Logistics key to Indian rural markets

9 July 2013
NEW DELHI: Brands seeking to tap into India's fast-growing rural markets will need to focus primarily on their logistics if they are to reach, acquire and retain customers, a leading consultancy has argued.

An Accenture report, Masters of Rural Markets: Profitably Selling to India's Rural Customers, included interviews with more than 40 business leaders, 20 industry experts and academicians and a quantitative survey of 70 businesses operating in rural markets.

It found that an efficient sales and distribution model was the most critical factor for successful rural expansion in India, with 59% of survey respondents saying it was a top priority, well ahead of the 40% response for both customer service and marketing campaigns.

Other issues that affected growth were partners with limited capabilities, long payment cycles and weak marketing channels.

A mere presence in the market was no longer sufficient for success, said Sanjay Dawar, managing director of management consulting, Accenture India, as he urged the need for "transformational strategies" and "unprecedented agility".

The report identified a group of businesses that had successfully gained rural market share, whom it termed Rural Masters, and analysed their strategies.

These included the adoption of a multi-pronged approach to "the last mile". The report noted that simply extending an urban hub-and-spoke model was widely used but that Rural Masters had also embraced village entrepreneurs, ecommerce and alternate channel partners in their search for ways to overcome distribution challenges.

It was vital to nourish these relationships, said Accenture, given the level of demand for capable channel partners. "Upgrading channel-partner skills is central to successful implementation of … sales strategies", it stated.

Another important tactic was to differentiate the needs of rural consumers and not just offer them the same value proposition presented to urban consumers.

"Rural consumers have diverse, specialized needs and preferences," said the report, and brands needed to understand "the cultural, economic and demographic dimensions that define them".

As well as utilising market scanning and segmentation, greater understanding could also be developed by investing in community development and building trust.

Data sourced from Accenture; additional content by Warc staff
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