"India White failed to provide rural consumers with sustainable
reasons on why they needed to use the products."
CEO, MD, Blackstone Market Facts India
is a process by which individuals and groups obtain what they need
and want through creating, offering, and exchanging products of
value with others. It is a process that starts by addressing human
needs and wants.
I believe India White made the classic mistake
of plunging into the rural market and committing large resources
without assessing the market or understanding the need for its offerings
in any way before initiating Operation Hinterland. The rural market
always appears attractive to marketers by virtue of its sheer size.
Unfortunately, all that this does is to trap companies into making
huge investments without adequate need-assessment. This is the trap
that India White seems to have fallen into.
Sadly, most marketers concentrate on the art
of attracting new customers rather than retaining them. It is imperative
to understand that an increase in long-term sales volumes is a function
of the rate of trial followed by the rate of repeat purchase (together,
these constitute the conversion rate of consumers). India White's
free sampling of the products seemed to have worked brilliantly
as far as the initial round of trials were concerned due to its
novelty factor-the markets where Operation Hinterland were launched
weren't familiar with the products on offer, and predictably, consumers
in these markets were only too willing to try them-especially since
they were being handed out free. However, without any ''sustained
repeat purchase'' over a period of time, India White found its sales
stagnating, and then declining.
Simply put, the marketing strategy of free
rural sampling adopted by India White's marketing director, Ashok
Khanna, was able to create new consumers but fell short when it
came to retaining them. The reason? The company failed to provide
rural consumers with sustainable reasons on why they needed to use
the products, and more importantly, pay for them after the sampling
exercise was over.
Instead of scattering their marketing efforts,
companies have to focus on the buyers whom they have the greatest
chance of satisfying. India White's next mistake was in adopting
a shotgun approach of mass marketing. Instead of identifying the
core market segment in terms of who they were and where they were,
and following that up with a focused approach to reach and influence
them, India White's operation was driven by an unfocused distribution
push. In effect, Operation Hinterland reached a huge audience that
was relevant to its marketing objectives, but failed to capitalise
The marketer must see his task as that of converting
an undifferentiated product into a differentiated offering. True,
India White must have clearly demonstrated the benefits of each
of its products to the relevant audience through the free sampling
exercise. But I do not think India White's marketing people were
able to reinforce the brand promise through emotional benefits and
saliency-both critical to induce repeat purchases. Thus, although
the company did some pioneering work in inducing trial among a huge
number of none-users, the trial resulted in nothing, and consumers
lapsed into their old ways when they failed to see a ''unique, relevant''
In an emergent market like India, it is critical
for marketers to understand the differences between rural and urban
markets. On the one hand, the rural market poses the seemingly insurmountable
channel challenge of how companies can reach their customers. That
said, it presents a huge opportunity in terms of volumes. The urban
market, in contrast, is easy to reach and there aren't too many
channel issues involved. However, urban customers are capricious
and the markets continually redefine categories.
A smart marketer will never try and offset
losses in one market with gains in the other. The marketing objective
of all companies, and indeed, of India White, should be to retain
and build volumes in existing urban markets and look for opportunities
in new emerging rural markets.
| "Free sampling can convince the consumer
to switch habits. But it can also reinforce her instinctive
behavioural response not to change."
CMD, Candico India
The sheer time and effort
needed to create new customers by, in effect, changing consumer
behaviour, is amply bought out in multiple historical examples.
The radio, the telephone, the TV, and now, the internet have all
taken years to achieve the critical mass required to be financially
self-sustaining (the last still hasn't).
If a company desires to change consumer behaviour,
it needs one of these two: a couple of decades, or an industry-wide
association willing to back a certain product (or service) standard
while consumer-resistance is slowly chipped away and the real tangible
benefits of the new product become apparent.
The fact that India White attempted to introduce
a shift to products that have some familiarity to the rural consumer
rather then trying to vend brand new products must have mitigated
the enormity of the task. That it still remained a daunting one
is evident in the dilemma facing Dani.
I believe that marketing may be a powerful
enough tool to create new consumers (as opposed to the relatively
easier task of shifting consumers between brands) given a couple
- The new product needs to have a clear, demonstrable
and immediate benefit over the current alternative.
- The marketing message should stay focused
on this benefit and the company should not crowd its communiqué
with other messages.
India White may have flooded the market with
its samples, but I wonder if it looked at the 'benefits' that its
products provided its potential consumers. It is easier to browbeat
a consumer into believing that India White's toothpaste has the
'benefit' of making her teeth whiter then it is to study whether
this benefit holds any value to the consumer. The company needs
to honestly question itself whether the benefits it professed were
identified after studying the specific needs of the rural consumer
or were merely assumed to work for rural consumers because they
did so for their urban counterparts.
Free sampling is a double-edged sword. It can
convince the consumer to switch habits and it can just as easily
reinforce her instinctive behavioural response not to change. Clear,
demonstrable, and immediate benefit is even more important in a
free sampling scenario because if the consumer does not perceive
the promised benefits of the product during the trial, you've just
ensured that she will not try out the product again. The 'inquisitive
sale' market would have been completely eliminated.
Another real danger of the free sampling initiative,
especially in the way that India White seems to have gone about
it, is marketing overkill. When you have an army of corporate suits
descending on rural habitats there is every chance that in the excitement
to push the product, promises that the product simply cannot keep
will be made. There is such a thing as overselling your product,
especially if the corporate attitude is ''make them try it first,
we'll worry about them buying it later''. India White's Operation
Hinterland may well have instigated well-meaning but inexperienced
individuals to say whatever they needed to in order to instigate
The rural-urban substitution effect that Dani
refers to-of growth in demand in rural areas making up for a fall
in the same in urban ones-overlooks the massive differences between
value-obsessed rural consumers and their relatively image-focused
urban cousins. Despite the India White example, though, companies
can expect to increase sales in rural markets since the low per-capita
consumption in the rural markets coupled with a decade of strong
agricultural growth and exposure to the mass media has primed them
for strong medium term growth. The secret is to come up with a value-benefit
that is really relevant to the rural consumer. Did India White do