INNOVATION IN RURAL MARKET

-group 7
Indian Rural Market- an
overview
 46% of the soft drinks sales happen in the
rural areas
 Rural India accounts for 49% of motorcycle
sales
 Rural India accounts for 59% of Cigarettes
sales
 53% of FMCG sales happen at Rural India
Continued…

 Lipsticks are used by more than 11% of the

rural women and less than 22% of the urban
women
 Close to 10% of Maruti Suzuki’s sales come
from the rural market
 Hero Honda, on its part, had 50% of its sales
coming from rural market in FY’09
Continued…

 By 2010 rural India will consume 60% of the

goods produced in the country
 In India, 70% of DTH Connections are from
Rural and Small Towns

 Will any company dare to ignore such market??????

Opportunities are already there......

What next?
INNOVATION!!!
Innovation

 Exploiting new ideas leading to the creation of a

new product, process or service

 It lowers the cost and/or increases the benefits

of a task
Innovation: Two types

 Product/Service innovation

 Process Innovation
Key challenges in Innovation in
Rural Market
 Physical Distribution
 Channel Management
 Promotion and Communication
 Poor Infrastructure
 Uneconomical Market Size
 Consumer Profile
Role players in India

 Corporate India
 Governmental Bodies
Andhra Pradesh e-Gov

 5th largest state

 8% complete high school, 48% illiterate
 70% agriculture dependent
 50% has no electricity, 69% no piped water
 High level of corruption
ICT

 Marketers
 Retailers & Intermediaries
 Consumers
 Benefits of IT driven business
strategy
 Ease of access
 Up-to-date content
 Layout, design, consistent theme
 Easy navigation
 Higher interactivity
 Access through multiple media
 Higher use of non-textual information
 Multiple languages
 Lower transaction cost
ICT Initiatives in Rural
Market
 ITC’s e-Choupal
 n-Logue Communications
 Project i-Shakti
 Inagriline by EID Parry
 Gyandoot
 TARAhaat
 Grameen Sanchar Society (GRASSO)
INITIATIVES OF INFORMATION AND
COMMUNICATION TECHNOLOGY IN
RURAL DISTRIBUTION
 Inagriline by EID Parry
 Private corporation- Murugappa Group
 16 franchised internet kiosks.
 Kiosks- business hubs of respective villages.
 Provision for online registration, easy access to
transaction records with the company.
 Operators trained to use PCs, to surf the portal
and the Net.
 The strategic goals of the
Murugappa Group
 Distribution infrastructure: This infrastructure
would be capable of supporting bidirectional
distribution of products and services into and
out of rural India.
 Trading infrastructure: This would serve as the
foundation to a platform for trading agricultural
commodities and rural industry manufactured
goods.
Gyandoot

