Innovation in Rural Markets

Innovation in rural markets

• Introduction
• Role of innovation in rural markets
• Importance of ICT in rural distribution
• ICT initiatives in rural markets
• Emergence of organized retailing
 Innovation in rural markets
Introduction
• Product/service innovation (new offerings –
packaging or pricing)

• Process innovation (ITC’s E-Choupal)

 Innovations in rural markets
Role of innovation in rural markets
Challenges
• Physical distribution
• Channel management
• Promotion &communication
• Poor infrastructure
• Uneconomical market size
• Consumer profile
 Innovations in rural markets
Corporate India
• Customized offerings
– Packaging
– Sachet – shampoos, toothpaste, oil
– SKU’s small size/quantity (soaps, biscuits)
– Pricing – coinage, extended credit line
– Communication – local mediums (folk media,
haats and melas)
 Innovations in rural markets
Government bodies
• Census 2001
Rural India Schools, Hospitals, Commercial Radio ownership
colleges dispensaries bank (% of rural households)
branches
Number 1,228,501 340,293 32,080 32

• E-governance at AP
• In MP Gyandoot &Jagridi E-Sewa
Innovations in rural markets
Salient features of Jagriti E-Sewa include:
- State-of-the-art software package that has
been built around the latest database and
intranet tools.
- Focus on Agriculture-Centric Services:
Diversification, backward and forward linkages,
contract farming, marketing, etc.
- Involvement of local educated youth or ex-
servicemen for better services and generation
of rural employment.
- Multiple revenue streams contributing to
sustainability of the venture.
 Govt of MP Gyandoot – MP Jan 00 Dhar dist
Interface between Govt & people (E-governance &E-
Commerce)
1. Agri produce rates
2. Land records
3. Grievance redressal services and etc
Additional features :
1. Online application of certificates
2. Village auctioning
3. Horoscope services
4. PCO’s and photocopying services

Fibre optics or Dist. Panchayat

31 intranet kiosks at centre
village panchayat UHF links
(3MHz-3GHz) Computer room
centre (Rs.75,000) (Server Hub)

311 panchayat (600 villages and a population around half a million)

 Gyandoot
Planning to introduce following services
1.Commodity/ Mandi Marketing Information
System.
2. Income Certificate.
3. Domicile Certificate (mool niwasi ).
4. Caste Certificate.
5. Landholder's passbook of land rights and
loans (Bhoo adhikar evam rin pustika).
6. Rural Hindi e-mail.
7. Public Grierana Redressal (Shikayat Nivaran)
8. Forms of Various Government Schemes.
9. Below Poverty Line Family List.
10. Employment news.
11. Rural matrimonial (Vivah Sambandh).
12. Rural Market (Gaon ka Bazaar).
13. Rural News Paper (Gram Samachar).
14. Advisory module (Salahkar)
15. E-education.
16. General Provident Fund.
 Innovations in rural markets
Importance of ICT in rural distribution
Better economies of scale
Minimizing stockholding costs, wastage in distribution and
avoiding stock-outs for a particular brand/product.
Enables consumers to arrive at optimum choice.
Ex: ITC
Finally it enhances
– Efficient price discovery, economy of transaction
transparent, competitive setting
– bottom-up participation
– Affordability, awareness, acceptability and accessibility
 Innovations in rural markets
Importance of ICT in rural distribution
Benefits of IT driven business strategy
– Ease of access
– Up-to-date content
– Layout, design, consistent theme
– Easy navigation
– Higher interactivity
– Access through multiple media
– Higher use of non-textual info
– Multiple languages
– Lower transaction cost
 Innovations in rural markets
ICT’s initiatives in rural markets
• ITC’s e-Choupal
• n-Logue communication
• Project i-shakthi
• Inagriline by EID parry
• Gyandoot
• TARAhaat
• Grameen sanchar society (GRASSO)
ITC’s - E-choupal (Hub &spoke model) – MP, KA,
AP, UP, Rajasthan and Maharashtra Jun 00

