Rural Marketing

ITC (FMCG)
FACULTY: AMIT KUMAR

Presented By Buddy Group-7:

Arushi Choksi G009

Mehar Sachar G30
Paul Zacharia G037
Jahnvi Arora G021
Mahima Shah G027
Naman Jain G032
Nikit Khimasia G036
About the company

ITC Limited is an Indian conglomerate company headquartered in Kolkata. ITC has a

diversified presence across industries such as FMCG, hotels, software, packaging, paperboards,
specialty papers, and agribusiness. The company has 13 businesses in 5 segments. It exports its
products to 90 countries. Its products are available in 6 million retail outlets.

Established in 1910 as the Imperial Tobacco Company of India Limited, the company was
renamed as the India Tobacco Company Limited in 1970 and later to I.T.C. Limited in 1974.
The company now stands renamed to ITC Limited, where "ITC" today is no longer an acronym.
As of 2019–20, ITC had an annual turnover of US$10.74 billion and a market capitalization of
US$35 billion. It employs 36,500 people at more than 60 locations across India.

ITC Limited" was originally named "Imperial Tobacco Company of India Limited", succeeding
W.D. & H.O. Wills on 24 August 1910 as a British-owned company registered in Kolkata.Since
the company was largely based on agricultural resources, it ventured into partnerships in 1911
with farmers from the southern part of India to source leaf tobacco. Under the company's
umbrella, the "Indian Leaf Tobacco Development Company Limited" was formed in Guntur
district of Andhra Pradesh in 1912. The first cigarette factory of the company was set up in
1913 at Bangalore.
In 1928, construction began for the company's headquarters, the 'Virginia House' at Calcutta.
ITC acquired Carreras Tobacco Company's factory at Kidderpore in 1935 to further strengthen
its presence.ITC helped to set up indigenous cigarette tissue-paper-making plant in 1946 to
significantly reduce the import costs and a factory for printing and packaging was set up at
Madras in 1949.The company acquired the manufacturing business of Tobacco Manufacturers
(India) Limited and the complementary lithographic printing business of Printers (India)
Limited in 1953.
Rural Marketing

Rural Marketing is the process of planning, developing strategies, tactics according to the rural
areas and for the rural population. It also includes pricing strategies according to rural people's
purchasing power.
In this, every other strategy is made keeping in mind rural people’s mindset, lifestyle and
consumer behaviour, and psychology.
Why are companies like ITC, HUL and Dabur trying to enter rural markets?

Purchasing power and disposable income of rural India has been increasing and is still
increasing at a high pace. In the financial year 2018, the market share and market growth of
rural markets in India was $23.63 billion and in the financial year 2020 it grew till $100 billion,
that is 23.63% increase in the market growth from 2018 to 2020. The market share is estimated
to increase till $220 billion in the financial year 2025, that is, 45.45% increase within 5 years of
time.

This is one of the major reasons why big companies, especially FMCG companies, for
increasing their market share and revenue prospects want to penetrate into the rural market.

ITC and other similar companies market share in rural market

Companies like HUl, P&G and Dabur have first mover and unique positioning advantage in
rural markets of India that ITC doesn’t have. These companies have various projects for
development of rural areas. HUL has started off with project shakti for women empowerment
and P&G has project shiksha for schools located in rural areas.

a) Why ITC is not able to penetrate into rural market:

Competitors like- HUL, P&G, Dabur, Parle and other are very strong in rural India and with
pricing strategy not giving any space to ITC and have early mover advantage as well:

§project shakti HUL has created a unique distribution channel.

With Suitable products like Tide, Ariel, Head & Shoulder and so on P&G offering at an
economical price.