 Initiated by government of Madhya Pradesh –

January 2000
 E-commerce and E- governance operation with
aim of providing information and interface
between the government and the people.
 Project includes installation of a rural intranet
connecting 20 kiosks in the village panchayat
centres in 5 blocks.
 Kiosks-soochanalayas
 Kiosk operator- soochaks.
 Each soochanalyas has a computer, modem,
printer, UPS,furniture and stationary.
 The kiosk have dial-up connectivity through the
local exchanges, running on optical fibre or UHF
links.
 Server hub is a Remote Access Server housed in
district panchayat centre.
 Cost of establishing one kiosk-Rs.75000
 Financed by panchayat and community , no
contribution from the government.
 Managed by local entrepreneurs referred as
managers, who charge users fees for the services
offered by the kiosks.
 The first 20 kiosks was handed over to respective
managers after one year of operations.
 Village panchayat maintains the building and the
fixtures.
 Managers are responsible for all operational
expenses and revenue collection.
 Manager does not receive any salary.
 He pays 10% of the income as a commission to the
district council for maintaining the Net.
 For the 11 centres started as private enterprises,
the owners each pay Rs.5000 as a license fee for
one year to the district council.
Features offered by Kiosks
 Agricultural produce rates
 Land records
 Grievance redressal services
 Online application of certificates
 Village auctioning
 PCOs
 Photocopying services
TARAhaat (2000)
 An ICT Company, established by the
Development Alternatives Group
 Connects the rural community to the national
economy and the rest of the world.
 Model to bring relevant information, products
and services via internet to the rural market .
 Launched in Bundelkhand, MP and UP and has
46 centres.
 Provides training and management support to
its networks
 Enables to provide standardized services.
 Acts as central provider of the products and
services
 TARAcard- photo ID for each villager, a local
credit card.
 Revenue comes from payments received for
services, commissions on sales, fees for
advertising and entertainment, royalties and
other sources of earnings.
 Ensures the need of wide range of users are met
also the revenues are widely distributed.
 Communication products offer local language
email, chat and bulletin boards.
The Key Objectives :
 Increasing employability
 Bridging gaps in information
 Promoting rural businesses
 Internet-based services through kiosks such as e-
health care, e-commerce, e-governance and e-
entertainment.
 Training institutes established at the heart of the
target market of TARAhaat, act as a knowledge
hub for rural areas, providing basic and advanced
courses throughout the year to rural entrepreneurs
and the trainers employed by entrepreneurs to
teach at their centres.
 Performance in 2008-09
The performance of TARAhaat has improved in the
year 2008-09 when it earned the highest revenue
ever.
 Network Growth
increased its network size from 128 to 236 running
centres in the year of 2009-10 and further expand
this network size up to 800 by the year 2012.
 New Products and Promotions
Launched two new courses on ‘Diploma in
Computer Application’ and ‘Diploma in Financial
Accounting’.
Grameen Sanchar Society (GRASSO)

 Franchisee of BSNL in West Bengal, Orissa and

Jharkhand.
 Has a three fold plan to improve the lives of rural
poor (BPL).
- a mobile Wireless Local Loop Public Call Office
for communication.
- an Internet kiosk for information delivery and
facilitation
- a rural Light Commercial Vehicle for completing
linkage between the market and the villagers, by
leveraging IT, telecommunications and services.
 Established one e-seva Kendra for every 10
PCOs covering a population of 10,000 people.
 The e-seva Kendra provides e-goverance, access
to weather and agri-related information, access
to market prices for agricultural prices, train
booking & bill payment.
 Tied up with IBM to deliver computer training in
village schools
 Plans to expand and provide value-added
services like godowns and cold- storage
facilities.
 ITC’s e-Choupal

E-Choupal is an initiative of ITC to link directly with rural farmers for

procurement of agricultural/aquacultural products.
Launched in June 2000

Presently the service reach out to more than 3 million farmers in

38,000 villages through 6500 kiosks and 9 states.

Investment in each Kiosk is Rs. 2.5 Lakhs.

ITC plans to scale upto 20,000 e-choupals by 2012, covering

100,000 villages and over 15 states, servicing 15000 farmers.

e-Choupal aims to eliminate wasteful intermediation and multiple

handling.
 Webbased information and procurement tools for Indian farmers,
supported by ITC.

 About6,500 e-choupals (gathering place) are established which

provides a point for information exchange to farmers, as well as
an e-commerce hub.

 Eache-choupal serves approximately 10 villages within 5

kilometers radius, managed by a sanchalak (coordinator) who is
hired locally and becomes the local entrepreneur.

 Reducetransaction costs of selling and buying crops for farmers

by aggregating certain services together
Designed to address the issues such as:
1. Fragmented farms
2. Weak institutions
3. Involvement of intermediaries
4. Information Asymmetry
E-Choupal Services

Relevant & Real-time Information

Commodity prices, Local Weather, News

Customized Knowledge
Farm Management, Risk Management

Supply Chain for Farm Inputs

Quality screening, Demand Aggregation for Competitive Prices &
Efficient Logistics

Direct Marketing Channel for Farm Produce

Lower Transaction Costs, Better Value through Traceability
E-Choupal Services contd…

Distribution of Products and Services to Rural Markets

Micro marketing
Product/Services Demos
Marketing and Brand Building activities
 BENEFITS
 Farmers can get real-time information despite their physical
distance from the "mandis".

