How Technology Has Changed The Nature Of Rural MarketingBy R V Rajan (Nov 1, 2008) Rural India has become a target for marketers because of the huge potential it offers for all kinds of products and services. But the lack of understanding of the way the rural markets operate gets the marketers into road blocks easily. The challenges posed by the difficulties of physical distribution and uneconomical market size besides lack of mass media reach in many markets, compound their problem. In spite of all the problems Rural India is growing at a phenomenal rate. Statistics show that there is a huge income shift taking place in rural India, and the aspiring middle class, with increasing purchasing power, is the focus of all marketing initiatives by corporates. While the debate about urban rural divide is still on, there is another issue that is raising its head and that is of the digital divide or how to bridge the digital divide that can help to overcome the traditional barriers for exploiting the rural market. Has technology made any impact on the way the rural folks shop? While there are sceptics who still question the role of technology in the growth of rural India and rural markets, there is no doubt that the average rural Indian whose life has been touched by technology has changed for the better. The web based technologies and harnessing of internet usage for innovative interventions have been quite a boon to the people. Let us look at some of these initiatives and how they are impacting Rural India. Information Communication Technology (ICT) enabled rural projects in India can be classified as those that provide: Govt. Projects The Andhra Pradesh government (www.ap-it.com) is responsible for some early initiatives that sought to use networked technologies to improve citizen services. A series of catchily-acronymed services including CARD, TWINS, FAST, etc. provide licenses and certificates, allow the registration of deeds and various kinds of payments at a single counter, in certain urban and rural areas of the state. The Gyandoot Project in Dhar, MP has developed a very important e-governance protocol, in the form of the shikayat, or complaint. For a fee of Rs.10, rural citizens may select from a predetermined menu of 30 different kinds of complaints, which together cover a wide range of citizen consumer to government interactions in rural areas. Both the above initiatives and several other government initiatives are providing opportunities for the common man to bypass the middlemen and get the information they want at a click of a button. The single biggest initiative on the government front was announced recently by the Ministry of Information and Technology which is planning to set up one lakh Common Service Centres (CSCs) across villages of India. It has tied up with ILFS (Infrastructure Leasing Finance) to manage the roll out with support from NGOs, ISPs and other private players. Private Projects n-Logue Communications (www.n-logue.com), incubated out of the Tenet group at IIT-Madras is now providing connectivity for a series of new projects across India, including those in Madurai and Nellikuppam, TN and Sikar, Rajasthan. Based on wireless (WLL) Technology, the company works on a commercial basis in partnership with various local partners including entrepreneurs and non-governmental organizations. The advent of cellular technology has definitely affected the progress of this initiative. Recently Anugrah Madison tried to use the services of the kiosks for promoting a brand of cement with opportunities for the kiosk owner to earn more income. It was an interesting idea where the kiosk owner, invited a dozen users / potential users of cement to his kiosk, providing an opportunity to the representatives of the cement company, sitting in the Hub centre to interact and promote the cement brand through a web camera. An interesting idea which opens up a lot of opportunities for both the corporates and the kiosk owners. EID Parry (I) Ltd., owned by the Murugappa Group, launched India Agriline project in early 2001 by setting up 16 franchised internet kiosks. The kiosks were intended to be the business hubs of their respective villages – one stop shops that acted as storefronts for buying farm inputs, a market for selling goods and an internet café for communication and information services. The content is in the local language (Tamil) for ease of use. To establish and nurture a long term relationship with farmers, there is provision for online registration and easy access to transaction records with the company. Operators have been trained to use PCs, to surf the portal and the Net and to assist users visiting the kiosks. The company has used this pioneering effort aimed at sugarcane farmers who supply sugarcane to the company’s sugarcane factories. Farmers using the facilities have benefited a lot and are leading a better quality of life. The Project I-Shakti kiosks have been set up by HLL in partnership with women’s self help groups in AP and have received an overwhelming response from the local people. To gain access to the services offered, users have to first register themselves and obtain a unique registration number. An ID card with the registration number is provided. The kiosks offer information chiefly in the form of audio visuals in the following areas: health and hygiene, e-governance, education, agriculture, employment, legal services and veterinary services. HLL with its deep pockets is ensuring that the project will succeed and is planning to scale up the initiative to other markets. SKEPL (Shree Kamdhenu Electronics Pvt. Ltd.) is a private initiative that provides integrated solutions, marketed under the brand name