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A study into the Current Scenario and Future Scope of Digital Marketing in Rural India

Introduction to the topic

A study of the current state of Digital Marketing in Rural India and its future scope and

possibilities – this subject was was appealing to us for a number of reasons. In the recent years

rural market have acquired significance and attract the attention of marketers as 68.84%

population of India reside in 6, 38,000 villages and overall growth of economy has resulted into

substantial increase in the purchasing power of the rural communities. Due to green revolution,

the rural areas are consuming a large quantity of industrial and manufactured products. In this

way rural market offers opportunities in the form of large untapped market, increase in

disposable income, increase in literacy level and large scope for penetration.

E-commerce companies that are targeting rural markets using digital media and if e-commerce

can be properly promoted, it will open a market much bigger than the entire urban market put

together.

This project aims to study the countless possibilities and various potential aspects of Digital

Marketing in Rural India, after a comprehensive understanding of the state of the same today.

Reason for choosing this topic

The reason for choosing this topic was two fold. One being our keen interest in digital marketing

and rural marketing both. We found it interesting to study the relationship between the two as

well as the scope digital marketing has in rural India. Rural India has undergone many changes

over the years and the presence and influence of digital marketing has been one of the prominent
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ones. The second reason we decided upon this topic was its contemporary appeal. The emergence

of digital marketing has come up during a time where marketing itself is going through a

dynamic change. The possibilities and future scope of digital marketing in rural India is limitless

and are bound by less constraints over the years.

Introduction to Digital Marketing

Digital marketing is a term used to describe the integrated marketing services used to attract,

engage and convert customers online. It utilizes multiple channels such as content marketing,

influencer marketing, SEO, social media and online advertising to help brands connect with

customers and uncover performance of marketing programs in real-time. Digital Marketing

leverages electronic devices to provide an experience that influences a desired audience to take

an action. It is not simply the channel of delivery, but the way in which an experience comes to

life, across various mediums. Digital media is now the first touch point for a consumer and a

channel where the consumer has greater control over what they see and when they see it.

Digital marketing takes things into consideration like –

• Page rankings in search engine results

• Advertising on search engine platforms

• Conversion through SMO & SEO campaigns

• Optimization of internet marketing & associated ROI

• Banner ads on other websites

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Rural India

India is known as an agricultural country, as most of the population of villages depends on

agriculture. Agriculture forms the backbone of the country’s economy. The agricultural sector

contributes most to the overall economic development of the country. 70% of the country's

population lives in rural areas where, for the first time since Independence, the overall growth

rate of population has sharply declined, according to the latest Census. Of the 121 crore Indians,

83.3 crore live in rural areas while 37.7 crore stay in urban areas, said the Census of India's 2011.

Digital Marketing in India

The digital marketing industry in India is flourishing as evident from an increasing number of

digital agencies popping up in every part of the country. Where Indian businesses and marketers

are concerned, they no longer seem to have an option of whether to embrace this digital

transformation. Due to the increasing competition and more importantly the endless

technological penetration into their consumers’ everyday lives, they are slowly and silently being

forced to refocus as well as restructure business models into the digital way. The Indian online

consumers are becoming more and more vocal about their preferred ways of interacting with

brands and businesses in the recent years Local businesses, are finding it extremely convenient to

run online campaigns due to the ability of measuring ROI more accurately and a greater control

over the spend over the campaigns. It is interesting to observe, how the digital consumption

habits of the Indian consumers have evolved.

On an average day, about 40 million Indian consumers are online.

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The Internet has helped in bringing the urban and rural consumers of India closer. 64.71% of the

Internet users are from the urban areas, whereas the rural consumers constitute 35.29% of total

online consumers in India. This is helped in making this huge market more accessible for the

brands and marketers alike. India has over 700 million mobile phone users and a whopping 44%

of them are from the rural areas. The mobile-enabled web has given the marketers an

unprecedented access to attracting higher traffic to their online portals, such as, e-commerce,

mobile apps, mobile banking and other financial services

Almost 15 per cent of rural consumers use the Internet to research products, purchase a product,

or register satisfaction or dissatisfaction with a product after the purchase is made, compared

with 30 per cent of urban consumers according to a report. The amount of actual online

commerce in rural India is still small, but it is picking up according to the report. From 2015 to

2016, the penetration of online purchasing in these areas doubled from four to eight per cent.

Key findings of some of the Recent Digital Marketing Surveys are –

1. 34% of the companies already had an integrated digital marketing strategy in 2016

2. 72% marketers believe that traditional model of marketing is no longer sufficient

3. Company revenue driven by internet marketing will get increased by 30%

4. In 2017, 80% businesses will increase their digital marketing budget

5. Digital Marketing budget may surpass the IT budget in 20

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Companies having a digital rural presence

Companies with above-normal exposure to rural areas are doing much better than those with an

equal split of urban and rural or with less than average rural presence .