 Farmers are reimbursed for transportation cost of goods.

 ITC gain access to fair trade pricing and able to control

quality and quantity of farm products.

 Local farmer can become an entrepreneur by establishing e-

Choupal kiosks and selling and trading goods with the
markets (coordinator).

 Customized and relevant knowledge is offered to the farmers

despite heterogeneous cultures, climates and scales of
production.
n-logue Communications

n-logue was set up by the Telecommunication and Computer

Networks (TeNet) of IIT Chennai.
It is the business of providing Internet, voice, e-governance and
other rural services through a network of Local Service
Providers and kiosks by establishing and maintaining corDECT
(wireless access) –based communication systems.
The basic business model has three tiers :
• The village kiosk operator
• The LSP
• N-logue communications.
 The Business Model

n-Logue

Services Revenues
LSP-1 LSP-2 LSP-3

Kiosk Kiosk Kiosk Kiosk Kiosk

Villagers
THE KIOSK OWNER/OPERATOR

The kiosk operators are largely young men or

women who invest in and operate a tele-kiosk.

Should have studied up to Class 10/12

The kiosk operator acts as an interface between

technology and village people.

The operator assist customers in sending and retrieving voice

and text messages.

The investment is around Rs 50,000
Each LSP covers a couple of small towns and about 35 villages.
Provide connectivity to govt. offices, primary health centre,
schools and colleges, small business and other local
institutions.
Provide basic communication services, computer training,
word processing, school curriculum based tutorial classes.
Provides online consultancy through agricultural and
veterinary experts, doctors.
n-Logue presently has about 3000 kiosks in the states of TN,
Karnataka, Maharashtra, Rajasthan, AP and Gujarat.
Kiosk: Bouquet of Services (besides telephony)

 Learning typing
 Computer education
 Photography
 movies on CD
 DTP work
 Email/voice & video mail
 E-Governence
 Video conferencing
providing
 Tele-medicine
 Vet Care
 E-learning
 E-Agriculture
PROJECT SHAKTI
SHAKTI - CHANGING LIVES IN
RURAL INDIA
 Shakti is HUL's rural initiative, which started in 2001, Shakti has already
been extended to about 80,000 villages in 15 states

 Targets small villages with population of less than 2000 people or less.

 Seeks to empower underprivileged rural women by providing income-

generating opportunities, health and hygiene education through the Shakti
Vani programme, and creating access to relevant information through the
i-Shakti community portal.
• Shakti Vani is a social communication programme. Women, trained
in health and hygiene issues, address village communities through
meetings at schools, village baithaks, SHG meetings and other social
fora.

• i-Shakti, the Internet-based rural information service, has been

launched in Andhra Pradesh, in association with the Andhra
Pradesh Government's Rajiv Internet Village Programme.

• i-Shakti has been developed to provide information and services to

meet rural needs in medical health and hygiene, agriculture, animal
husbandry, education, vocational training and employment and
women's empowerment.
 OTHER ACTIVITIES :

 To improve the business skills of the SHG women, extensive training

programmes are being held.

 As part of their training programme, all HUL Management Trainees spend

about 4 weeks on Project Shakti in rural areas with NGOs or SHGs.
Assignments include business process consulting for nascent enterprises
engaged in the manufacture of products such as spices and hosiery item
Emergence of Organized Retailing

Unorganized Retail market in India: Rs. 4,00,000

Crore.

Organized Retail market: Rs. 20,000 Crore.

India’s Retailing space per capita: 2 Sq. ft.

US. Retailing space per capita: 16 Sq. ft

Organized retailing has faced major challenges in

expanding themselves in rural market.
Haats, Mobile traders and Village shops form the
traditional retail network.

