3 years

marketing

The Phone Ate My Lunch

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Beware mobile phones. They can devour your business. Ask marketers who find it difficult selling products in rural India

A RECENT Hindi film made by Shyam Benegal, Welcome to Sajjanpur, has an interesting moment. A villager bypasses the post office and sends an SMS instead to his relative. Scenes like this hearten urban moviegoers who’re keen to see technology work its merry miracles with the masses. But they also worry rural retailers and marketers who fear that the day may not be far that they too are bypassed— ‘disintermediated’ in jargon—as the humble ringtone turns into a giant sucking sound across the vast hinterland of India.

As the cellphone assumes the status of the individual’s most prized possession, phone bills are sucking away so much money that there’s little left for other things. Almost nobody can escape. The first and hardest hit are marketers directly in the way of the mobile revolution. If you are selling products such as watches, radio sets or even cycles in rural India, you are up against a force you have no time left to ignore any longer.

Rama Bijapurkar, marketing consultant, has witnessed this first-hand in her travels across India’s hinterland. “There is a definite category collision brought on by the sale of cellular devices,” she says, “especially in rural India. In some categories, this collision could be as deadly as the asteroid that wiped out the dinosaurs. It is distinctly possible that entry-level products such as radios and watches become history within a very short time in rural India.”

THWACKED BY THE HANDSET

According to data available with NCAER, a statistical research organisation, half of all radios, watches and cycles sold in India are in the rural market. The cellphone looms large now as a rival for the interest of these products’ buyers. It has become the first consumer durable that a person buys, which means that other big-ticket purchases are put off till later. Increasingly, a ‘later’ that never comes. In the case of watches and radios, the phone acts as a substitute—and so far as cycles are used to reach someone, indirectly for these too. “Cellphone expense cuts down on rural commuting significantly,” observes a microfinance professional with experience in rural Uttar Pradesh. Since plenty of commercial activity in rural India centres round agriculture and trade, the phone keeps the need for physical travel to a minimum. So it’s not just cycles, even motorcycles and related products have been affected.

A recent study by Virgin Mobile, a telecom operator, estimated that a growth rate of over 30 per cent a year is feasible for cellular phone sales in rural India. Philips, which has been rural India’s top marketer of radio sets for decades together, refused to comment when contacted for this story. The silence, presumably, is not without reason.

That some products are bought at the cost of others is well understood in low-budget markets. “The rural customer is unique in the sense of price sensitivity,” says B Narayanaswamy, president, Ipsos Indica Research, a consultancy that has done extensive work in Indian villages, “For him, the mobile phone provides a multiple product platform. Thus anything in the price ballpark, from watches to radios to torches, has already seen sales dip.”

The availability of cheap loans for cellphones also lowers the entry barrier. “A lot of microfinance lending is done to enable communication and trade, and is targeted at purchasing a cellphone,” says the microfinance professional. In any case, logic dictates that lenders should be happier lending money for a product that’s relatively easy to trace, at the press of a few buttons.

This is bad news for other products.

Cellphone penetration, meanwhile, deepens by the day. “We are very bullish on rural India,” exults Vipul Sabharwal, director, sales, Nokia, “Today Nokia has over 15 entry devices that range from Rs 1,300 to Rs 5,000. The village market demands three features: the phone has to be affordable, durable and practical. The Nokia 1202 is our lowest cost mobile device, designed specifically for people in rural areas. It features a flashlight, extended battery life, loud ringtones and a phone book. The Nokia 1650, priced at Rs 1,700 is Nokia’s lowest cost colour phone, and it includes an FM radio. And yes, the multi-functionality pull does make it attractive, and crowds out the need for the consumer to purchase the same functionality separately.”

All this, even before secondary effects start kicking in. Once phone subscribers start using their handsets to buy music, audio-visual clips and perhaps even groceries someday, dozens of other marketers will be sweating. Do they have any hope for respite?

RING FENCING

Rural marketers are faced with a cellular challenge. What should they do by way of response? “Provide value,” advises Jagdeep Kapoor of Samsika, a marketing consultancy, “Less is definitely not more in rural India.”

Some products need not become obsolete. “Torches, for instance, can survive,” he adds, “A phone battery is no match for a torch, but they have to give value. Electricity outages are real in these parts. More power at lower price points with emphasis on design will help.”

Watches, on the other hand, may need to take a leaf out of Titan’s marketing book. In urban India, the brand went beyond functionality to sell watches as fashion accessories instead of timekeeping devices. “For watches, they have to move up to a gift category—say, as wedding gifts. Just a cheaper priced watch is not the answer,” says Kapoor, “It’s not going to be easy for these brands to restructure their marketing strategy, but if you make the consumer move beyond the entry level, there is certainly scope.” Rural incomes are rising, and anything worn on the body can act as a status symbol—also a reason that cellphones are often waved about in social settings.

Then, marketers need to do a better job of distribution. ‘Joh dikhta hai, woh bikta hai (what’s seen is what sells),’ as Kapoor’s maxim goes. This is something at which cellphone marketers beat them hands down. In rural Andhra Pradesh, for example, handsets sell right next to ration shops from which people buy their essentials. But as a study by research firm ORG has outlined, other durables suffer from low availability in rural India. Of course, fanning out isn’t cheap; the investment would need to be justified by higher sales prospects in the future. This, again, comes down to the challenge of generating rural demand in the face of the cellphone threat.

But then again, going back to Sajjanpur, gaining visibility can also be done via cinema exposure. If marketers can get filmmakers to weave interesting usages of their products into their film scripts, perhaps they’d have a better chance at prolonging their survival. Still, it’s hard not to pity the marketing executive in any of these hardhit categories, should he get that phone call informing him of his next posting—somewhere in the labyrinth of rural India. It promises to be the toughest marketing job in the world. Crack the problem, though, and it could bring you everlasting fame as part of a business case study.