box thinking will be necessary in penetrating and more imporatnatly capturing the BOP market, says the report.