Akashganga (meaning ‘milky way’ in Hindi), that automate the milk collectin process in village dairy cooperative societies. The company’s products include an automatic milk collection system, an electronic weighing scale, a dairy information system kiosk, and a milk analyzer that tests for levels of fat and non fat milk solids. SKEPL also offers accounting and milk procurement software, as well as consulting and maintenance services, to its customers. Currently, the majority of the company’s customer base is in the states of Gujarat and Maharashtra. Akashganga is an example of how information technology is being used as a catalyst for synergies between social development and business objectives. SKEPL demonstrates how the development benefits of improved efficiency and transparent and fair prices for dairy farmers can be combined with the business objectives of growth and profitability in a sustainable and mutually beneficial relationship. Akashganga also illustrates how innovative use of technology can have a profound impact on the daily lives of the common villager. Human resource development has also been an important development benefit of SKEPL’s operations. By hiring and training locally, akashganga has contributed to the development of human capital in rural areas. Unemployed youth have been able to earn livelihoods locally within their rural community instead of migrating to the big cities. Providing jobs at the local level, the company has provided stimulus to the local rural economy. TARAhaat.com (www.tarahaat.com), promoted by Delhi based Development Alternatives, is an extremely ambitious commercial project to provide online services to a large number of rural communities in North India. One of the more innovative aspects of this project is its highly interactive and graphics-intensive interface system, which allows semi-literate and neo-literate users enhanced access to products and services. While the menu of services that TARAhaat offers is similar in many ways to the other rural ICT projects, the most popular is its education courses, which are very popular among rural children. Education for girls does not receive sufficient emphasis in most parts of Rural India. However, a study has shown that users of Tara Kendras were predominantly girls and women as parents feel that computer education will give their daughters get better matrimonial alliances. Rural children at the TARAkendra seemed confident about their future prospects. The fact that they can now use computers, just like their city counterparts, is a big boost for most of them. TARAhaat hopes that this self confidence will lead to entrepreneurial efforts and village micro enterprises that will transform the rural economy when the younger generation takes wings. ITC’s pioneering e-choupal initiative, the most successful of all the private initiatives, is leveraging the real power of IT to transform the agricultural economics of rural India. This novel interactive transaction and efficient fulfillment channel virtually integrates the farm produce value chain to plough back a larger share of the consumer spend to the farmer. Under e-choupal, ITC has set up internet kiosks in villages. These kiosks are managed by the farmers, selected from within the community and trained, known as Sanchalaks. At the kiosks, the Sanchalaks help the farmers to readily access the different agricultural crop specific websites that ITC has created in the relevant local language. The farmers can learn online the best farm practices for their crop, the prevailing prices and price trends for the crop in the Indian and world markets, the intricacies of risk management, and the local weather forecast. The smallest individual farmer thus gets the benefit of expert knowledge on the cultivation of his crop. E-choupal leverages the seamless workflow capabilities of IT to virtually integrate several best in class players along the chain and offer the services in a single platform to every farmer. The e-choupal project, launched in June 2000, has today become the largest internet based corporate intervention in rural India. E-choupal’s network today reaches out to more than three million farmers in over 35,000 villages through 5,050 e-choupal kiosks that ITC has set up across six states covering 3.5 million e-farmers. Realising the potential for leveraging the business potential of the choupals, ITC decided to use the kiosks for reverse trading i.e. allowing other companies to sell their products and services directly to the farmers via internet. Companies like Monsanto, BASF India, Nagarjuna Fertilizers and Madhya Pradesh State Seed Corporation started using ITC choupal to promote and sell their products with tremendous success. Inspired by this success ITC has begun selling Life Insurance policies through the e-choupal network and is now talking to FMCG companies to use its services. There is no question, that this single initiative of ITC has opened up a new distribution opportunity in Rural India, with tremendous possibilities. “What started as a cost effective alternative supply chain system to deal directly with the farmer to buy products for exports is slowly going to expand into an alternative distribution mechanism for rural India” – S Sivakumar, Chief Executive, ITC Agribusiness, in March 2002. Agri business initiatives taken up by some other Indian companies Many reasons were given for these problems. Firstly, these models depended on intermediaries, who were not trusted by the farmers. This slowed the process of building up volumes. Secondly, most of these models had high fixed costs. Thirdly, the issue of channel conflict had to be tackled. Tata Chemicals tried to run the TKK model in