New categories even in village haats

In the last decade we have seen many new categories capture the imagination of the Indian consumers Green Tea, Olive Oil, Oats....

The other day I saw an interesting product, stacked in a bag in a village haat ....

The category is Macaroni

Bamboo Cluster Village - Assam

Recently had the chance to visit a village which was into production of products out of Bamboo. Each house was specializing in some product. One has to see the skill level to actually appreciate it. A few photos from the visit..

Entrance to the Village

Sofa Sets being made

Bangles being made

Smaller Stools

Finished Smaller Stools

Rural Marketing Videos

I came across a set of videos on rural marketing by CNBC TV 18 Story Board. They are little dated - 2009, but then in India it is very difficult to get anything updated on rural marketing,

Rural Retail

Mobile rural retailer in MP...

Wooden Toys & Handicrafts : Disappearing

chanpattana toys

The basic logic behind segmentation is that there is heterogeneity in demand and  there would be demand for products /services across the value spectrum. But then today in many categories we can see mass manufacturing over-weighing this logic, we can see that happening in the case of traditional handicraft products, products made from clay, wooden toys.

The list is very long , and some of these products have even disappeared and for those which are still around you have to search for them as they have been substituted by cheap Chinese products. I have nothing against cheap Chinese stuff, I do realize that they do offer a value proposition for many of us. But my issue is that many retailers and even manufactures have abandoned the little high price reasonable quality (LHPRQ) platform in the market. They have started believing that only cheap (many a times low-quality) offering is the only offering which the consumer is interested in.

I also realize that with the advent of these 'cheap' products the market for the LHPRQ products must have shrunk, but if one is willing to wait out there would be a lot of consumers who would after some time look for better quality products. And in the meanwhile you would always have your loyal followers...

A Fistful of Rice By Vikram Akula

In 'A Fistful of Rice' Vikram Akula traces out his journey of starting SKS and shares his philosophy, take on tackling the poverty and rural issues in the country. The strength of the book is it very well-written and easy to read (infact at times a little too easy) and gives us an understanding of the for-profit micro finance model as against the NGO model which Grameen Bank promotes.

The book starts with his experiences on his visits to India in his childhood and moves on to the days where he started working in rural India and to the part where his search for a scalable model helps him conceptualize the SKS model. The idea he promotes through the book is that it is not a bad thing to make profits from micro finance or the poor. His idea is that one will not able to attract more money (other than grants and government funds) unless and until you are able to provide decent returns. This is what Late Prof C K Prahalad propounded in his book bottom of the pyramid where he said that there is money to be made by serving the world's poor.

Towards the end of the book, Akula shares the new areas in which SKS is expanding , from using their reach in rural India to sell product to their members, the non-profit work which they are doing in areas of education & health....

The book was written before the Microfinance crisis hit, so there is no mention about that, and the negative coverage which the industry has got, but then these issues are out the scope of this post, but there are a lots of positives which one can take away after reading the book especially for people interesting in making their presence felt in rural India.

Simple..Yet Difficult

This post is triggered by a sad event, the death of seven month old child of our gardener. What was more painful for us was that the death was caused by 'Simple Diarrhea', which is something which is not unmanageable.

But the fact of the matter is that the 'Simple Diarrhea' is the second leading killer of children in the world. Just to emphasize the impact of these so called simple preventable diseases,

With over 240 million children under the age of five, India contributes 25 percent of the world’s child deaths….. It is believed that easy measures could prevent 90% of diarrhea deaths, 62% of pneumonia deaths, 100% measles deaths 92% malaria deaths, 44% HIV/AIDS deaths and 52% neonatal fatalities. For example, Simple measures like exclusive breastfeeding for six months can prevent child deaths by a good 16%.......(Unicief India)

And, the task itself is very simple, communication, when I hear about diarrhea the first thing which comes to my mind is the communication which used to aired by Doordarshan on what needs to be done, the simple things like giving the child water and salt combination, or tender coconut water and so on. I fear that that kind of communication has been lost in the deluge of channels and programmes these days. For people interested in knowing more about prevention of diarrhea should visit, http://rehydrate.org/

In the book The Checklist Manifesto, author Atul Gawande explains how following simple steps or checlists can in a host of issues rirght from handling an aircraft in the event of an emergenecy to help bring down infection levels in Hospitals. The more interesting study which he quotes in the book is the role of simple hand washing with soap in Karachi slums leading to a 52 percent drop in the incidence of diarrhea, 48% fall in cases of pneumonia...and when others things remained more or less same.

I am sharing these thoughts here as I feel that the domain of marketers in India in much wider than any other place , as it includes rural India and the huge number of urban poor and we can do a lot by simply improving communication and helping bring in social change....

