It seems there is no respite for the Indian consumer (especially the middle-class) from back-breaking inflation with the latest hike in oil (petrol and diesel) prices coming into effect from 04 November, 2011. There is some noise in the media about a partial rollback, though something like that seems highly unlikely despite the fact that international crude oil prices have softened of late.
If we look at the situation dispassionately, the reasons for this recurring phenomoenon are not difficult to comprehend. India imports about 79% of its oil and the sharp depreciation in the value of rupee against the greenback has offset the gains from the softening of crude oil prices internationally. The rupee has dipped from Rs. 46.29 to a dollar at the time of the last hike (on September 16) to Rs. 49.40 making oil imports costlier.
To put things in perspective, a change in the value of the dollar by one rupee leads to a loss of 90-95 paise per litre of petrol.The Indian consumer has become used to (rather fed up with) frequent interest rate and oil price hikes. Both burn a hole in her pocket. The Opposition along with the Left have decided to take the government to task as the latter battles to save its face in the wake of rampant corruption and a slowing economy. The interesting thing to note here is the withdrawal of support by UPA allies like Trinamool Congress lately.
According to Jayati Ghosh, the prominent Left-leaning JNU-based economist, an increase in oil prices will not just have a direct effect on prices (estimated by the Finance Ministry to add just below 1 per cent to the existing rate of inflation). It will also have a cascading effect – as all goods have to be produced using some energy, usually oil or equivalent, and then transported, so all of their prices will increase subsequently. So the country will have to face a further onslaught of inflationary pressure which is this time entirely policy-induced.
However, chairpersons of state-owned oil marketing companies have enough justification to hike the oil prices citing rupee depreciation. The government had decontrolled petrol pricing in June last year and given oil companies freedom to fix rates at retail level.
All this leaves the common man with a heart full of discontent which might have electoral repercussions in the future. However, for the time being the only avenue at his disposal is increased usage of public transport.The only people cheering at this scenario will be the ecofriendly green campaigners!
A platform where I will share my views on topics and issues that interest me deeply (with a strong business bias, of course)and chronicle the major events in my life beginning 2010.
Monday, November 7, 2011
Tuesday, June 14, 2011
World-class in India
A few things that I deem to be world class in India have been mentioned below. Before I proceed, it is important to define the term world-class. To me the term world-class means “having quality that is more or less on par with the best in the world”.
1.ISB: The Indian School of Business, a decade-old institute at Hyderabad is the youngest entrant in the top twenty business schools of the world according to Financial Times.
2.The Delhi Metro: It is definitely the best in India and comparable with the best in the world for its reliability, spaciousness, comfort and affordability. All this despite the accidents which happened during its construction killing a few people.
3.Tata Nano: The cheapest car in the world is fast gaining a strong foothold in the small car market which it created in India. After a slump, it is raking in the sales numbers and is all set to be exported.
4.Dabbawallahs: The Harvard Business School has come up with a case study on the Dabbawallahs of Mumbai. With no technology at their disposal these men put six sigma experts to shame with their impeccable and timely delivery of lunch boxes to thousands of Mumbaikars from their homes.
5.Narayana Hrudayalaya and Shankara Netralaya: These heart and eye hospitals provide world-class healthcare at affordable rates thanks to an innovative business model that makes social service sustainable and profitable.
6.Sachin Tendulkar: The only sportsperson from India to have dominated a global sport ie; the world of cricket as a batsman for almost one and a half decades (out of a twenty two year old ongoing career). He is arguably the greatest batsman to have graced the game of cricket.
7.Indian IT talent: Indian IT workers are considered world-class for their analytical and programming skills, besides their knowledge of English and the willingness to work overtime. From Silicon Valley to Bengaluru, the Indian techies have carved a niche for themselves and are highly sought after, be it for IT services or products.
8.Taj Mahal: It’s majestic monument which is one of the seven wonders of the world. Perhaps, the only monument that has put India on the global tourist’s map.
1.ISB: The Indian School of Business, a decade-old institute at Hyderabad is the youngest entrant in the top twenty business schools of the world according to Financial Times.
2.The Delhi Metro: It is definitely the best in India and comparable with the best in the world for its reliability, spaciousness, comfort and affordability. All this despite the accidents which happened during its construction killing a few people.
3.Tata Nano: The cheapest car in the world is fast gaining a strong foothold in the small car market which it created in India. After a slump, it is raking in the sales numbers and is all set to be exported.
4.Dabbawallahs: The Harvard Business School has come up with a case study on the Dabbawallahs of Mumbai. With no technology at their disposal these men put six sigma experts to shame with their impeccable and timely delivery of lunch boxes to thousands of Mumbaikars from their homes.
5.Narayana Hrudayalaya and Shankara Netralaya: These heart and eye hospitals provide world-class healthcare at affordable rates thanks to an innovative business model that makes social service sustainable and profitable.
6.Sachin Tendulkar: The only sportsperson from India to have dominated a global sport ie; the world of cricket as a batsman for almost one and a half decades (out of a twenty two year old ongoing career). He is arguably the greatest batsman to have graced the game of cricket.