1. Hero Motocorp - In the two-wheeler industry Hero is the strongest brand in the rural India and

has 5,000 distribution points in rural India, the highest in the industry. It derives nearly half of its

sales from the rural markets, 20% more than its competitor Bajaj Auto. A strong growth in the

rural instead of urban areas has helped Hero's stock outperform its competitor's stock. The

company's stock has gained 8%, while Bajaj Auto's stock has remained flat.
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2. Emami - In the consumer industry, Emami has one of the highest exposures to the rural

markets. Around 60% of its sales and 50% of its profit is from the rural areas. Due to this higher

rural exposure, Emami's sales growth has been in consistent over the past five quarters, higher

than most of the other consumer companies. Because of this, the company's stock has given a

return of 25% in the year till date compared to that of companies with lesser rural exposure such

as Marico, Colgate-Palmolive and Godrej.

3. Maruti - The company has nearly one-third of its sales from the rural and it is expecting this to

go up significantly over the next two years. It has a strong brand and network in the rural areas

that has helped it grow at double digits in the rural markets despite overall sales being down by

7%. However, with a good monsoon, the sales volumes shot up in the second quarter, the highest

in the past four quarters, which will boost the company's earnings.

4. Mahindra & Mahindra - Companies with over-average rural exposure fare better in stock

market. A strong growth in the rural segment, is likely to counter the slowdown in other

segments, the reason for a strong bounce-back of stock.

5. ITC - Increasing rural contribution and a resilient demand for its products in the urban markets

have helped ITC's stock outperform. Rural contribution to sales for ITC is growing at a faster

pace than other consumer companies such as HUL and Nestle. The company makes 35-40% of

its sales from the rural market. Companies with over-average rural exposure fare better in stock

market Its products have displayed resilient demand even in the slowdown.
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Benefits of Digital Marketing in Rural India

With improvement in infrastructure, villages have come closer to cities. Mobile phones and, to

some extent, the internet has brought villages closer to urban population further and hence, rural

India became familiar to urban lifestyle. This motivated rural people to increase prosperity and

improve their lifestyle. This motivation along with availability of easy capital through micro

finances and governments’ schemes has helped rural India to set up side businesses related to

agriculture.

Revenue opportunities in rural India for businesses

Most of the consumer companies till 2005 were more focused only on urban area. As cities

started saturating due to high population and low opportunities, many consumer product

companies faced stagnant revenues.

Hence, it became important for organizations to enter into rural areas to sell their products and

achieve targeted revenue growth. Companies introduced their products in new (rural)

geographies to create new product cycles as existing product cycles in urban areas had reached

saturation for many products. Firms came up with many rural specific program, for ex, Shakti by

HUL. FMCGs also came up with rural specific small packs and advertised them in yearly rural

fun fairs to generate product demand. To cater growing rural demand, auto companies like TATA

Motors started ‘Neev’ which is rural specific program.

With a Rising competition in the telecom industry, need of increasing customer base and high

band width, mobile usage has grown in villages. No. of mobile users in rural India has gone up.

Though feature phone volumes are higher than smart phone volumes, we can easily observe the

shift towards smart phones with entry of next generation in rural employment.
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Social media tools like Facebook and YouTube are at nascent stage but have started gaining

momentum . For such cases, digital can be a good option as people using internet will become

influencers in most of the villagers as people using smart phone and internet are considered as

smart and intelligent ones in the village. Companies, especially in consumer goods place, should

start targeting people with smart phones and internet connections who in turn will spread word of

mouth across locations. Businesses should start taking every Facebook user seriously as she/ he

will be a big influencer in near future.

With digital, information flow to rural people will become easier. Info regarding weather, daily

rates of crops, milk and milk products, poultry etc. can be made available on mobile phone either

by government or by NGOs. This will increase not only farm efficiencies but also the market

understanding of farmers. In addition, training on advanced farming techniques and use of proper

fertilizers can be done across many villages at a time. Many Indian villagers have capability to

produce user specific products but they cannot be sold in cities where demand for such products

is available.

In long term, digital media will help to increase the consumption in rural India and will also

create employment opportunities, thereby increasing disposable income- this in turn will have

positive effect on economic growth of the country.

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Changes because of Digital Marketing and Media

Penetration of media and telecom services has changed the way India’s rural consumers buy.

Like their urban counterparts, consumers in the hinterland have become more aspirational,

striving to purchase branded, high-quality products. They have also become more discerning, no

longer willing to accept inferior products simply because they cost less. The changing rural

consumer is also defying stereotypes and outdated assumptions. There is no longer one rural

consumer—a generic entity who supposedly can be served profitably with one-size-fits-all

strategies, according to the Accenture report, which is the third in its Masters of Rural Markets

series. Moreover, traditional influencers no longer have a strong hold over the rural consumer.