New initiatives are taken like SHG by HLL and ITC’s

Chaupal Sagar to serve end consumers.

Govt. initiatives:
 Public Distribution System(PDS)
 Khadi and Village Industries Commission(KVIC)
 Indian Farmers Fertilizer Cooperative
Limited.(IFFCO)
Khadi and Village Industries
Commission(KVIC)
 Objectives involve skill improvement, providing
employment in rural areas and transfer of
technology, rural industrialization and
promoting self-reliance among people.

 Covers 108 industry groups and 4000 products.

 Operates through 30 State/UT Khadi and Village

Industries Boards.
IFFCO
 World’s largest fertilizer cooperative based in
India.

 Has 40,000 member cooperatives.

 Responsible for fertilizer distribution in the

country.

 During the year 2008-09 IFFCO produced 71.68

lakh tonnes of fertiliser material and sold 112.58
lakh tonne.
Initiatives by private companies

 Chaupal Sagar: First rural mall opened in MP.

 DCM Shriram Consolidated’s Hariyali Kisaan

Bazaar: Started by offering farm related inputs
but stepped in retail buss. too.

 TATA: TATA Kisan Sansar.

 Godrej Group runs Aadhar stores in Maharashtra

and Gujarat.
 Traditional Retailing
 Low cost structure
 Owner operated
 Negligible real estate and labor costs
 Little or no taxes
 Consumer familiarity-generation to generation
Drivers of the Organized Retail
Format
 Economies of scale
 attraction towards large store
 Product variety
 proximity
 Quality service:
 Franchised and company owned stores

 Increased brand consciousness

 Youth population - well informed about brands
 Brand awareness
 Reliability on company outlets
 Fighting fakes
 Philips uses ITC’s E-Choupal to sell their lighting
tubes in rural India.
EXAMPLES OF ORGANIZED
RETAILING IN RURAL INDIA
 Mahindra Shubhlabh Services
Ltd.(MSSL)
 Subsidiary company of Mahindra and
Mahindra Ltd.
 Started in 2000 with equity stake from IFC,
Washington.
 Revolutionized agri-business by aggregating factors
of production under the brand name Mahindra
Krishi Vihar.
 Solutions specific to crop, region and market.
 Provides complete range of products to improve
farm productivity and establishes market linkages
to optimize the commodity supply chain.

http://mahindra.com/Farm_Equ_sec/agribusiness.html
Mahindra Shubhlabh Services
Ltd.(MSSL) Cont…
 The staff provides support and guidance to
farmers in the selection and usage of
products.
 They also guide farmers for crop health,
environmental and human safety.
 Mahindra Krishi Vihar provides platform for
banking institutions to provide loans to
farmers with minimum documentation, quick
sanctions and attractive interest rates.
http://mahindra.com/Farm_Equ_sec/agribusiness.html
Mahindra Shubhlabh Services
Ltd.(MSSL) Cont…
 In-turn the financial institutions develop a
lower-risk portfolio and reduce their
overhead costs through this channel.

http://mahindra.com/Farm_Equ_sec/agribusiness.html
ITC’s Choupal Sagar
Bringing modern retail to Rural India

 First rural mall in India with 7000 sq. ft. of area.

 It offers self-service facility.
 It stocks everything from toothpaste to TV, hair
oils to motorcycles, mixer-grinders to water
pumps.
 Most of the brands that Chopal Sagar sells are
national brands such as Marico, LG, Philips,
Eveready and shirts from ITC’s apparel business,
bikes from TVS and tractors from Eicher.

http://www.itcportal.com/rural-development/choupal-saagar.htm
ITC’s Choupal Sagar
Bringing modern retail to Rural India

 The mall is located near the stock points of

ITC’s e-choupals, making it an integrated
model.
 To offset the huge investments, ITC has
partnered with other companies interested in
serving the rural market.
 This has helped them with widened product
offerings and spreading their overhead costs.