New entrant Patanjali also with Swadesi positioning and distribution channel gained the rural
market.
 b) Reason for Low Market Share in Rural Market

● Distribution Channel: ITC has 3 level distribution channels for rural India. ITC already
has great demand and supply in the cigarette market but because of Government
regulations the same distributors cannot distribute other non-tobacco products. In rural
distribution, after manufacturing the product goes to the distributor and distributor
pushes the products to the wholesalers because in rural markets connectivity is not good
and wholesalers also push those products which have greater margin. ITC non-tobacco
products don’t have that reach into the rural market as its competitors.

● Products: ITC has a long product line and product depth, but many brands/products are
premium products which are not suitable for rural markets. However, ITC has personal
care brands such as Vival, Fiama Di Wills, Superia , Savlon, Engage, Packaged-Food
brand like Sunfeast, Yippee, candyman and so on have many other brands which are not
premium and hence, might sell in the rural market.

● Influence of Retailer: Rural consumers purchase choice is greatly restricted and

manipulated by local retailers because rural consumers are less aware as compared to
urban consumers. Rural consumers generally ask for “Laal wala sabun dena” or “Ak
nahane ka sabun dena” and retailers push the product in which they have greater margin.
ITC does not give a great margin like other FMCG companies and, hence, lose potential
customers in rural areas.

● Competition: Already big giants like HUL, P&G have great penetration in the rural
market and companies like Parle, Britannia Pepsico with great demand and with right
positioning driving the packaged-Food segment in the rural market.

● Positioning: One of the major drawbacks of ITC is that it is still being positioned as a
tobacco & cigarette-making company which has and is still harming the other FMCG
products under ITC and their positioning.
● Awareness: In the rural market, people are not much aware of the FMCG brands of ITC
and brands of ITC are not much famous as other competitors brands like Lifebuoy,
Head&Shoulder Parle-G, Kurkure, Good-day, and so on have been positioned as a brand
for rural India and, hence, majority of the rural population prefer these brands over ITC
non-tobacco brands.

4P’s of Rural Marketing

Product - Capture potential markets.

Price - Pursue various customer segments
Place - Distribution - Enhanced due to online channels like Amazon
Promotion - Communication via TV ads, Social media & traditional channels.

1.) Products - Product is not considered as an actual product in marketing strategy, but as a
source of value to be supplied to customers. Physical products, installation and repair
services, financing plans to purchase the products, word of mouth references, quality
assuring brand name, convenience of availability, point of sale equity, priming and
pre-purchase education provided by sales staff, and so on are all ways that Rural Itc can
provide value to its customers. Rural Itc's marketing managers can use these multiple
approaches to comprehend product concepts to differentiate the company's total value
proposition from that of its competitors. ITC has a highly diversified product range and
they sell related goods which are high quality and simple to understand.

2.) Price - Pricing is a highly complex activity and we will cover only a very limited aspect
of what goes into pricing decisions. To a large extent pricing depends upon the other 3Ps
of marketing – product, place and promotion. Conceptually perceived value is the
maximum price a customer is willing to pay for a Rural Itc product in the given
competitive context.

Agricultural goods priced aggressively (lower than competitors)

Comparable products at lower prices under different brand names. Eg. lux and vivel

Good Value Pricing

Offering right mix of product features, quality, and service combination at fair price.For
example offering a limited frill option - customers can have initial product experience at an
accessible price.

Competition Based Pricing

The pricing strategy is based on the competition in the market. Under this strategy Rural Itc
focus is to match the prices of the competitors and focus on reducing the cost of operations to
increase profitability.

3.) Place

Rural Itc provides its products to customers through a series of processes known as a place or
distribution channel. Distribution and marketing channels serve a variety of functions, including
logistics, product quality assurance, reducing purchase lot size and thus enabling individual
customers to buy products, after-sales services and installation services, enabling product
customization options at the point of sale, providing an extensive product assortment using
product line – breadth, length, and depth, providing customers with product information, and
easy access to products.