7.Indian IT talent: Indian IT workers are considered world-class for their analytical and programming skills, besides their knowledge of English and the willingness to work overtime. From Silicon Valley to Bengaluru, the Indian techies have carved a niche for themselves and are highly sought after, be it for IT services or products.
8.Taj Mahal: It’s majestic monument which is one of the seven wonders of the world. Perhaps, the only monument that has put India on the global tourist’s map.
World-class Universities and Institutes in India
Of late, I got to read a few articles about the Environment Minister Jairam Ramesh’s remarks on IIT/IIM faculty. He had said that the IITs/IIMs were world-class institutions because of their students and not the faculty. His statement was not original and is an open secret.
Research output in India (including the IITs/IIMs) is negligible both in terms of quantity and quality. The primary reason behind this is that there is no ecosystem for research to happen in India. There is neither strong industry-academia partnership nor adequate funding. MIT’s annual budget is about seven times the government funding available to all the IITs put together. (Source: Angela Saini's book The Geek Nation).The whole government funding system should be replaced by an endowment system which is in vogue in the US and other European universities and institutes. The ecosystem is not just about money but a change of mindset as well. In the US, higher education institutions follow the principle of “publish or perish” in letter and spirit. The same culture needs to be imbibed by Indian higher education institutions if they really want to become world-class. Besides, the government needs to give them autonomy and reservations must not exist at all (neither for the students nor for the faculty). The students at IITs/IIMs and other higher education institutions in India should be selected purely on the basis of merit and should be encouraged to do research for which adequate grants and support should be provided by their alma mater. India Inc. should also come forward and donate money generously to set up chair professorships, new departments and high-tech labs as a part of their CSR activities. The bottomline is if you can keep the government and reservations away ( or at least, as far as possible) and change the funding model altogether, there is no reason why we cant have a few Indian universities up there in the global top 100 rankings.
Research output in India (including the IITs/IIMs) is negligible both in terms of quantity and quality. The primary reason behind this is that there is no ecosystem for research to happen in India. There is neither strong industry-academia partnership nor adequate funding. MIT’s annual budget is about seven times the government funding available to all the IITs put together. (Source: Angela Saini's book The Geek Nation).The whole government funding system should be replaced by an endowment system which is in vogue in the US and other European universities and institutes. The ecosystem is not just about money but a change of mindset as well. In the US, higher education institutions follow the principle of “publish or perish” in letter and spirit. The same culture needs to be imbibed by Indian higher education institutions if they really want to become world-class. Besides, the government needs to give them autonomy and reservations must not exist at all (neither for the students nor for the faculty). The students at IITs/IIMs and other higher education institutions in India should be selected purely on the basis of merit and should be encouraged to do research for which adequate grants and support should be provided by their alma mater. India Inc. should also come forward and donate money generously to set up chair professorships, new departments and high-tech labs as a part of their CSR activities. The bottomline is if you can keep the government and reservations away ( or at least, as far as possible) and change the funding model altogether, there is no reason why we cant have a few Indian universities up there in the global top 100 rankings.
Greatest American business leaders and entrepreneurs
Nitin Nohria, the current dean of Harvard Business School (HBS)in his JRD Tata Memorial Lecture, which he delivered in 2010, mentions about the following American leaders who form a part of the "Greatest business leaders" course being taught at HBS.Most of us are aware of Steve Jobs, Bill Gates and Jack Welch. To know more about the men who built the world's largest economy, read on. For the entire speech, click here
Andrew Carnegie, who at the turn of the 20th century built the steel mills that provided the raw material for the railroads and transportation infrastructure that connected America and made it the world’s largest integrated domestic economy.
CW Post, who during the 1910s and 1920s introduced Post Cereal and launched the consumer packaged goods industry in America
Walt Disney, who during the 1930s built one of the great media and entertainment companies, even though he started during the depths of the Great Depression
Henry Kaiser, who helped build the Hoover Dam and many other extraordinary infrastructure projects including a shipyard that, during the height of World War II, was completing three Liberty Ships every day.
William Levitt, who created Levittown, the first mass-produced postwar American suburb, in the 1950s and built houses that redefined the American real estate landscape;
Sam Walton, who started building one of the biggest discount retailing companies in the 1970s;
Bill Gates and Steve Jobs, who ushered in the personal computer revolution in the 1980s;
Jack Welch, who transformed GE during the 1990s so that it remained an iconic company, and the only company that was on the Dow Jones Industrial Average for the entire 20th century.
Andrew Carnegie, who at the turn of the 20th century built the steel mills that provided the raw material for the railroads and transportation infrastructure that connected America and made it the world’s largest integrated domestic economy.
CW Post, who during the 1910s and 1920s introduced Post Cereal and launched the consumer packaged goods industry in America
Walt Disney, who during the 1930s built one of the great media and entertainment companies, even though he started during the depths of the Great Depression
Henry Kaiser, who helped build the Hoover Dam and many other extraordinary infrastructure projects including a shipyard that, during the height of World War II, was completing three Liberty Ships every day.