paralled to its fertilizer sales and marketing organization. But it encountered problems as the wholesalers undercut the TKK Franchisees. Though this could be avoided by replacing the traditional procurement and distribution channels, there was the issue of credit. The farmers need credit, but companies were not willing to take the risk of giving credit to farmers. Fourthly, many companies did not have enough knowledge in procurement. Thus, all these models had a long way to go before they could be successful in their initiatives. An analysis of performance of all the ICT initiatives indicates the need for deep pockets and clear goals to succeed. Except HLL and ITC, the multinationals with not only deep pockets, but also with clear commitment to rural marketing, most other private initiatives have faced roadblocks and have not scaled up as per their plans. Public / Private Sector Partnership While Rajiv Gandhi and Sam Pitroda are credited with taking telephony to the length and breadth of India through the STD Booths, what the mobile technology is now doing to connect Rural India to the rest of the world is mind boggling. Today it is not unusual to see farmers and traders in small towns walking around with mobiles. We all know the story of the fishermen of coastal Kerala. Using mobiles they could identify the markets which could fetch them the best price for their catch and proceeded to that market. This meant higher income and better living. Today, mobiles have helped empower the ordinary people in Rural India with instant access to information, which they are putting to good use. Mobile service providers who are finding the urban markets getting saturated, are invading Rural India with no frills mobiles at affordable prices bringing the technology at the door step of a Rural Indian, drastically improving the prospects for marketers for all kinds of products and services. Microsoft has set up an ambitious target of over 50000 broadband connected kiosks across villages covering over 50 per cent of the rural population in the next three years under the “Saksham” scheme. Intel recently joined the club announcing a new program “Jagruti” whereby it will offer PC makers an innovative platform developed exclusively for the rural market. It has developed a rugged chassis to withstand dusty and extreme temperatures. It has also integrated a UPS as well as an AC/DC converter in the machine so that it can work on a car battery for six to eight hours, to tackle the lack of electricity in many villages. Moreover, it has also tied up with Microsoft in an “affordability alliance” which will look at partnerships to provide solutions for rural India. If Technology has to impact Rural India in a big way and faster, it is imperative that there is a partnership between the government and private players. While government takes care of the infrastructure requirements, the private players can introduce appropriate technology to help the ICT initiatives to succeed. The central government plans to provide Common Service Centres in one lakh villages in association with the private players is in the right direction. The Future Farmers in remote villages can use ATM machines to open a bank account. A mobile ATM van linked wirelessly through Reliance Info Comm’s network and the back end services of the participating banks visits villages. The software on the ATM is simple – in regional languages and very easy to decipher. Instead of opening a branch in a village which could cost a bank Rs.12 lakhs, for the same investment on the ATM several villages can be connected. A great way to literally take banking to the door step of a villager! A news item in Economic Times recently mentions about the opening of email accounts by members of a Farmers Club in a hamlet near Anand in Gujarat who were also learning to operate the PC. The farmers want to communicate with corporates foraying into farm products retailing (like Reliance, Bharathi Wal Mart, etc). The farmers who are in talks with these companies for contract farming believe that if they deal with companies as a group, they will get better deals. More farmers in other areas are bound to replicate such initiatives. Technology will greatly help in bridging the rural urban divide. Villagers could directly find buyers and sellers across the country or globe. A villager could order anything from the nearby town on the website and local delivery could ensure that his purchase is delivered. All large companies would be able to offer internet connectivity to their stockists across the country, cutting down on their inventory and improving delivery times. Customized games could help establish a brand of toothpaste in a child’s mind. Multimedia consumer promotions customized for the village can do marketing of an order never seen before. A small study by Anugrah Madison last year in rural Tamilnadu, revealed that in the middle class households with school going children, the priority in the purchase of consumer durables, is a PC next only to a colour TV. This is because the parents believe that PCs can help their children get access to better quality of education, ensuring a better future for them. Once the PCs come home, apart from helping the children, they are bound to be put to other uses. There is no end to what we can think is possible and all these will significantly contribute to increasing incomes and prosperity and greater (marketing) opportunities for corporates in Rural India. Technology is certainly going to help change the way Rural Marketing is done in the not so distant future! * R V Rajan, Table: Examples of ICT Enabled Rural Development Projects in India
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