NEW DELHI: Leading brands are increasingly looking to distributors and channel partners for their marketing requirements in rural India, as agencies lack manpower, insight and planning capabilities.
Automaker Ford India, for example, works with its dealerships to reach rural customers. "Using the hub and spoke approach, more than 40% of our sales and service outlets help us target these markets," Vinay Piparsania, executive director, marketing, sales and service, told the Economic Times.
And telecoms business Karbonn Mobiles built its distribution from the district level up unlike multinationals which start at metro level and work down. As a result, Karbonn claims to have over 90% district coverage.
"Our key partners are over 1,000 micro distributors who have extended the reach to even a taluka [a district subdivision] level today," said executive director Shashin Devsare.
This comes at a time when rural markets are assuming increasing importance. Another automaker, Hyundai, expected them to account for 20% of sales by 2014, while consumer electronics business LG said rural sales were outpacing those in urban areas.
And as such businesses have developed a focus on rural markets, so ideation has increasingly come from in-house teams, so removing another reason for using agencies.
Agencies have also faced difficulty in obtaining funding from holding companies. Rahul Saigal, president of Geometry Global highlighted the scale of the problem.
"You need to reach tens of thousands of villages. You need satellite offices in small towns, technology for monitoring, vendor connections and the ability to manage thousands of feet-on-street," he said. "An agency that cannot offer this has nothing to offer," he added.
That lack of funding has had a further impact on agencies' insights and planning capabilities. Many have concentrated instead on implementation, when what they really need to do, argued Anisha Motwani, CMO at Max Life insurance, was to "focus on connecting the brand and the target consumer".
But the spread of digital and mobile may be set to change the picture once more. "You will see a [rural] spurt all over again," declared Ranjan Kapur, WPP's country head, as the uptake of technology made it easier to reach people.
And Ashish Bhasin, chairman and CEO of Aegis Media, pointed to the potential rewards in rural marketing. "The approximate industry size is Rs 25,000 crore. I believe there's Rs 15,000 crore spend that is incremental to this, accounted for by promotion and on ground which agencies don't have even a 0.01% share of."
Data soured from Economic Times; additional content by Warc staff