William Levitt, who created Levittown, the first mass-produced postwar American suburb, in the 1950s and built houses that redefined the American real estate landscape;
Sam Walton, who started building one of the biggest discount retailing companies in the 1970s;
Bill Gates and Steve Jobs, who ushered in the personal computer revolution in the 1980s;
Jack Welch, who transformed GE during the 1990s so that it remained an iconic company, and the only company that was on the Dow Jones Industrial Average for the entire 20th century.
Near-zero interest rates and their impact
I was brooding over the question as to why the US, Japan and Germany have near-zero interest rates and how it impacts the global financial markets. The following post is the answer to this question by Mr.Harshil Dave, one of my seniors at SDMIMD, Mysore. He is an MBA Finance guy working as a consultant at Oracle Financial Services. I agree with whatever he wrote about this topic on Facebook and I would welcome comments from my readers as well.
"In order to spur the GDP growth rate and reduce unemployment in their economies they need to provide incentive to businesses to borrow money from banks. By having near zero interest rates, the central bank is trying to encourage existing businesses and budding entrepreneurs and luring them by cheap credit. In theory, near-zero interest rates are supposed to help increase GDP growth rate (By capacity expansion and increased spending by businesses and households) and reduce unemployment (which stands at 9.8% in the US at present). After the crisis when major economies across the world were dragged into recession (which is characterized by multiple negative GDP growth rate quarters according to NBER definition of recession) the monetary policy makers had to cut down the interest rates to bring back the economy on positive GDP growth track. Near zero interest rates are also meant to restore confidence in the dried up inter-bank money market lending. This was in context of the US.
Coming to Japan, they have been a zero interest rate regime since a long time, you can refer to 'Yen carry trade' and 'Asian currency crisis' to go to the origins of the same!
Germany, had to follow France's footsteps of lowering the interest rates after Sarkozy accused Merkel of not taking adequate measures to combat recession!
Low interest rates increase liquidity in domestic economy, as in the case of the US what has happened is that since you can borrow money at virtually zero interest rates from commercial banks, the proprietary trading arms of big multinational banks have borrowed from their commercial banking arm and invested money in emerging economies like India, China and Brazil. Because of this we observe a surge in FII inflow led by prop trading desk activities and also by 'Dollar carry trade' (Selling short dollar against other currencies expecting dollar to depreciate on account of slow growth and more dollar bills being printed, and then investing that money made by shorting the dollar contract into other asset classes in Emerging economies).
Consider it as a tap of water (liquidity) opened by the Fed to aid the domestic economy, but the water (liquidity) spilled more in other places (Emerging Economies)! We see benchmark indices go up by 10-15% in matter of few months because of such liquidity. When the interest rates in the US will go up there is very high likelihood of reversal in this fund flows which can cause markets to crash in matter of few weeks!"
"In order to spur the GDP growth rate and reduce unemployment in their economies they need to provide incentive to businesses to borrow money from banks. By having near zero interest rates, the central bank is trying to encourage existing businesses and budding entrepreneurs and luring them by cheap credit. In theory, near-zero interest rates are supposed to help increase GDP growth rate (By capacity expansion and increased spending by businesses and households) and reduce unemployment (which stands at 9.8% in the US at present). After the crisis when major economies across the world were dragged into recession (which is characterized by multiple negative GDP growth rate quarters according to NBER definition of recession) the monetary policy makers had to cut down the interest rates to bring back the economy on positive GDP growth track. Near zero interest rates are also meant to restore confidence in the dried up inter-bank money market lending. This was in context of the US.
Coming to Japan, they have been a zero interest rate regime since a long time, you can refer to 'Yen carry trade' and 'Asian currency crisis' to go to the origins of the same!
Germany, had to follow France's footsteps of lowering the interest rates after Sarkozy accused Merkel of not taking adequate measures to combat recession!
Low interest rates increase liquidity in domestic economy, as in the case of the US what has happened is that since you can borrow money at virtually zero interest rates from commercial banks, the proprietary trading arms of big multinational banks have borrowed from their commercial banking arm and invested money in emerging economies like India, China and Brazil. Because of this we observe a surge in FII inflow led by prop trading desk activities and also by 'Dollar carry trade' (Selling short dollar against other currencies expecting dollar to depreciate on account of slow growth and more dollar bills being printed, and then investing that money made by shorting the dollar contract into other asset classes in Emerging economies).
Consider it as a tap of water (liquidity) opened by the Fed to aid the domestic economy, but the water (liquidity) spilled more in other places (Emerging Economies)! We see benchmark indices go up by 10-15% in matter of few months because of such liquidity. When the interest rates in the US will go up there is very high likelihood of reversal in this fund flows which can cause markets to crash in matter of few weeks!"
Monday, May 2, 2011
Religion Marketing!
