Leveraging ICT for Rural Marketing

Amit K Roy ITC LTD - IBD

FICCI RURAL MARKETING SUMMIT

May 10th 2007, New Delhi

What we keep hearing about Rural

Large Population base Lower Incomes Monsoon Dependent Rural is different Limited Media reach Illiteracy Poor Infrastructure Spurious Products Unviable Direct Distribution Insufficient Research

We Believe that the Incomes in Rural are low because of

Fragmentation Geographical Dispersion Heterogeneity Weak Infrastructure Scope of my Presentation Talk about implications of these realities Explain how IT makes a positive Difference Illustrate through ITC eChoupal case Study

Implications for Farmer / Consumer

Reality
Fragmentation of Land Geographical Dispersion Heterogeneity

Implications
Adversely Impacting Productivity & quality of the produce Weak Bargaining Power - No access to Real time Information - Expensive to deliver Information
-

Single farmer multiple crops Investment Needs, Cash flow ability, soil conditions . Difficult to Customise

Weak Infrastructure (Roads, telecom,

Power , Irrigation)

Dependence on Middlemen Few Alternatives

Efforts made so far

Unbundled Institutions Right Solutions, but one can only go this far.

Institutional Credit : Constrained by difficult Counterparty risk management. Govt Agri Extension worker High Cost and low impact Agri Input Companies- Typically Product Focus Cooperative Societies Benefits Cornered by a few . Mandi Ideal Price Discovery, Sunk cost on transportation , forces Farmers to Sell. Higher Transactions cost and malpractices by the middlemen

Which resulted in ..
Low Risk Taking Ability

Low Incomes

Low Investment

Low Productivity

Implications for Rural marketers

Reality Fragmentation Geographical Dispersion Heterogeneity Weak Infrastructure Implication Reward: Effort ratio better in Urban High Cost of reach Not worthwhile to customise Passive Distribution

Which resulted in

ENTER IT - Illustration The ITC eChoupal

The Problem Faced by FarmerThe 2 Ds

DEEP SEA - Institutional support Information on farming best practices/ weather Quality and information on Inputs DEVIL Middle Men Price Discovery Quality and weighment Handling Loss Time

The eChoupal
Information and Communication Technology Infrastructure at each eChoupal. Computer with printer Internet connection Solar Panel VSAT This farmer called Sanchalak is Educated A progressive farmer middle size farmer. Well respected by fellow farmers Not a businessman
A formal training is imparted to the Sanchalaks on the usage of the ICT infrastructure.

Power

Connectivity

Overcoming Odds

Training

Content

e helps overcome 2Ds..

Unbundling Information and Transaction Price Discovery before deciding to sell Freedom of choice for transaction Payment Cash on spot Bundling Information, Knowledge and Transaction Knowledge on Farming best practices Information on Weather High Quality Products and Solutions Usage

Power of scale to farmers Overall improvement in productivity Sanchalak has build tremendous Trust and Credibility in the Village.

The eChoupal Services

Relevant & Real-time Information
Commodity prices, Local Weather, News

Customised Knowledge
Farm Management, , Risk Management

Direct Marketing Channel for Farm Produce

Lower Transaction Costs, Better Value through Traceability

Supply Chain for FMCGs, Vehicles, and Farm Inputs

Screened for Quality, Demand Aggregation Competitive Prices Efficient Logistics Financial Services Life, General , Health and Crop Insurance

Education

Whats in it for the farmer?

Bottom line for the farmer Increased yields Improved Quality Reduction in Transaction costs

Power of Scale to the Small Farmer Customized Knowledge despite Heterogeneity Real time information despite Distances

The Network Size

State Madhya Pradesh Uttar Pradesh Maharashtra Rajasthan Karnataka Andhra Pradesh Total No of Villages Hubs 46 48 26 25 2 3 150 Choupals 2000 2100 1000 870 100 100 6170 33935

Our Vision - 20000 choupals ,covering 100, 000 villages in 16 states

Distribution thru eChoupal

Category Daily Buy Continuous Availability Mechanism Active Servicing upto rural outlets Sanchalak Facilitates Distribution a) Continuous Inventory b) Aggregates Demand Bulk buy and High Value Special Products Hypermarket @ Choupal Saagar Lead Customers to respective Company O/ls eg TVS, Eicher etc

Marketing Services thru eChoupal Distribution Research Communication Micro Marketing Sampling Product Demonstration

Choupal Sagar Can make a difference..

State of Art facility for Procurement.

Setting new benchmarks in shopping experience for rural Consumers

Wide Range of Product Categories

Coming out with Families Increasing.

Recap ICT Ingredients of ITC eChoupal Deliver real-time information and customised knowledge Aggregate demand and access high quality products at lower cost Act as a direct marketing channel allowing efficient logistics management Provide products as per the needs of the villagers

Thank You