Only 1% get influenced by the village head and about 6% still listen to the shopkeeper. Even the

role of the television is diminishing, with only 7% of the rural consumers getting influenced by

claimed and celebrity endorsements, said the study, which included 10 focus group discussions

with rural consumers in 10 Indian states, a quantitative survey of 2,800 rural respondents in eight

states, interactions with executives from more than 70 channel partners and in-depth interviews

with more than 40 business leaders. The rural consumer has evolved and can be broadly

classified as traditionalists, steady climbers, young enthusiasts and village elites.

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Types of Internet Users in the Rural markets

1. Mature Users - The mature user is likely to be an 18- to 50-year-old (male) salaried worker

or businessman from an affluent household. He has been online for three years or more,

longer than people in any other segment. As a shopper, he is brand conscious, spends

smartly, and actively trades up. His ownership of durable goods approaches that of urban

dwellers. He accesses digital media daily and spends two to three hours online a day,

primarily on a smartphone. There are some 160 million mature users (19% of the rural

population), and Internet penetration is relatively high at 30%.

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2. Ambitious Users - Internet penetration in this segment, which comprises around 8% of rural

users, or almost 70 million people, is estimated at 33%. The typical ambitious user is a young

male college graduate. He belongs to a less affluent household than the mature user and aspires

to move to a city for work. An active consumer of digital media, he spends two to three hours

daily online using an Internet-enabled phone (or, in some instances, a smartphone). Strong

growth is expected of this segment.

3. Late Adopters - These are 30- to 50-year-old men who—though many own their own farms—

are less affluent than their ambitious counterparts. They make up 15% of the rural population

(125 million people), with 16% online penetration. Late adopters are savers and conservative

consumers who trade up selectively and prefer value-for-money brands. They spend one to two

hours a day online and primarily use entry-level smartphones. They access digital media four to

five times a week.

4. Next-Wave Users - While this segment accounts for around 36% of rural users (almost 300

million people), Internet penetration is only around 9%. The typical member is a young female

homemaker from an affluent household. Though not a college graduate, she is the decision

maker in her household and prefers branded products. Next-wave users have generally just

started going online, and they spend only about 15 minutes per day on the Internet using an

Internet-enabled phone. Despite these users’ limited digital experience and maturity, the size and

relative affluence of the segment make it one of three high-potential rural growth segments

(along with the ambitious and mature segments).

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5. Dark on the Internet - This segment, which makes up almost a quarter of the rural population,

comprises older men and women (50 years and up) who do not work, are not well educated, and

do not come from affluent households. They tend to have traditional values, and women in the

segment do not play a role in family decision making. Household members share a basic phone.

They have little interest in going online, and Internet penetration is only about 1%.

Key Differences Between Urban and Rural Users

1. While urban users focus on the social aspect, interacting with friends on sites such as

Facebook, people in rural areas use social networks to access the Internet, which is where

their consumption of content—such as news and videos—primarily occurs.

2. Two-thirds of rural users go online using inexpensive Internet-enabled phones connected to

2G networks. Only about a quarter of these users have smartphones and only 10% use PCs or

laptops. In urban areas, by contrast, almost two-thirds of users own smartphones, and another

20% use PCs or laptops.

3. Rural and urban users use different apps for similar activities.Even when rural users use the

same app as urban consumers, they often use it for different purposes.
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Digital Marketing Penetration into Rural Markets

A huge number of villages in India are what you might call ‘media dark’. There is no reliable

electricity source and therefore no TV. Literacy levels are low, which rules out print.

Smartphones are extremely rare. The only media channels people can use are AM and FM radio

or basic feature phones.

The process is as follows:

1. Define your consumer journey

2. Create the right content

3. Build the right platforms

4. Different markets demand different approaches

Facebook and BSNL

The social media giant, Facebook has announced that it has joined hands with Bhartiya Sanchar

Nigam Limited (BSNL), in order to boost the ambitious ‘Digital India’ drive by Govt. of India by

setting up free 100 Wi-Fi hotspots in the rural regions of Western and Southern India.