This is not the latest marketing jargon! Of late, while zipping through TV channels during my post-MBA and pre-job break, I came across a few regional and national channels beaming shows (akin to the Telebrands shows). But the products being advertised are not the traditional consumer products or services for that matter. Some companies have realized that Hindu religious feelings which border on superstition for most Indian housewives (besides the uneducated and gullible men from small towns) can be leveraged to sell products like Shri Yantra, Rudraksh etc. These products (if you can call them so) were traditionally given by the saints/sanyasis to their devotees since centuries to ameliorate suffering of all kinds. It was given and accepted as something that had divine blessings in it. But with commercialisation of everything else around us, one can’t be surprised if somebody tries to commercialise God and make money in His name.
It’s not that there is no precedence for things like this in India. Over the past three decades, many fake sadhus and babas have duped the gullible and unassuming Indian public of their hard-earned money, all in the name of faith. We have had scores of Nithyanandas in India now and people still fall for such people and products with the belief that they will help them to get rid of their troubles. Nothing can be further from the truth.
Life is not rosy. In fact, everyone’s life has problems and the best way to deal with them is to be optimistic and honestly try to find solutions instead of buying such products. I don’t know if Rudrakshs and Shri Yantras of yore had any divine blessings or not but I can tell for sure that the modern Rudrakshs and Shri Yantras being sold via TV shows have devil’s blessings (which would certainly strip people of their cash).
It is high time the ASCI took some stringent action against companies which advertise such products. Awareness needs to be created to prevent more people from being hoodwinked and cheated of their money.
It’s not that there is no precedence for things like this in India. Over the past three decades, many fake sadhus and babas have duped the gullible and unassuming Indian public of their hard-earned money, all in the name of faith. We have had scores of Nithyanandas in India now and people still fall for such people and products with the belief that they will help them to get rid of their troubles. Nothing can be further from the truth.
Life is not rosy. In fact, everyone’s life has problems and the best way to deal with them is to be optimistic and honestly try to find solutions instead of buying such products. I don’t know if Rudrakshs and Shri Yantras of yore had any divine blessings or not but I can tell for sure that the modern Rudrakshs and Shri Yantras being sold via TV shows have devil’s blessings (which would certainly strip people of their cash).
It is high time the ASCI took some stringent action against companies which advertise such products. Awareness needs to be created to prevent more people from being hoodwinked and cheated of their money.
Dhoni Demystified!
Hello readers.
It has been a long time since I posted anything on my blog. The World Cup victory and the subsequent hysteria is now behind us. I would try my best to decipher why MS Dhoni has been what he is today- India’s world cup winning captain besides being the world’s highest paid cricketer according to Forbes.
To begin with, Dhoni is a maverick. He believes in himself more than any other Indian cricketer I have ever seen. He is an excellent reader of the game. He understands tense situations, stays cool (sans emotions mostly) and takes calculated (at times very unconventional ) risks. According to him, one has to be different to be successful. He has got a 60% success rate in ODIs and he is easily India’s most successful captain ever. But he has also had his share of failures and embraced them with utmost sportsmanship.
I have been watching Dhoni very closely ever since he burst into the international scene in 2004 with a blistering 148* against Pakistan at Visakhapatnam (which happens to be the place where I did my entire schooling). His approach towards batting has matured from outright aggression to calculated strokeplay as per the needs of the team. He has improved his wicket-keeping skills over the years tremendously. I admit his batting has deteriorated over the past one year or so. But his innings in the WC final against Sri Lanka reminded us all of his gutsy brilliance.
I love his cool temperament which hides his aggression on the field, honesty ( he is not afraid to call a spade a spade) and smart thinking. He has been my idol ever since he started playing for India. After so many years, a guy from a small town made it big at the international scene and hogged the limelight (from Sachin Tendulkar). I don’t mean to compare the two. Tendulkar is a way better batsman when compared to Dhoni. But for the first time, a cricketer in India became more popular (as defined by endorsement fees) than Sachin and caught the fancy of an entire nation. Nobody could even dream of such popularity in the era of Tendulkar. Dhoni is an inspiration for all Indians, especially those from small towns and middle-class backgrounds sans any connections to make it big in whatever field they are in.
To sum up MSD is what he is today because of his smart and unconventional thinking, super cool temperament and tremendous self-belief besides of course, good (not great) cricketing (batting & wicket-keeping) talent. Watch out for more from the man who revolutionised Indian cricket.
Cheers,
Alok
It has been a long time since I posted anything on my blog. The World Cup victory and the subsequent hysteria is now behind us. I would try my best to decipher why MS Dhoni has been what he is today- India’s world cup winning captain besides being the world’s highest paid cricketer according to Forbes.
To begin with, Dhoni is a maverick. He believes in himself more than any other Indian cricketer I have ever seen. He is an excellent reader of the game. He understands tense situations, stays cool (sans emotions mostly) and takes calculated (at times very unconventional ) risks. According to him, one has to be different to be successful. He has got a 60% success rate in ODIs and he is easily India’s most successful captain ever. But he has also had his share of failures and embraced them with utmost sportsmanship.