http://www.itcportal.com/rural-development/choupal-saagar.htm
Mahamaza (Bringing E-Commerce to Rural India)

 Introduced in 2000.
 Network of virtual dealers scattered around the
country.
 275,000 web store dealers in small towns.
 Extraordinary range of products, from
Motorcycles to cycles and cell phones.
 They sell 28 brands across 15 industries.
 Website uses offline network of ‘Web store
owners (WSO)’.
 Rs.5100 is charged as the registration fees.
Mahamaza Cont…

 WSOs interact with customers face to face

and report transactions to nearest offices
located in Delhi, Lucknow, Dehradun and
Pune.
 Payments are made through pay-orders, DD
or Cheques.
 Goods delivery within a week.
 Mahamaza avails heavy discount as they
purchase in bulk from the participating
companies.
Mahamaza Cont…

 Mahamaza sold Rs. 1.5 crore worth of Nokia

Phones in the very 1st month after striking the
deal with the co.
ParryIndia Agriline

 An agriculture co. in Tamil Nadu.

 Has setup first-of-its kind portal
indiaagriline.com, launched in 2001.
 Farmers can access personalized and general
information on agriculture and allied
activities.
 The portal provided detailed information on 6
crops which included sugar, banana, cashew,
tapioca and groundnut.
http://www.eidparry.com/agriland.asp
ParryIndia Agriline

 It provides detailed info ranging from farm

practices to advisory services to pricing details
for different crops in the nearby markets,
weather forecasts.
 Set-up kiosks in 16 villages near their sugar
factory.
 These kiosks are called Parry’s Corners, business
hubs for their respective villages.
 A one-stop shop that acted as a storefront for
buying farm inputs, a market for selling goods,
and an Internet café for communication and
information services.
http://www.eidparry.com/agriland.asp
ParryIndia Agriline

 Personalized info such as payment details of

a sugar co. to farmers could also be accessed
on the system once a farmer is registered on
a kiosk.
 This facilitated market transactions, industry
competitiveness, new innovations and
positive social transformations.

http://www.eidparry.com/agriland.asp
3A Bazaar

 3A Bazaar is India’s first mobile retail

company which was launched in early 2007.
 The company is owned by the Paramount
Trading Corp Pvt Ltd, an exporter of metal
handicrafts and primarily operates in the
Jyotiba Phule Nagar district of Uttar Pradesh.
 The company is the brainchild of Mr. Asad
Shamsi, who was inspired by a few similar
retail chains in Europe
http://www.3abazaar.com/
3A Bazaar Cont….

 ‘3A’ represents the first letters of the names

of the three Shamsi brothers, all of whose
names begin with ‘A’.
 Mr. Shamsi conducted extensive research in
rural India and found out that India’s rural
population does have disposable income, but
not regularly.
 1st chain of rural retailing in India through
mobile vans.
http://www.3abazaar.com/
3A Bazaar Cont….

 There are about 7 vans which carry goods worth

2-2.5 lakhs of rupees everyday from Mr.
Shamsi’s storehouse to about 700 villages in JP
Nagar district.
 Villages are visited weekly or fortnightly or
monthly.
 It fits with the irregularity of incomes of
villagers and the mobility eliminates the
drawbacks of a static rural retail shop.
 Daily average sales are in the range of 8-10
thousand rupees

http://www.3abazaar.com/
3A Products

 Grocery
 Staples
 Toys
 Personal Care
 Health Products
 Confectionery
 Color and Cosmetics
 House Hold items
 Stationery
http://www.3abazaar.com/
http://www.3abazaar.com/
CONCLUSION

 Marketers use innovative tools and strategies to

overcome challenges they face in business.
 Business innovation is broadly divided into
product/service innovation and process
innovation.
 The ICT-driven value chain and organized retail
format have been found to be the best
innovations for rural India.
 The ‘anytime-anywhere’ advantage of e-
marketing leads to efficient price discovery,
economy of transaction and a more transparent
and competitive setting.
Keep smiling