Financial Daily from THE HINDU group of publications
Monday, Oct 18, 2004
Industry & Economy
Climate & Weather
Marketing - Rural Marketing
`Weather still best guide to rural demand'
Thiruvananthapuram , Oct. 17
SUSTAINED good performance by the software, pharma and services sectors has emboldened at least some market pundits to write off the monsoon `push' effect on economy.
They venture to do it on grounds that new growth drivers have seemingly emerged in the Indian economy and agriculture is unlikely to play a significant role in incremental growth as it has done in the past.
For the record, growth of industry and services in India has marginalised agriculture to a 22 per cent slice of the country's GDP, down from 34 per cent only 10 years ago. While the 60 crore rural consumers still have a significant effect on national consumption, the pundits aver that the urban consumer is increasingly important for many products as more people move to India's sprawling cities and earn higher salaries.
But, as is always the case, there is a `Bharat' angle to the growth story that cannot be wished away, according to Dr V. Mukunda Das, rural marketing strategist and consultant. He said this while replying to Business Line's queries on the extent to which a successful monsoon can determine income generation in rural areas.
Now Director at the School for Communication and Management Studies, Kochi, Dr Das has been consultant to leading MNCs, including Colgate-Palmolive, as also other international agencies and public sector undertakings. He has been a Marketing Consultant to the European Economic Community assisted Kerala Horticulture Development Programme (KHDP).
Do companies need to have a weather-centric approach to devising their rural marketing strategies? The answer is a resounding yes, according to Dr Das.
Studies on inter sectoral linkages between agriculture and industry have shown that the industrial sector in India depends a lot on the agricultural sector, both for intermediate and final consumption purposes. Studies have also shown that every bad monsoon has had a large impact on the industrial units, especially those strongly linked to agricultural sector.
The industrial sector - makers of consumer products, that is - also depends on the rural sector for their market. "Though there are no published studies on the impact of a bad monsoon on rural market demand, our research in several villages in India have shown that depending on the gap between actual and normal rainfall, some villagers forgo buying of toiletry items, for instance, in years when there are bad monsoons," Dr Das said.
Generally speaking, marketers can assume that the demand for their products in a year with bad monsoon could be less by 20 per cent to 30 per cent compared to a normal year (this could vary across regions). In other words, companies have to redefine almost on a routine basis their marketing strategies and sales promotional efforts to district/zones which are expected to have deficit rain and design contingency plans.
What normally happens as a result of bad monsoons is that the indebtedness of rural people increases. This credit-based consumption, especially during bad monsoon years, has to be carefully examined by marketing planners in corporate offices.
However, it is safer not to alter pricing during such off-seasons, as the demand is by and large inelastic. On the other hand, good monsoon years will have to be ascertained by rural market planners for streamlining their strategies, says Dr Das.
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