I have been watching Dhoni very closely ever since he burst into the international scene in 2004 with a blistering 148* against Pakistan at Visakhapatnam (which happens to be the place where I did my entire schooling). His approach towards batting has matured from outright aggression to calculated strokeplay as per the needs of the team. He has improved his wicket-keeping skills over the years tremendously. I admit his batting has deteriorated over the past one year or so. But his innings in the WC final against Sri Lanka reminded us all of his gutsy brilliance.
I love his cool temperament which hides his aggression on the field, honesty ( he is not afraid to call a spade a spade) and smart thinking. He has been my idol ever since he started playing for India. After so many years, a guy from a small town made it big at the international scene and hogged the limelight (from Sachin Tendulkar). I don’t mean to compare the two. Tendulkar is a way better batsman when compared to Dhoni. But for the first time, a cricketer in India became more popular (as defined by endorsement fees) than Sachin and caught the fancy of an entire nation. Nobody could even dream of such popularity in the era of Tendulkar. Dhoni is an inspiration for all Indians, especially those from small towns and middle-class backgrounds sans any connections to make it big in whatever field they are in.
To sum up MSD is what he is today because of his smart and unconventional thinking, super cool temperament and tremendous self-belief besides of course, good (not great) cricketing (batting & wicket-keeping) talent. Watch out for more from the man who revolutionised Indian cricket.
Cheers,
Alok
Tuesday, February 15, 2011
Book Review- Rural & Social Marketing
In this post, I am going to review a book named “Tapping Rural Markets-Concepts and Cases” edited by Mr. V V Gopal (an IMT-Ghaziabad alumnus) and published by ICFAI University Press in 2005. It’s a tad lengthy but I am sure you will enjoy reading it.
The book provides a broad view of the rural market scenario in India as of 2005 and discusses the opportunities and challenges faced by marketers who venture into the arena. It is divided into two sections- Concepts and Cases, wherein the concepts of rural marketing and innovations and initiatives of leading consumer goods companies like ITC, Coca-Cola, HUL and LG are dicusses in detail.
Section 1: Concepts
1. Innovations in rural India- Jayatri Dasgupta
Being the source of livelihood for close to two-thirds (around 65 %) of the country’s population, rural India holds great potential for development. This article investigates why rural economy did not develop much in spite of the wide scope that agriculture and non-farming rural activities offered. Large-scale exploitation by private traders and middlemen and the lack of information dissemination to farmers on various important issues were identified as serious obstacles for rural development. Dasgupta highlights the success story of the cooperative movement in dairy production pioneered by AMUL. The setting up of agri-portals to open up information channels, distribution and procurement networks is also focused upon.
2. Understanding Rural Marketing- V V Gopal
Spotting the exciting opportunities of the rural markets, marketers are drawing elaborate plans to tap them. However, rural marketing is still at an embryonic stage. This article analyzes the reasons behind the scenario. It discusses various strategies adopted by marketers to influence the decision-making process and the buying behavoiour of the rural customer. CavinKare chik shampoo in 50 paise sachets and Coke Rs. 5 per bottle are just a few of the marketing strategies formulated by big marketers targeting the rural customers. The authoralso lays emphasis on the role of communication in promoting rural sales. He further opines that communicating in the local language captures the rural shoppers mind share as well as heart share resulting in the capture of wallet share.
3. Emerging Face of Rural Markets – Purba Basu
The rise of the rural markets has been the most important marketing phenomenon in the nineties. Leading consumer goods companies ventured into this segment the colume of growth it likely was going to offer. The article narrates how mass media have come in handy for FMCG companies to promote their products in rural markets. Various strategies adopted byu the retailers to attract the consumer. The need for product availability, enhancing awareness and increasing the buying power of the rural customers is emphasized in this article. The article also explains that product availability can affect decision of brand choice, volumes and market share. Creating awareness through advertisements, which touch the emotions of the rural consumers can drive a quantum jump in sales. Marketers are concentrating on tapping the untapped buyers which have tremendous purchasing power.
4. Tapping India’s Rural Market – Sara Huhmann
The open sale of foreign consumer products in India commenced during post liberalization period. Multinational companies view India as a market with great potential and opportunities for growth and promotion. This article addresses various issues relating to rural marketing such as understanding rural market formulating the strategies to be adopted to penetrate into segment and understanding the types of products and packages the rural consumers use. The buying behaviour of rural India revolves around the concept of ‘earn today and spend tomorrow’. Marketers are taking into account the low disposable incomes of the consumers and are coming up with unique packaging for such consumers such as ‘sachets’, priced at affordable level.
5. For a Brand New Rural India – Harish Bijoor
This article focuses on the challenges of marketing in rural India, which is multi- cultural, multi-faceted and populous. It differentiates rural India (real India) from urban India (Virtual India). The author opines that real India is today run by virtual India. It is moving very fast in the direction of the needs, aspirations, desires discovered by the man in rural India. Marketers have to adopt one of the two ways top create brand for the rural shopper – either the insensitive way or a sensitive way. Taking the urban brand and lowering the price, extending the brand to low unit packs etc constitute th einsensitive way. The sensitive way is all about taking the rough route of branding in the rural market while at the same time preserving rural India. The article suggest ways by which marketers can preserve the rural terrain but still create brands that are relevant to the needs of the rural man. It emphasizes the need to preserve the sanctity of the rural India.