Products are stored in procurement hubs, mini malls and the selling, purchasing and storage all
happens in one place.
 4.) Promotion

The Promotion Mix, also known as an Integrated Marketing Communication Strategy, is a

combination of numerous promotion strategies available to Rural Itc. Advertising, Sales
Promotion, Personal Selling, Public Relations, and Direct Marketing are the five types of
marketing.

Rural Itc can employ all five communication techniques to persuade customers of the existence
of the product, the pricing of the product, the product's distinguishing qualities, the places where
people can acquire the items, and finally, how consumers can efficiently use the products or
services.

Products sold through Samyojaks, Sanchalaks and others. CRS activities, farmer education and
awareness are at the forefront. Skilled central management group helps solve all queries and
makes WOM promotion easier.

How does ITC create value?

Value to the customers of Rural Itc can be delivered in numerous ways such as –
1.) Priming and pre purchase education provided by sales staff
2.) Financing plans to purchase the products
3.) WOM references
4.) Physical product
5.) Quality assuring brand name
6.) Convenience of availability
7.) Installation and repair services
8.) Point of sale equity

These numerous ways to understand product concepts provide marketing managers of Rural Itc
an opportunity to differentiate its overall value proposition from that of the competitors.

Distribution Network of ITC :

Overview:

A key decision among the four P‟s of marketing managers is distribution. Distribution decides
the manner in which product and services are made available to the target customers. It involves
the bridging of place utility gaps between manufacturer and customers. The design of physical
distribution, referred to logistics and supply chain management and trade channels of
distribution are the major components in distribution.

Distribution channel
Traditionally, ITC, like all packaged goods companies in India, stocks products at its
distribution centres. Products first go to its exclusive wholesale dealers, then distributors and
direct retailers. In rural India, the big retailers supply products to smaller retail outlets. The
entire process takes anything from one week to three weeks, depending on the distance between
the retail outlet and the factory.

The Model 3 distribution channel is used for small towns and villages. This channel of
distribution involves two intermediaries to transfer goods from the manufacturer to the
customer. In this carry and forward agents and semi-wholesalers act as a connecting link
between manufacturers and consumers. Retail wholesalers are those who, besides selling goods
to the retailers also deal directly with the ultimate consumers. In this way, they are able to
establish direct contact with the consumers, so as to get prompt information relating to their
preferences.

How has ITC succeeded in reaching out to their audience in rural areas?

Utilisation of public distribution system: The PDS in the country is fairly well organised. The
revamped PDS places more emphasis on reaching remote rural areas like the hills and tribals.
The purpose of PDS is to make available essential commodities like food grains, sugar,
kerosene, edible oils, and others to the consumers at a reasonable price. The shops that
distribute these commodities are called fair price shops. Here again there is an arrangement for
centralised procurement and distribution. The manufacturing and marketing men of ITC
explored the effective utilisation of PDS.

Distribution upto feeder markets/mandi towns: Keeping in view the hierarchy of markets for the
rural consumers, the feeder markets and mandi towns offer excellent scope for distribution. The
rural customers visit these towns at regular intervals not only for selling the agricultural produce
but also for purchasing cloth, jewellery, hardware, radios, torch cells and other durables and
consumer products. From the feeder markets and mandi towns the stockist or wholesaler under
ITC’s distribution channel arrange for distribution to the village shops in the interior places.
This distribution is done by mopeds, cycles, bullock-carts, camel-backs etc. depending upon the
township.

Shandies/Haaths/Jathras/Melas: These are places where the rural consumers congregate as a

rule. While shandies/heaths are held on a particular day every week, Jathras and melas are held
once or twice a year for longer durations. Such places attract a large number of itinerant
merchants. Only temporary shops come up selling goods of all kinds. It turned out to be
beneficial for ITC to organise sales of their product at such places. Promotion is taken, as there
will be a ready captive audience. It is estimated that over 5,000 fairs are held in the country and
the estimated attendance is about 100 million rural consumers.