Rural Marketing Videos

While searching for videos on rural marketing I found this three part video (storyboard) edited by Dalip Sehgal, MD of Godrej Consumer Products limited. The series was shot in Nov 2009 and it includes the interview with Adi Godrej and others of the group who share their insights on rural markets, then a set of interviews with retailers and consumers. Thought it was worth sharing with my readers,

Part One - A reality check in rural markets of Punjab, link
Part Two - Rural Immersion for Top Management at Godrej, link
Part Three - Experiences of Airtel, M&M and Hero Honda, link

Moving beyond sachets to products for rural masses

This post was triggered by the exchanges we had on twitter a few weeks back (@futurescape, @RGambhir) on the issue of whether rural marketing in the country has evolved to the stage where companies have started designing products exclusively for these markets. Till recently most popular approach most urban marketers had towards rural was do some cosmetic changes to the product, mostly the packing (smaller ones) and then push them in the rural markets. And to be fair to them even this sachetization lead to a boom in these markets. But then it was still giving a step-treatment to the markets which has 70% of our population.

In the recent past Nestle and GlaxoSmithkline Consumer Healthcare (GSK) have launched products that have been exclusively designed for rural. GSK's Horlicks Asha is — a low-cost variant (40 per cent cheaper than Horlicks) for rural markets only. Asha tastes slightly different and is priced at Rs 85 for a 500-gram pouch pack -– close to half the price of the original. And Nestle has launched Rs 2 and Rs 4 products — Maggi Masala-ae-Magic and Maggi Rasile Chow, meant for rural/semi urban markets to provide low-cost, light meal fortified with iron. There have been more attempts of these kind earlier , but they have been more part of a CSR initiatives, but companies like GSK and Nestle are looking at these products as profit making intitaives. More towards the BOP than the Social Business philosophy.....

A few more examples which would fit in would be 'Tata Swach' the low cost water purifier launched by Tata. For more refer the post @emergingfutures on swach . Even Tata Magic would fall into the same category...

Hopefully with this we can see many more similar initiatives in the future .

Monsoons and the Indian Market

Monsoons is a reality of Indian market, a good proportion of the growth of the Indian economy is still dependent on how adequate the rainfall is across the country. But as with many other things we tend to take the monsoons for granted and it is only when we have a drought hanging over the country that we start talking and discussing about it as is apparent from the recent news items on weak rains and impact on FMCG revival, impact on the stock market ,and the FM lowering the economy's growth to 6 plus from 7%.

The linkage of good monsoons and Indian market is because of another reality which we keep ignoring and about which I have written about earlier also, it is the rural market. link to my earlier posts on rural marketing.

The rural economy is heavily dependent on monsoons and many companies are dependent directly for their sales from the rural markets (more than 50% for FMCG and durables), and with an inadequate monsoons the rural consumption falls and so does their overall sales. There are many more whose sales are indirectly dependent...

And the urban consumers is dependent on the farmer for his of pulses and cereals..... as some one told us that the farmer is a better marketer than his urban counter part as we depend more him for our daily needs than he does on us!!!!! And with sowing down by 20% the prices are bound to climb higher in the coming days with toor dal touching the feared 100/- mark.... the impact would be more pronounced on the monthly budget soon.

The sad part is that we tend to draw up plans to combat the impact of bad monsoons the year we have a problem and when the rains are back to normal the next year we forget and go on with life. This year it is seen as more important as a weak monsoons might extend the slowdown...

Another write-up in NY times of the same issue, link

Jaipur Block Printing

On our recent trip to Jaipur we had a chance to see the demonstration of block printing in Jaipur - Sangnerie Print.

It is a traditional handmade product and has a huge market in India and abroad. The person here shows how a single

print is done. My search on the net could not find any good websites promoting the handicraft....

Tractor Buying Farmer and his buying cycle

As marketers we tend to have a lot of interest in understanding consumer buying process. The latest that we are falling back on is observation and neuroscience to take a peek into the consumers mind while he is making the purchase decision, but one can also use more mundane ways to get genuine insights into his mind by talking to retailer or dealer who meet and interact with consumers on a day-to-day basis, even your sales people can be of significant help.

I had one such interaction with a senior person who has been taking care of tractor sales for a well known tractor company, and my discussion with him gave me many insights into process through which a farmer goes through before decides on which tractor to buy. Will try a share a few of those insights,

One of the things of interest is the time which a farmer takes to arrive at the final decision, which from the dealer perspective is the specific brand of tractor he buys. According to him the whole process from need identification to the final buying can take anywhere between 6-9 months, which is quite long even for a product like tractor which is both a expensive as well as a long lasting product for the buyer, making a very high involvement purchase .