6. Rural Promise - Sravanthi Challapalli
This article presents the distinct features of the rural markets and details how it is different from its urban counterpart. Rural Indians are keen to buy small packs. They are price and product conscious. They cling on to particular brand. In contrast to what is generally believed, disposable income in this segment is not low. The author opines that the yardstick applied to study urban India could provide pointers to rural India als0. Statistics show that rural India is rapidly moving from poverty to propensity opening the doors for marketers.
7. Rural Marketing is a Different Ballgame – Deepak Halan
When it comes to non-urban shoppers the marketing strategies formulated should be different from those that aim at their urban counterparts. This article narrates why establishing a rapport with rural consumers is important and discuss the research methodology that needs to be followed when catering to their needs. The author opines that identifying region-specific media, melas, developing regional messages and demonstrations facilitate the process of creating brand awareness among the rural folk. This article emphasizes that besides pffering products that specially cater to the needs of rural consumers, marketers need to understand that capturing rural markets involves focusing on low priced products.
8. Strategies for Rural Markets – T Sarathy and R Lakshmi Narayanan
The expanding rural markets are vital for the growth of many companies. Hindustan Uni Lever Ltd (HUL) is one among them. This article deals with various aspects relating to rural marketing in rural India, important among them being the market potential, rural reach and the budget allotment. Having understood the changing dynamics of the Indian market scenario and realizing that the rural consumer is now in a position to dictate terms, corporates are allocating a significant part of their budget to the rural markets. This article discusses the role of IT in this segment with reference to e-Choupal by ITC. Lack of infrastructure, low literacy levels and uncertain income of the rural consumers are some of the major challenges faced by the rural marketers.
Section II : Cases
1. ITC – M Rajshekar and Indrajit Gupta
This details the initiatives taken by this company to capture rural markets. Choupal Sagar is the first rural mall set up by the company. The outlet has an offer every commodity – from toothpastes to televisions, hair oils to motorcycles, shirts to fertilizers and many more. With its network of e-choupals, ITC gets in touch with the farmers through the Internet or VSAT lines and thus communicates the latest commodity prices. In case the farmers find these prices attractive, they sell their products to ITC. ITC has ushered in an information revolution catalyzed by choupals. The company is planning to set up a bank, cafeteria, an insurance office and a learning center to ensure that farmers visit Chaupal Sagar at all times, unlike the present situation, wherein they come only after harvest. ITC, with all present situation, wherein they come only after harvest. ITC with all its initiatives, succeeded in gauging rural consumers buying patterns.
2. Coca- Cola – K Subhadra
This details about the marketing strategy adopted by coca-cola to capture the rural market. The company proposed a strategy based on 3 A’s – Availability, Affordability and Acceptability. It adopted a hub and spoke distribution model to make coke available to rural consumers. Coke was transported to the hub from bottling plants and through them to the spokes in small towns. Coca-Cola launched a 200 ml ‘Chota Coke’ at a price affordable by rural consumers. The company ensured through its tv commercials and hoardings that consumers received and accepted them well. The case also presents the future plans of the company in penetrating further into rural markets.
3. LG – Dakshi Mohanty and T Phani Madhav
This traces the history of LG’s entry into India and examines its rural marketing initiatives. Though it had a presence in the Indian market since a few decades, LG focussed on rural marketing only from 2002. LG advertised its products all through the year. It also gave them an option of online shopping. As a unique marketing strategy, LG offered offices in the semi-urban and rural areas, known as central area offices (CAO) and remote area offices (RAO), which not only acted as sales offices but were also profit centers with decision making authority. The case details how LG succedded in its ventures by way of introducing a series of economy range products such as CinePlus along with Sampoorna CTVs and frostfree refrigerators. Through its novel strategy, “Different models, different channel”, LG operated into rural markets successfully.
4. SEWA – Reema Nanavaty
SEWA (Self-Employed Women’s Association) is a member based organization, which assists rural women producers realize the maximum financial benefits from their products and services. Out of its 1,67,000 members 1,01,000 are rural members. This article illustrates the measures taken up by SEWA to uplift the rural women who mostly come from the drought prone areas where their ability to produce goods for consumption and sale is severely affected by various factors including water shortages, etc. its strategy focuses on assisting rural women to bargain for better prices from middlemen, identifying the needs of the community and design programs that go hand-in-hand with the exiating government programs. SEWA also proposes to continuously invest in regular market surveys and market based research activities.
5. Hindustan Unilever Limited – N Gayatridevi
Project streamline is a rural distribution model for Hindustan Unilever Ltd. Owing the invasion of television, consumer awareness in rural India has increased. HUL is among companies that took rural marketing seriously. Having experienced a bitter loss in its business of toilet soaps, toothpastes, HUL realized that the future lay in tapping the enormous rural population. It then ventured into the rural markets with an intention to promote its products in the rural areas. Project Streamline was launched by the company with an objective to have an control over the rural distribution and thereby to increase the rural penetration. Then HUL went on to initiate “Project Shakti” to address the drawbacks of the project streamline, with an objective to respond to the buying behaviour of the rural consumers. It facilitated the reach and distribution process of the company. It also explains the marketshare and price of the product.