Furhter adding to the announcement, the network revealed that it will sponsor Rs. 5 crores per

annum to keep these Wi-Fi hotspots up and running. A pilot programme has already been

launched. The pilot programme covered almost 25 villages throughout India

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Mahindra Farm Equipment Sector and Rural Digital Marketing

Mahindra’s Farm Equipment Sector (FES) recently rolled out a marketing campaign for the

Mahindra Arjun Novo tractors, which featured a television film, leveraging 3D animation to

demonstrate technological advancements of the tractor. The TVC is set against the backdrop of

Mahindra Research Valley, the centre for design and development for Mahindra’s automobiles

and tractors. The TVC, conceptualised by Interface Communications, showcases a true farm

performance, bringing to life proven product performance using 3D animation. The product

features have been explained and dramatised, depicting the product’s superiority and advanced

technology and highlighting its key message for customers.The VP, Rajendra Shahane said in an

article that digital marketing has become very important in the rural marketing mix suddenly. It

wasn’t that case one year back. It has even changed the way we approach our consumer, and

even plan our CRM. It gives us tremendous opportunity to create relationships and making

connect with our consumers as it is a two-way process now. It has become a dialogue now.

Forecasting Digital Media presence in Rural India

Almost 70% of rural users access social networks, which are their most popular online

destination. Other popular activities for rural consumers are downloading media (45%),

searching for information (41%), and chatting and e-mailing (30% each).

• Rapid growth in Internet usage in rural India is a double-barreled game-changer, with up to

300 million Indian consumers expected to be online by 2020. While most of the focus to date

has been on urban users, rural areas—which are home to two-thirds of the country’s

population, or some 870 million people—are where much of the action will be for the rest of

the decade.
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• More than half of all new Internet users will come from rural communities and that rural users

will constitute about half of all Indian Internet users in 2020. Cheaper mobile handsets, the

spread of wireless data networks, and evolving consumer behaviors and preferences will all

drive rural penetration and usage. They will both change how rural consumers interact with

companies and give companies many more options for engaging with rural consumers.

• The number of connected rural consumers to increase from about 120 million in 2015 to

almost 315 million in 2020, a jump of almost 30% a year. Rural growth will significantly

outpace growth in urban centers, and by 2020, rural users will make up 48% of all connected

consumers in India.
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• Rural Internet users are today almost exclusively male (98%), a different pattern from that of

cities, where men dominate (79%) but women are also online in growing numbers (21%).

More than 60% of rural users have been online for less than two years, which means most rural

users are still relatively immature digitally, and their usage patterns can be expected to evolve

as they gain experience.

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What companies must do to reach the rural consumer

• Companies must develop a segmented view of the market and stop painting all rural consumers

with the same brush.

• Companies must also focus on creating an experience with the rural consumer in mind.

• Rethink the cost of serving rural markets. The economics of the Internet give marketers an

opportunity to reevaluate the business case for reaching rural markets.

• Adapt the online experience for rural users. Websites and apps designed with urban consumers

in mind may not be effective in rural markets, where device screens are smaller and

connections are slower.

• Content must fit on feature phones and work with low-data apps and connections. There is a

strong need for vernacular content as well. Refocus advertising budgets. Even today in

rural markets, the Internet rivals TV as a source of influence.

• Rural consumers spend about 40% of their total media time on digital media—the same as

urban consumers—although they have different reasons for preferring digital channels,

including the ability to tap into the latest media content at low cost, receive constant

updates, and gain access to vernacular and geographically diverse classified content.

• Bring down the barriers to online sales. While there has been an upward trajectory in rural

online buying, the number of e-commerce buyers in rural areas is still small. Factors

related to delivery and returns are big issues, but there is also a widespread perception

in the countryside that e-commerce is neither safe nor reliable.

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• Almost 40% of rural consumers feel that their personal information is at risk, while 30%

believe that products sold online are of poor quality and 25% find e-commerce sites

and apps hard to use.

Digital’s Expanding Influence on Rural Commerce

The influence of the Internet on the purchasing process is already becoming a significant factor

in rural areas.

Almost 15% of rural consumers use the Internet to research products, purchase a product, or

register satisfaction or dissatisfaction with a product after the purchase is made, compared with

30% of urban consumers.

The amount of actual online commerce in rural India is still small, but it is picking up. From

2015 to 2016, the penetration of online purchasing in these areas doubled from 4% to 8%.

Convenience and discounts are the key reasons that rural consumers buy online—63% and 62%,

respectively, cite these factors. Product availability is an important factor for 40%.

Opportunities and possibilities in the future

• Digital marketing will become a norm in both rural and urban areas

• Complete internet connectivity in all rural areas

• The number of internet users in India is approx. 375 million and by 2020 it is expected to

be over 600 million.

• India ranks amongst the top 10 content consuming countries, content will not by itself

drive digital marketing goals. Its design needs to be useful and relevant.
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Conclusion

To conclude, we believe that digital marketing and media has great scope in the rural

areas India in the next few up coming years. There are some big opportunities as well as

threats that present themselves in this venture of digitalization. Digital marketing is the

way of the future and will ultimately transform the rural areas of India and make them

highly connected, educated and informed. Eventually making them at power with the

urban consumer. Digital marketing already has impacted rural India and will only

continue to do so in the future, making marketing more integrated and the consumer more

evolved.

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