And in his experience the 'one' thing which the farmer relies the most to come up with his final decision is WOM , which he gets from users of tractors of the same or the competing company. This infact is I would say the most important insight gleaned from my talk, because this has critical implications for both the marketer and sales people. Most of the dealers and sales people would like to move on from the last sale and look for new prospects, but the very fact that the new tractor buyer would base his 'buy' or 'No buy' decision on the feedback from earlier customers is sometimes lost in the haste to get more sale. It also has implications for service as the tractor would come keep coming back to the dealer for regular servicing which would mean new touch-points of good experience which the farmer can carry back.

Infact the farmer has become a true king with the number of companies offering him tractors close to 15-16 . Though it has also created a lot more confusion, from the earlier days of either M&M or Escorts sort of a situation. But then lack of competition does not mean loss for the consumer but even the company operating in a such protected environment also ends up becoming sterile??

Rural Retail Options - Traditional Vs Emerging

Thought will share the presentation on rural retail options, over the last couple of years have shared the presentation with many students so thought might as well put it on slideshare to a wider audience,,

Rural Retail Options – Traditional Vs Emerging

View more documents from Rajesh Aithal.

Tata Magic - Rural Transport Vehicle

Was travelling for the last week so could not update much. Will share some of my travel insights..

I noticed the presence of Tata Magic across the roads in UP, Delhi and Haryana. The vehicle is being marketed as a rural transport vehicle. With a 700 cc engine and a van like design it seems ideal for the passenger tranportation needs in rural India. The vehicle is designed to take 7 passengers, and one who has seen how many more are squezzed knows that the maximum number of people is best left to the imgination of the driver. It seems that Tata would end up using the chassis of its existing Ace ( a huge success) and thus able to optimise on the costs.

Though Tata Magic is not the first to enter this segment, some year back Hindustan Motors came up with a rural transport vehicle called RTV, but it did not succeed much.Today one can seen some of them plying as school vans. But my feeling is that Tata Motors has again hit the right spot in the market going by the number of Magics I have seen on the highways in the country. Obviously the price of around 2.5 lakhs worked in its favor, but will magic follow the footsteps of Ace?

For more details on Magic visit Tata Magic

Rural Marketing in India - Beyond Tactics

Sharing the presentation from the talk which I had given to MBA participants of IIT Allahabad on Rural Marketing,

Rural Marketing In India Beyond Tactics

View more presentations from Rajesh Aithal. (tags: marketing india)

Project Shakti Going Global

Project Shakti as a model of distribution has attracted a lot of attention both from the company as well as media. The model makes use of existing Self Help Groups working in villages and appoints them as sales persons called shakti amma to sell HUL products in villages. The idea is to be able to reach those villages which do not very good road connectivity and penetration of media is also poor. By appointing the lady as a distributor for the company is able to get a direct reach in villages where it had no presence earlier and the lady would be able to get additional source of revenue. A win-win situation if one were to describe it.

The lady- Shakti Amma would be supplied the at her door-step and she would be selling it to the nearby cluster of 3-6 villages. The initiative has three components, one being the distribution component, second being the use of lady for communicating health and hygiene messages in the villages. The third component is IT, wherein a kiosk - ishakti is set up in the village , which could be used as information kiosk in the village.

Though this is relatively an old initiative, started in 2001 in Andhra Pradesh, the news that the model is being taken global is what has brought it back to media attention. Acco

rding to the news item, "The project is being customised and adapted in other Unilever markets such as Sri Lanka, Vietnam and Bangladesh. It is being considered for other Latin American and African markets. In Bangladesh and Sri Lanka, it is being promoted as Joyeeta and Saubaghya, respectively. There is a similar initiative in Vietnam as well." For more on the article, link.

Though there are obvious positives in the project both for the company as well as the lady who takes up the business but there are many issues which need to be looked into. One of issues is the actual amount of benefit that the lady gets by in by engaging in the business for HUL, though the company claims that it almost doubles the household incomes, but  there variations in that. Similarly the Vani component of the initiatives which is one in which the company does not make any money is being expanded very slowly and the expansion of the project is not very uniform and even within a village also the project impacts only one lady. And when one interacts or sees the mileage that the company tends to derive out of the project it makes us vary of the claims and the actual benefits....

Though this models of leveraging the existing Self Help Groups in villages for distribution for products to rural areas is being seen by many as the next wave in the SHG movement..