ITC’s focus on direct distribution in rural areas

ITC Ltd is working on the “leanest possible" distribution model to supply products directly
from its manufacturing units to retail outlets across the country, aiming to ultimately reduce lead
time to just one day. ITC plans to remove as many stocking points as possible as part of its new
model. At each stocking point, products get degraded due to handling. The company will
require less working capital if it eliminates some stocking points.

ITC has one of the most extensive distribution networks in India. Its products are available at
4.3 million of the estimated eight million retail stores in India. Of this, about 2 million are under
ITC’s direct distribution network. ITC will replicate the new factory-to-retail point distribution
in phases, and eventually bring all the 2 million retail points under the new structure. The plan
includes an ambitious target of directly reaching out to the top one lakh villages which
contribute 80% of India’s rural consumer goods consumption.

Their ultimate goal is to ensure a supply chain that is as close to the market as possible with
minimum stocking points. This will ensure greater freshness of products, greater responsiveness
and lower costs.

The Base of Pyramid distribution challenge faced by ITC

These are the challenges in the distributions of goods and services to the BoP consumers. BoP is
defined as households who spend less than $75 per month. This accounts for 114 million
households in the Rural market which accounts for about 76% of the rural market in India. It
talks about the complexities that are associated with the BoP markets. These are as follows:

• Income Levels & Volatility

• Savings Pattern

• Language & Literacy

• Mobility & Travel Patterns

• Customer Preferences

• Scarcity of Data Sets

It emphasises that the role of Government is huge in stimulating the rural economy and creating
incentives for organised players. Without proper government support in establishing distribution
networks and supporting these people it is hard that an efficient distribution network can be
achieved for these markets. Government and private players need to work hand in hand to help
in the cause of upliftment of these masses and developing these markets as future markets to
nurture profits for the organisation.
Rural Marketing Strategies of ITC:

To penetrate into the rural market ITC came up with E-Chaupal

Over the last decade or two, India's rural economy has seen significant changes. The rural
landscape has been transformed by rising earnings resulting from the country's economic
progress, as well as increased exposure to metropolitan lifestyles facilitated by improved
infrastructure and connection. The increased demand for aspirational products over
conventional low-value commodities reflects this shift in rural customers' attitude. Today's rural
consumers want to get the most bang for their buck and improve their quality of life by using
innovative technology, products, and services.

e-Choupal is a project of ITC Limited, an Indian conglomerate, to connect directly with rural
farmers for the purchase of agricultural and aquaculture products such as soybeans, wheat,
coffee, and prawns via the Internet.

Let's take a look at the mandi process before we discuss e-choupal. Mandi's were wholesale
agricultural markets that were regulated by the government and established through legislation.
Mandis are notoriously congested and chaotic, and during the selling season, farmers may have
to wait in line for up to three days simply to enter the mandi to make a sale.
The crop must be sold as soon as possible after it is harvested. Agriculturalists rarely have
access to sufficient storage facilities. If they did, they'd be able to sell before or after the peak
selling season, when the mandis are jam-packed with farmers forced to sell, and without the
time constraints that come with a perishable produce. Small farmers rely on regular cash flow
for survival as well. After transporting the crop all the way to the mandi, it is not economically
feasible for him to return it because it would take time and money that he lacks.

e-Choupal addresses the problems that Indian agriculture faces, such as fragmented fields, poor
infrastructure, and the use of intermediaries. [1] In rural India, the programme instals computers
with Internet access to provide farmers with up-to-date marketing and agricultural information.
This effort presently includes over 6100 installations that serve over 4 million farmers and
encompass over 35000 villages. Madhya Pradesh, Haryana, Uttarakhand, Uttar Pradesh,
Rajasthan, Karnataka, Kerala, Maharashtra, Andhra Pradesh, and Tamil Nadu are among the
states where the 'e-Choupal' website gives information to farmers. ITC's procurement staff,
handling agents, and modern warehousing facilities across India support the e-Choupal network,
allowing its Agri Business to source identity-preserved merchandise even on short notice. ITC's
processors are hand-picked, high-quality businesses that provide sanitary processing and
sophisticated packaging. To retain the original flavour, taste, and scent of the various Agri
products, strict quality control is done at each stage.
They've also separated themselves into livestock development programmes, women's economic
empowerment programmes, primary education, skill development, and vocational training
programmes.