6. CavinKare – Gouri Shukla
Having understood the needs ad buying pattern of the rural consumers, CavinKare came up with an unique idea of selling its shampoo in “sachets”. The case illustrates how the company unshered in a revolution in consumer products through “Chik” – shampoo in low priced sachets. This filled the need gap in rural markets. The price sensitive rural consumer did not mind spending Re. 1 for a shampoo hair wash. The case then details CavinKare in order to consolidate its position went on to sell shampoos at 50 paise, and also launched a single use perfume at Rs. 2.
The book provides a broad view of the rural market scenario in India as of 2005 and discusses the opportunities and challenges faced by marketers who venture into the arena. It is divided into two sections- Concepts and Cases, wherein the concepts of rural marketing and innovations and initiatives of leading consumer goods companies like ITC, Coca-Cola, HUL and LG are dicusses in detail.
Section 1: Concepts
1. Innovations in rural India- Jayatri Dasgupta
Being the source of livelihood for close to two-thirds (around 65 %) of the country’s population, rural India holds great potential for development. This article investigates why rural economy did not develop much in spite of the wide scope that agriculture and non-farming rural activities offered. Large-scale exploitation by private traders and middlemen and the lack of information dissemination to farmers on various important issues were identified as serious obstacles for rural development. Dasgupta highlights the success story of the cooperative movement in dairy production pioneered by AMUL. The setting up of agri-portals to open up information channels, distribution and procurement networks is also focused upon.
2. Understanding Rural Marketing- V V Gopal
Spotting the exciting opportunities of the rural markets, marketers are drawing elaborate plans to tap them. However, rural marketing is still at an embryonic stage. This article analyzes the reasons behind the scenario. It discusses various strategies adopted by marketers to influence the decision-making process and the buying behavoiour of the rural customer. CavinKare chik shampoo in 50 paise sachets and Coke Rs. 5 per bottle are just a few of the marketing strategies formulated by big marketers targeting the rural customers. The authoralso lays emphasis on the role of communication in promoting rural sales. He further opines that communicating in the local language captures the rural shoppers mind share as well as heart share resulting in the capture of wallet share.
3. Emerging Face of Rural Markets – Purba Basu
The rise of the rural markets has been the most important marketing phenomenon in the nineties. Leading consumer goods companies ventured into this segment the colume of growth it likely was going to offer. The article narrates how mass media have come in handy for FMCG companies to promote their products in rural markets. Various strategies adopted byu the retailers to attract the consumer. The need for product availability, enhancing awareness and increasing the buying power of the rural customers is emphasized in this article. The article also explains that product availability can affect decision of brand choice, volumes and market share. Creating awareness through advertisements, which touch the emotions of the rural consumers can drive a quantum jump in sales. Marketers are concentrating on tapping the untapped buyers which have tremendous purchasing power.
4. Tapping India’s Rural Market – Sara Huhmann
The open sale of foreign consumer products in India commenced during post liberalization period. Multinational companies view India as a market with great potential and opportunities for growth and promotion. This article addresses various issues relating to rural marketing such as understanding rural market formulating the strategies to be adopted to penetrate into segment and understanding the types of products and packages the rural consumers use. The buying behaviour of rural India revolves around the concept of ‘earn today and spend tomorrow’. Marketers are taking into account the low disposable incomes of the consumers and are coming up with unique packaging for such consumers such as ‘sachets’, priced at affordable level.
5. For a Brand New Rural India – Harish Bijoor
This article focuses on the challenges of marketing in rural India, which is multi- cultural, multi-faceted and populous. It differentiates rural India (real India) from urban India (Virtual India). The author opines that real India is today run by virtual India. It is moving very fast in the direction of the needs, aspirations, desires discovered by the man in rural India. Marketers have to adopt one of the two ways top create brand for the rural shopper – either the insensitive way or a sensitive way. Taking the urban brand and lowering the price, extending the brand to low unit packs etc constitute th einsensitive way. The sensitive way is all about taking the rough route of branding in the rural market while at the same time preserving rural India. The article suggest ways by which marketers can preserve the rural terrain but still create brands that are relevant to the needs of the rural man. It emphasizes the need to preserve the sanctity of the rural India.
6. Rural Promise - Sravanthi Challapalli
This article presents the distinct features of the rural markets and details how it is different from its urban counterpart. Rural Indians are keen to buy small packs. They are price and product conscious. They cling on to particular brand. In contrast to what is generally believed, disposable income in this segment is not low. The author opines that the yardstick applied to study urban India could provide pointers to rural India als0. Statistics show that rural India is rapidly moving from poverty to propensity opening the doors for marketers.