For more details on the project visit, www.hllshakti.com

Harish Bijoor On Rural Marketing

Had an opportunity to sit through a session on rural marketing by Harish Bijoor. Was planning to write on some of the ideas which he shared with us. Found that varun has done it already, so a link to the post, link

Must read.....

Rural and Urban Multinational Linkage

When we talk about rural markets we tend to see it as something which is too far and disconnected from our normal day-to-day activities, but as consumers of many products and services the linkage with rural is much closer than we realise. 

When we buy agricultural commodities like wheat and rice some of us might think about its rural linkage , but for retailers the procurement network in rural becomes  very critical if they have to ensure consistent quality at reasonable prices.

But what I am trying to say is that the linkage is much closer. A good example of this is the french fries that you eat in any of the 132 Mc Donald's restaurants across the country. Most of us would agree to the fact they tend to be much crispier than whatever we eat in some other restaurant  or prepared at home. And world wide it is a proposition to which they stick to . This is ensured through an efficient supply network in place of right kind of potatoes. For which they have to get these specific varieties of potatoes grown(usually exclusively from Mc Donald's) and then transported through a cold chain. The same applies to other ingredients which go into making a burger. 

But this in turn has also restricted the speed at which they been able to expand their operations in India, as they have to have the cold chain and procurement network in place before they start their restaurants.

Many more instances of how a efficient back end rural linkage is essential to ensure a consistent offering for the urban consumer. Be it how Pepsi went in for contract farming in Punjab for tomato's and potatoes or the echoupal model providing the linkage to the foods division of ITC.

Rural Markets are Shinning Again!!!!!

No one needs to keep emphasising that in India rural markets costitute a huge untapped opportunity, but unfortunatley it seldom gets the attention it deserves, or for that matter the consistent attention...marketers either make half-hearted attempts or the intiatives are more part of thier CSR work.

But one time when the markets gets serious attention is when the urban markets slow down and companies are hard pressed for growth, it is then that they start brushing the dust over thier rural marketing files,  as seems to be happening now.  

Coca Cola India has drawn up a fresh startegy to tap rural market. In the past too the company has tried to tap the rural opportunity by introducing coke at Rs five price point. This time around the strategy revolves around a retailer training programme for smaller grocery stores in tier II & III towns, and stepping up distribution of specific products in smaller towns, and increasing focus on marketing and operations focus for these markets. Link

Another company which is planning make good the shaort fall of growth targets through the rural areas is Maruti Suzuki. The company is focusing on these markets with it's entry-level cars. It is using a combination of large sales team and special discounts to attarct rural consumers. The two specific intiatives from Maruti for rural markets are the Resident Dealer Sales Execuitves which they are planning to appoint and 'ghar ghar mein Maruti' campaign. The focus of the Resident Dealer Sales Execuitves scheme is to use a local resident to push the sales of cars, and 'ghar ghar mein Maruti' focuses on targetting opinion leaders who would influnece the sales in the village. Link

It is very easy to criticise the short-term approach followed by companies when it comes to rural markets, but the when one sees the difficulties which exist  in making the rural markets a sustianble source of growth one is willing to empathise with them. But then there is also a need to keep the focus on these intitiaves even when the urabn growth bounces back......

Kisan Seva Kendra : Rural Retail Initiative of IOC -II

Continuing with the earlier post, the idea behind KSK outlets by IOC was to provide a one stop shop for the villagers , where along with his fuel he could buy products of his daily needs too.

Tie-Ups

The combination of the pump and the retail outlet is what drives this model. IOC has gone ahead and tied-up with many FMCG and farm implements companies for an exclusive access to these rural outlets. One of the first FMCG companies to tie-up with KSK was Dabur, now they have recently tied-up with AIRTEL for mobile. The other tie-ups include National Seed Corporation and Indo Gulf Fertilizers. There many similar tie-ups in the pipeline and the company is working on the modalities of the deal.

Ground Realities

After listening about the initiative i decided to visit some of the KSK outlets in UP. The photos below are from one of the KSK outlets which I had visited recently...













At the ground level there are many operational difficulties with managing the retail outlet. The fuel sells on its own and the villagers are happy that they are able to buy diesel and petrol at their doorsteps. Earlier they had to travel atleast 10 kms to the nearest petrol pump to buy fuel.... But the dealers feel that they don't have the expertise of dealing with the wide range of products that they are expected to sell, ( from Fertilizer to note books) and because they don't have the whole range which a typical grocery shop would have they find it difficult to attract customers, and with the limited sales they are unwilling to put in a separate person for the retail shop , which is essential. Then there are issues related to credit and the market visits one has to make to keep maintain the stocks...

So one needs to keep a watch to see how the model evolves ...........