To fulfil this emerging and growing opportunity, ITC has come out with 3 major programs
under the E-chaupal Initiative.

1) Choupal Sagaar
"Zarooratein anek jagah ek"

Choupal Saagars are multi-purpose hubs started mainly in the states of Uttar Pradesh, Madhya
Pradesh, and Maharashtra that handle agricultural commodity procurement and product and
service sales through rural hypermarkets. These facilities, which are located in Tier III and Tier
IV towns, address the challenges of quality products and services being available, accessible,
and affordable to rural and semi-urban residents.

Multi-category hypermarkets stock a wide choice of clothing, footwear, groceries, consumer

durables, electronics, and household goods, among other things. Classic Polo, Duke, Donear,
DCot, Integriti, Chota Bheem, Adidas, Red Chief, Bata, Relaxo, Nilkamal, Bombay Dyeing,
VIP, Welspun, American Tourister, Hawkins, Milton, and Singer are some of the aspirational
brands available at Choupal Saagars.

For people living in rural and semi-urban areas, Choupal Saagars are one-of-a-kind One-Stop
Destinations. In addition to being hypermarkets, procurement centres, and commodity
warehouses, they provide services such as fuel stations.

ITC's Agri Business has opened 24 Choupal Saagars with over 2,00,000 square feet of
dedicated retail space throughout the three states.

2) Choupal Mahotsav

A three-day event, is a multi-brand consumer engagement platform that builds on the

framework of entertainment, information and shopping at ITC Choupal Saagars.

Since its inception in 2009, the Choupal Mahotsav has been held during the Kharif and Rabi
harvest seasons to ensure the largest possible participation of rural and semi-urban audiences.

The festival is held in stages in Choupal Saagars in Uttar Pradesh, Madhya Pradesh, and
Maharashtra. Consumer engagement platforms and information sessions, health camps, specific
brand and product zones, kid zones, sporting and entertainment events, games, and schemes are
among the major attractions.
Over 10,000 customers from 200 catchment villages attend each location for over three days
thanks to extensive pre-launch efforts that include above-the-line and below-the-line activities
as well as the involvement of specialised ITC resources at the grassroot levels.
The Choupal Mahotsav offers a once-in-a-lifetime opportunity to gain a better understanding of
rural audiences, launch new goods, improve brand recall, and boost overall brand equity.

3) Choupal Haat

It's a one-of-a-kind platform created by e-Choupal for active engagement with rural audiences
in a fun, easy-to-use, and pull-based environment.

Through an ecosystem of ITC and its many partners, the Haat provides an opportunity to
intimately contact with and understand the demands of the target audience, as well as offer
answers. Choupal Haats have multiplied ITC e-direct Choupal's contact with villagers,
extending its reach even further.
Choupal Haat is a modular construction that relies on natural rural convergences such as village
haats and melas to function.
ITC has created bespoke Choupal Haats for different consumer groups, such as Mahila Choupal
Haat for women, School Choupal for children, Swasthya Choupal for health and wellbeing, and
Grahak Diwas for certain demographic target segments. The services offered (Figure-1) through
Choupal Haat Platform include Consumer Engagement, Product Demonstration, Sampling,
Retail Seeding, Lead/Enquiry Collection and Tracking of Leads/ Enquiries.