7. Rural Marketing is a Different Ballgame – Deepak Halan
When it comes to non-urban shoppers the marketing strategies formulated should be different from those that aim at their urban counterparts. This article narrates why establishing a rapport with rural consumers is important and discuss the research methodology that needs to be followed when catering to their needs. The author opines that identifying region-specific media, melas, developing regional messages and demonstrations facilitate the process of creating brand awareness among the rural folk. This article emphasizes that besides pffering products that specially cater to the needs of rural consumers, marketers need to understand that capturing rural markets involves focusing on low priced products.
8. Strategies for Rural Markets – T Sarathy and R Lakshmi Narayanan
The expanding rural markets are vital for the growth of many companies. Hindustan Uni Lever Ltd (HUL) is one among them. This article deals with various aspects relating to rural marketing in rural India, important among them being the market potential, rural reach and the budget allotment. Having understood the changing dynamics of the Indian market scenario and realizing that the rural consumer is now in a position to dictate terms, corporates are allocating a significant part of their budget to the rural markets. This article discusses the role of IT in this segment with reference to e-Choupal by ITC. Lack of infrastructure, low literacy levels and uncertain income of the rural consumers are some of the major challenges faced by the rural marketers.
Section II : Cases
1. ITC – M Rajshekar and Indrajit Gupta
This details the initiatives taken by this company to capture rural markets. Choupal Sagar is the first rural mall set up by the company. The outlet has an offer every commodity – from toothpastes to televisions, hair oils to motorcycles, shirts to fertilizers and many more. With its network of e-choupals, ITC gets in touch with the farmers through the Internet or VSAT lines and thus communicates the latest commodity prices. In case the farmers find these prices attractive, they sell their products to ITC. ITC has ushered in an information revolution catalyzed by choupals. The company is planning to set up a bank, cafeteria, an insurance office and a learning center to ensure that farmers visit Chaupal Sagar at all times, unlike the present situation, wherein they come only after harvest. ITC, with all present situation, wherein they come only after harvest. ITC with all its initiatives, succeeded in gauging rural consumers buying patterns.
2. Coca- Cola – K Subhadra
This details about the marketing strategy adopted by coca-cola to capture the rural market. The company proposed a strategy based on 3 A’s – Availability, Affordability and Acceptability. It adopted a hub and spoke distribution model to make coke available to rural consumers. Coke was transported to the hub from bottling plants and through them to the spokes in small towns. Coca-Cola launched a 200 ml ‘Chota Coke’ at a price affordable by rural consumers. The company ensured through its tv commercials and hoardings that consumers received and accepted them well. The case also presents the future plans of the company in penetrating further into rural markets.
3. LG – Dakshi Mohanty and T Phani Madhav
This traces the history of LG’s entry into India and examines its rural marketing initiatives. Though it had a presence in the Indian market since a few decades, LG focussed on rural marketing only from 2002. LG advertised its products all through the year. It also gave them an option of online shopping. As a unique marketing strategy, LG offered offices in the semi-urban and rural areas, known as central area offices (CAO) and remote area offices (RAO), which not only acted as sales offices but were also profit centers with decision making authority. The case details how LG succedded in its ventures by way of introducing a series of economy range products such as CinePlus along with Sampoorna CTVs and frostfree refrigerators. Through its novel strategy, “Different models, different channel”, LG operated into rural markets successfully.
4. SEWA – Reema Nanavaty
SEWA (Self-Employed Women’s Association) is a member based organization, which assists rural women producers realize the maximum financial benefits from their products and services. Out of its 1,67,000 members 1,01,000 are rural members. This article illustrates the measures taken up by SEWA to uplift the rural women who mostly come from the drought prone areas where their ability to produce goods for consumption and sale is severely affected by various factors including water shortages, etc. its strategy focuses on assisting rural women to bargain for better prices from middlemen, identifying the needs of the community and design programs that go hand-in-hand with the exiating government programs. SEWA also proposes to continuously invest in regular market surveys and market based research activities.
5. Hindustan Unilever Limited – N Gayatridevi
Project streamline is a rural distribution model for Hindustan Unilever Ltd. Owing the invasion of television, consumer awareness in rural India has increased. HUL is among companies that took rural marketing seriously. Having experienced a bitter loss in its business of toilet soaps, toothpastes, HUL realized that the future lay in tapping the enormous rural population. It then ventured into the rural markets with an intention to promote its products in the rural areas. Project Streamline was launched by the company with an objective to have an control over the rural distribution and thereby to increase the rural penetration. Then HUL went on to initiate “Project Shakti” to address the drawbacks of the project streamline, with an objective to respond to the buying behaviour of the rural consumers. It facilitated the reach and distribution process of the company. It also explains the marketshare and price of the product.
6. CavinKare – Gouri Shukla
Having understood the needs ad buying pattern of the rural consumers, CavinKare came up with an unique idea of selling its shampoo in “sachets”. The case illustrates how the company unshered in a revolution in consumer products through “Chik” – shampoo in low priced sachets. This filled the need gap in rural markets. The price sensitive rural consumer did not mind spending Re. 1 for a shampoo hair wash. The case then details CavinKare in order to consolidate its position went on to sell shampoos at 50 paise, and also launched a single use perfume at Rs. 2.
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