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Migrant workers: The key to raising rural brand consumption

A significant portion of India’s population is rural, and their consumption of branded products is low. However, research has found that households with migrant workers tend to spend more on branded products due to the transfer of sociocultural information from urban areas. This impact tends to be higher in poorer families, those with mobile phones, and those living in more populous villages. Brand marketers can leverage this data to improve sales force allocation to rural areas to get higher sales and ROI.

Close to 70% of India’s population lives in villages, and a significant proportion of these residents migrates to urban areas for work. According to the 2011 census, over 78 million people migrated from rural to urban areas to earn a living. Their annual remittances are to

the tune of Rs. 1.5 lakh crore, according to the Economic Survey of India 2016-17. This massive population of migrant labourers was also made apparent to us during the pandemic. When these workers return to their rural homes, they carry their money and new lifestyle ideas, including brand awareness, which is typically low in rural areas.

Given that up to 60% of the consumption in developing countries is of relatively inexpensive unbranded products, especially in rural areas, this phenomenon can greatly benefit

marketers of branded products. So, how can they leverage this phenomenon to identify and target households most amenable to brand consumption? A study examining the social and economic impact of migration on brand expenditure in Indian villages tries to answer these questions.

Migration affects brand expenditure in two broad ways. The first one is through the transfer of money and branded goods to

families in villages as an indication of success, which increases the family’s status-enhancing consumption. The second way is through the phenomenon that Levitt called “social remittances,” which is the transfer of information on lifestyles, aspirations, and behaviours in the urban areas.

The study found that economic remittances increase consumption of branded products and that this impact is higher for poorer families. Two factors cause this upswing in brand expenditure: seeing branded products as status-enhancing and the newly obtained ability to afford branded products due to economic remittances from the migrant. The impact is relatively lower for more affluent families as they have other means of communicating status, e.g., land ownership, education, or professional titles. Moreover, the branded goods available in rural areas tend to be affordable brands rather than luxury brands and so have lower status-signalling value to wealthier households.

The impact of migration on brand expenditure is also higher for families with mobile phones.

Mobile phones allow regular communication with the migrant and, thus, increase social remittances. Interestingly, possession of a television leads to a far more negligible impact as the television already creates brand awareness to a certain extent. Households that have sent migrants to work a while ago also show a higher impact as the migrant gains more significant exposure to brands over time and also manages to grow their earnings. Similarly, the effect is higher for families living in more populous villages with better infrastructure as these factors enhance brand availability.

This study has significant implications for marketers as it looks at a largely untapped market

for brands and the as-yet under-researched dynamic of migration. Marketers can use migration data to strategize the allocation of their sales force, focusing on villages and households where the inclination towards brand expenditure will be higher. The current allocation of salesperson visits is based on population and household income, which doesn’t necessarily predict reception towards branded products. Migration data can bridge this gap and allow brand marketers to get higher returns on their sales effort investments. It can also lead to higher sales as villages with greater potential for brand expenditure are tapped. Therefore, considering the impact of migration can be a far more potent tool to increase brand presence in rural areas.

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