ITC Gains

The commissions paid to the agents under the mandi system were not excessive, but because of
the inefficiencies discussed earlier, the true cost of intermediation through the mandi system
was between 2.5 and 3% of procurement costs. While retaining commissions paid for the
sanchalaks’ services, the 0.5% commission paid to them is significantly less than the costs
associated with the mandi system. Direct reimbursement of transport costs to the farmer is
estimated to be half of what ITC used to pay the commission agents for transport to their
factory. Removal of intermediary manipulation of quality and the ability to directly educate and
reward quality in the customer base results in higher levels of quality in e- Choupal
procurement. This results in higher oil yields, which, in turn, lead to higher profits for ITC.

E-Choupal also allows ITC to develop long-term supplier relationships with farmers and attain
some degree of supply security over time. Risk is also managed in the e-Choupal system by a
far stronger information infrastructure. Sanchalaks and samyojaks working on behalf of ITC
provide excellent bottom-up information on pricing, product quality, soil conditions, and
expected yields. This allows ITC to better plan future operations.
Sustaining Commercial Volume

“Virtual vertical integration” can only work if there is a continuous flow of information between
the e- Choupals and ITC. Because of the number and physical dispersion of the e-Choupals, this
communication must be initiated by the sanchalaks. If their motivation to communicate with
ITC diminishes, the channel will still function for procurement, but will lack the vitality to
supply risk management, distribution, or product design. Maintaining continuous commercial
flow keeps the sanchalak motivated to spend time and money calling the ITC representative to
ask about new products, convey village demand, and providing ITC with local updates. An
example of the power of local information was seen early in e- Choupal implementation. A
competitor attempted to divert produce coming to the ITC factories by stationing representatives
on the roads leading up to the plant. This person would stop farmers on their way to the ITC hub
and offer them a price higher than the ITC rate at the competitor’s plants. Farmers alerted the
sanchalaks and they in turn provided ITC with the information necessary to address the
situation. Sanchalaks thus provide an essential role in the chain of communication.
ITC maintains commercial volumes by sequencing procurement and sales year-round, thereby
securing the continuous flow of commission checks through e-Choupals. Purchases and sales
have been arranged so that kharif (the cropping season that coincides with India’s monsoon,
July through October) and rabi (winter cropping season in irrigated areas) inputs and
procurement maintain a steady stream of revenue for sanchalaks.

Scaling the Model

Profitable re-engineering requires the unambiguous understanding of value provided, the
circumstances in which they are applicable, and the revenues they are capable of generating.
ITC’s model identifies three sources of value for the company that can help scale the model:

● Crop Specific Intervention. ITC recognized that agrarian systems vary by crop. This
means that the inefficiencies in the supply chain, the correction required from
e-Choupal, and the magnitude and timing of the resulting revenues will differ by crop.
For example, the systems, and consequently the e- Choupal models and payback
streams, for coffee and shrimp are very different from those for soy. ITC’s goals for soy
intervention reflected this nuanced analysis and the project was targeted with recovering
the entire cost of infrastructure from procurement savings. This is contrasted with the
coffee and shrimp efforts where the source of e-Choupal value is such that the
investment recovery horizon is much longer.

● Low-Cost Last Mile. The same system of physical and information exchange that
brings produce from the village can be used to transfer goods to the villages. As
infrastructure has already been paid for by procurement, it is available at marginal cost
for distribution. This ties in nicely with ITC’s larger goal of transformation into a
distribution super-highway. ITC's current channels reach areas with populations of 5,000
and above. E-Choupals allow penetration into areas with populations less than 5,000.
 Products such as herbicides, seeds, fertilisers, and insurance policies, as well as soil
testing services are sold through e-Choupal. E-Choupal as a distribution channel begins
in agriculture but extends well into consumer goods and services. In the traditional
channel, composed of mobile traders and cycle-based distributors, farmers lack the
resources to make informed purchasing decisions. More often than not, traders and
distributors do not understand the farmers’ issues and end up selling them products and
services that do not satisfy their needs. With many larger companies hesitating to serve
the rural market, farmers often do not have variety in their choice of products and
services. This lack of choice means that not only are farmers forced to buy whatever is
available, they often must pay a premium for those products.

