Renovation or buying something has been part of the tradition during Diwali, and it certainly encourages people to spend their disposable income. As the festival coincides with kharif harvesting season, consumers in rural India have higher propensity to consume, thus motivating marketers to design rural-specific strategies. MOHD MUSTAQUIM highlights the efforts marketers make.
The festive season in India begins with harvest festival Onam, followed by Dussehra, Diwali and Christmas across the country. Out of them, Diwali is the biggest in the entire subcontinent, and it is during this festival people spend the most.
In India’s rural, consumers usually wait for Diwali as best offers are available during the festival. A major share of the festive sales is seasonal unlike in urban where consumers are salaried and their ability to spend is year-round.
Festive season in India contributes around 30-40 percent of annual sales of consumer durable products. According to a recently released report by Assocham, corporates are gearing up to spend about 25-30 percent more on their advertising as compared to last year in consumer durables, electronics and automobile taking the lead. However, the response from rural markets may not live up to the expectation owing to low rainfall.
DS Rawat, secretary general at Assocham, says, “Feedback from corporates suggests that the marketing teams of the companies engaged in the Business-to-Consumer (B2C) have already lined up plans for their ad campaigns which will begin from Navratras and run through Durga Puja, Diwali and right up to Christmas.”
Television remains a preferred platform, but with increasing penetration of the social media in rural India, marketing and media planners have also relied on platforms like Facebook.
Nearly 69 percent of the companies see the festive season a perfect time to advertise their products; this is despite the fact that advertising cost has risen in the recent time.
Responding to the prospect, leading public sector bank Punjab National Bank has reviewed its interest rates. “Two-wheeler loan on floating basis would attract interest rate of 12.25 percent. Car loans on fixed basis would attract interest rate of 10.65 percent and 10.50 percent to better rated borrowers on floating basis,” the bank states. It has announced full waiver of processing fee and documentation charges on housing, car and two-wheeler loan schemes for the festive season.
“Jewellery sales in Dhanteras surged by up to 30 percent, both in value as well as volume terms year-on-year regularly and in fact during this time the Gold traders struggle to find supplies. Over a period of time, it has become a fashion to buy some metal on that day even in small towns and in villages,” Manas Nayak, AGM, activation at GirnarSoft, says.
Last year Diwali’s sales response was mixed. Consumer electronics companies could not register the expected growth due to rupee depreciation, high operating cost and other reasons. Manish Sharma, managing director at Panasonic India, says, “The festive season last year lacked the usual excitement, something that the industry had witnessed in the previous years. Rupee depreciation, cost pressures, inflation and RBI ban on zero percent EMI schemes were some of the factors that contributed to the low consumer sentiment and lower sales.”
Sharma further adds, “In spite of a dull consumer sentiment, we did fairly well in terms of overall sales last year. While the beginning of the season was a little sluggish, the industry witnessed an upswing during mid-year.” The wedding season coinciding with the festive season, financing schemes and bank loans have acted as a catalyst in driving the sales last year.
“We are happy to see growing very fast, especially in the rural areas where there is no fibre cable network. In the bad weather, when DTH services get interrupted, and through traditional cable operators, there has always been some interruption in the services. We provide uninterrupted services through India’s first C-Band Technology,” says Manas Kumar, business head at Noida Software Technology Park Ltd (NSTPL), NSTPL make set-top-boxes in the name of JAINHITS.
Mahindra Tractors sold around 1000 tractors in Bihar and Jharkhand, 700 alone in Bihar on the day of Dhanteras last year. Kishlay Kishor, assistant area manager, institutional sales for Bihar and Jharkhand at Mahindra Tractors, says, “Every year on Diwali, our stock gets short due to increasing demand. Therefore, this year we are planning to increase our stock by 20 percent from the last year sales after district wise survey.”
Mahindra Tractors expects high in Diwali this year. The company senses negative sentiments due to late Monsoon, but does not see any impact on their sales. Countering the impact of weak Monsoon, Kishor says, “We are going to deliver below 40 HP tractors to the farmers at Rs 110,000 only while the rest of the fund will be arranged on interest free loans.”
Similarly, Escorts Tractors expects to sell 10,000 tractors in September and 13,000 tractors during Diwali across the country. The manufacturer sold 8,000 tractors during last year’s Diwali.
Panasonic, on the other hand, is aiming a revenue growth in excess of 25 percent from last year's accomplished during festive season. With an aim to reach out to the rural consumers in the simplest ways, companies are focusing on both ATL and BTL activities.
Rural India is likely to outpace growth in the urban markets propelled by increasing penetration across categories such as refrigerators and washing machines. The growth in rural market will be driven by factors like increasing rural income, increased distribution, customised products for rural consumers, improved rural infrastructure and availability of power.
Price, affordability, availability and awareness are some of the primary challenges that marketers face while attempting to penetrate rural markets. These challenges can be linked to the mindset of rural consumers, lifestyle and behavioural attitude towards new products. Another most important difficulty faced in the rural marketing is making products available; unorganised and scattered rural markets require deep distribution and sub distribution networks, logistic facilities, and good infrastructure.
Anticipating the impact of monsoon, some companies are reviewing their Diwali plans. Some are banking upon big discounts and offers to tackle the problem and to ensure higher sales.