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Spoonfeedin WOrld

Business – Nokia looks to tap billion customers in rural India

Rajiv Banerjee & Prasad Sangameshwaran

Immediately after taking over the top job at FMCG behemoth P&G, Bob Mc-Donald announced to his shareholders the ambitious target of adding a
billion new customers to the 4 billion that P&G already serves. And a bulk of the one billion will come from India and China.

Across the Atlantic in Finland, the senior management at Nokia were listening intently. Not for any competitive reason but for the rather similar ambitions which the Finnish phone maker harbours in the same markets. And in all probability, a majority of the billion customers are from rural areas in India and China, making it the El Dorado and the players, the modern day Conquistadors.

But for a telecom handset player in what is one of the fastest growing sectors not only in India but the planet, the stakes to be among the first ones to hoist a flag in the rural markets is high. Sample the following numbers.

Almost 2 bn people across India, China and Africa reside in rural areas and out of that close to a billion reside in India alone. So it’s not just the FMCG companies or the telecom service providers who are salivating over the potential but even a handphone manufacturer like Nokia who’s looking to entrench itself in the rural markets here. And it’s doing so by taking a different route, albeit one which forays into a turf where the service providers hold fort — services. It’s Nokia Life Tools (Jeevan Saadhan), an ambitious programme which bundles the handset with a services, all aimed to hook the rural customers.

“This is a long term initiative which focuses on empowering rural India,” B V Natesh, head, emerging markets services, Nokia India. So what began as a pilot programme last year has now been rolled across India possibly marking a first for any telecom handset maker and for others to follow as well.

For Nokia, NLT, is in many ways a lab which will enable them to replicate the model in other potential rural markets across the globe. The thrust on rural markets in India comes even as the mobile density is around 40% with 450 million users thus providing ample scope for full throttle growth.

However, most of the growth witnessed so far has taken place in urban areas, particularly major metros with teledensity going through the roof. “Rural in the next big opportunity. Everyone knows that. But the question is how to tap it. All the operators are aggressive. Bundling helps any handset player to create extra ‘value’ to lure the entry level consumers . But how does one create brand leadership for oneself in such a scenario without depending on others ? ” remarks Jitender Dabas, VP & strategic planning director, JWT.

Dabas who has been in thick of action on NLT says the approach goes back to the development level which kicked off when Nokia launched the 1100 series keeping in mind the rigours of the hinterland. But lowering handset prices or reducing charges is only half the attempt, he says. And Nokia knows that if it needs to make money from rural markets, it has to play a role in augmenting the incomes of the target audience. And for that one can’t merely rely on a transactional relationship but one that creates relevant value for them.

The relevant value creation of NLT stands on four pillars or rather the four Es — empathy, entertainment, evidence and education. The services on offer at various price points range from market prices, weather to music and entertainment to even simple courses on English on the mobile phone. Dabas explains that in the rural community, it’s about stature and not just status. “At the end even economic progress is more a means to achieve ‘stature’ than statuses in the community. Therefore progress achieved through more knowledge is a definitive way acquire social ‘stature’,” he states. Interestingly the go-to-rural market has an FMCG flavour to it.

Clearly the top brass at Nokia including D Shivakumar, MD, Nokia India are drawing from lessons learnt during their stints in FMCG, particularly HUL. “Clearly the way they approach the rural marketing has shades of Unilever in it. The seriousness & the depth with which they build their understanding of the rural consumer has clear inspiration from their stints at Unilever,” remarks a senior official close to the project.

And apart from inferences to FMCG, an FMCG major is also helping Nokia provide the services. Nokia has tied up with ITC e-Choupal under which ITC e-Choupal will provide expertise in the areas of commodity prices and instant information for the agriculture sector from their network of local mandis and e-Choupals. “With our reach and ITC’s e-Choupal’s network, we are confident of empowering farmers across states with latest and relevant information,” says Natesh.

Even as this will be a first for a handset manufacturer, the strategy of empowerement isn’t entirely new. So far the degree of success cannot be gauged and Natesh is unwilling to disclose the number of subscribers who have opted for this services. Meanwhile, the industry is watching with interest on how exactly it pans out for Nokia. A senior official from a rival company sounds a note of caution.

“Competing with operators is an altogether different story. Unless the value adds is something very unique, it will just be another fad which will fade away in sometime,” he says, adding that mobile connectivity has ensured that farmers have access to information like mandi prices. “Further if one gets a plan with a close user group from operators, then why pay extra.”

Nokia officials however counter that NLT becomes a retention platform by offering more and more services in the time to come. “The key is to create a base through constant engagement. Once it is achieved, the services can be bundled on all handsets sold in rural market,” the official states.

Nokia chief Olli Pekka Kallasvuo is betting big on project Ovi — evolving from pure devices to an integrated services player. In Finnish, Ovi means the door. Following the India launch, Nokia plans to take NLT across six more markets globally. It remains to be seen whether the tools open the door to the rural markets for Nokia in the time to come.


October 28, 2009 - Posted by | Uncategorized |

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