● Intelligent First-Mile. The global resources, best practices, and remunerations that the
e-Choupal brings to farmers have encouraged innovation and provided an avenue to see
their ideas realised. This illustrates ITC’s vision of using e-Choupal as the “intelligent
first mile.” Farmers are now coming up with products and services that ITC could
provide to further improve operations. Farmers are demanding that ITC certify and make
available the “Samrat” variety of seeds that is preferred over the currently certified
JS300 variety. Some farmers have urged ITC to bring its resources to bear on onion and
potato crops. Responding to the fact that the Indian onion crop is regarded as inferior to
the Chinese crop in the world market, farmers recognize that this is due to the lack of
availability of high quality seeds and information. They have approached ITC with a
suggestion to create e-Choupals for these crops, pointing to the mutual profitability of
such an effort.

ITC’s objective is not to be a platform provider for sale of third-party products and services but
rather a network choreographer who orchestrates bi-directional demand and supply of goods
through a collaborative business model. ITC intends to differentiate itself by serving only those
products and services to which it can add value. ITC’s core asset is its knowledge of the
customer. By transforming the value chain and setting up a platform for procuring commodities
from them directly, they now have a foundation for forging a close relationship with the
farmers. This relationship leads to a better understanding of the issues plaguing farmers.
Through e-Choupals, hubs, and processing centres, ITC has the ready infrastructure needed to
implement an alternative channel for distribution of goods and services to rural India.
E-Choupals can double as storefronts and hubs as centres for stocking inventory. In the long
term, ITC sees vast opportunities from its e-commerce platform and low-cost distribution
system. Company officials have expressed the ambition to become “the Wal-Mart of India,” and
ITC chairman Y.C. Deveshwar told the media recently that “The e-Choupal network will serve
area where nearly 70% of the country's population resides...(including) villages with
populations of less than 5,000 people where most businesses never venture."7

In addition, the information infrastructure implemented by ITC can be used to enhance its
business decision-making, better manage risk, and identify opportunities for cross-selling and
up-selling. The company can leverage detailed transactional data and transform it into
actionable knowledge. Data mining and data warehousing will help company executives to
better understand the behaviour of their customers, identify unfulfilled needs and ways to serve
them efficiently. The communication infrastructure compensates for the lack of physical
infrastructure needed for marketing products and services in rural India. It enables rapid,
low-cost information dissemination and a trusted brand for introducing new products, while
minimising the need for a travelling sales force. Online ordering and order management
eliminate the need for physical storefronts. And the IT infrastructure and local sanchalak
provide customer intelligence, thus maximising customer satisfaction and profitability.

SUMMARY

The e-Choupal model shows that a large corporation can combine a social mission and an
ambitious commercial venture; that it can play a major role in rationalising markets and
increasing the efficiency of an agricultural system, and do so in ways that benefit farmers and
rural communities as well as company shareholders. ITC’s example also shows the key role of
information technology—in this case provided and maintained by a corporation, but used by
local farmers—in helping to bring about transparency, to increase access to information, and to
catalyse rural transformation, while enabling efficiencies and low- cost distribution that make
the system profitable and sustainable. Critical factors in the apparent success of the venture are
ITC’s extensive knowledge of agriculture, the effort ITC has made to retain many aspects of the
existing production system, including retaining the integral importance of local partners, the
company’s commitment to transparency, and the respect and fairness with which both farmers
and local partners are treated.

LEARNINGS

Rural marketing in India is an untapped market that has immense potential of generating
revenues and if industries tapped these markets their growth prospects would increase from
30%-45%.

Though people in rural India are becoming more brand aware, understanding the rural consumer
mindset, their psychology and changing their brand loyalty from one brand to another is
difficult.

Rural India is very sensitive to price and any changes that might occur with respect to the
existing products that they might be using. Hence, ITC should be very careful when
incorporating changes into existing products or introducing new ones.