•Mainly initiated to avoid intermediation

&facilitate procurement of specific
commodities
•Direct channel virtually links to the mandi
system for better price discovery
• An E-Choupal serves 600 farmers in 10
surrounding village with in 5km radius

6000 internet kiosks ITC –

VSAT
(Rs.2.5 L) Procurement
centre

30,000 villages and a population 3 million

(Target: 0.1 million villages across 15 states & 10 million farmers)
 TeNet-IITM- n-Logue – TN, KA, AP, UP, Gujarat and
Maharashtra ’94
Hi-Tech & cost effective solutions (Internet, voice &E-
Governance)
1. Basic communication services; Computer training; DTP; Word processing; School
curriculum based tutorial classes using multimedia applications; Astrological
predictions
2. Additional services: online consultancy through agri &veterinary experts; doctor
&student counselors; access to online land records through Boomi projects; access to
online medical database in collaboration with WebHeathCare.

3000 Tele kiosks

LSP (Local Service Providers)
(Rs.50k) corDECT
•Training
connection, PC with
•Hardware maintenance
coilour monitor, N-Logue
•Covers avg. 35 villages/ LSP
multimedia communications
•Connectivity to Gov .off;
equipment, web
PHC; schools &colleges; small
camera, UPS with
business & local institutions
4hrs backup, dot-
matrix printer

(Target:5 Lack Kiosks by 2007)

 HUL + Women self-help group –i-Shakthi-AP
E-Governance

1. Audio-Visuals in the following area (focus on locally relevant info from homegrown
experts): Health and hygiene, E-Governance, Education, Agri, Employment, Legal
services and veterinary services
• Query mailing & discount coupon system
• 6 working days in a week (9 AM to 7 PM)
• User will be provided with ID card & unique registration number

2. Additional services:
• Tie-up with Azim Premji’s foundation to deliver innovative educational modules to
students – VIII to XII – through kiosks.
• Similar tie-up with Tatas for adult education
• Tie-up with ICICI Bank – new delivery channel – first life &general insurance
introduction - later others (equity, mutual fund, bond, pure gold, personal credit, rural
savings A/C and remittances)
EID Parry Ltd (Murugappa Group)- India Agriline
(Inagriline) – TN 01
Business hubs

16 internet kiosks
One stop shops for
• buying form inputs,
•market for selling &
•info communications &services

Log-term relationship
The content is in local language Tamil
•Online registration provision & easy
access to transaction records
•Trained operators to use PC’s, to surf
portal, & NET & to assist users
 Development Alternatives group (DA)– Technology
&Action for Rural Advancement (TARAhaat)-MP, UP,
Punjab and Hariyana 00
TARAhaat (Commercially viable model to bring info, products &services to the
rural mkts

Trg
&Mgt
support

46 Franchised
mother portal
TARAkendras/village Delivery vans
TARAhaat.com
cyber café networks
Development Alternatives Group– MP, UP, Punjab
and Hariyana 00

1. TARACARD – photo id – uses like credit card to pay for goods,

services & financial transactions
2. Local language E-Mails, chat & bulletin boards, web-hosting to
broaden outreach
3. Payment for services, commission on sales & fee for Ads and
entertainment, royalties and other sources of earnings
 Bulk Franchisee of BSNL – Grameen Sanchar Society
(GRASSO) NGO -West Bengal, Orissa, Jharkhand -
3 fold plan to improve people especially BPL

100 E-Seva Kendra

Info delivery &facilitation/10 PCO’s
•E-Governance
•Access to weather &Agri Info 100 LCV (Light
•Access to Agri product mkt price Commercial
1000 WLL •Availability of cold storage facility Vehicle) /10 PCO
(wireless Loop) •Availability of labour & work opp. Linkage between
PCO (Public Call
•Facilities for train booking &bill villagers and mkt
Office) / 1000 payment
people

Additional features:
• Plans to give job opportunities to all villagers through expansive linkages
•Tie-up with IBM –school computer training Rs.60/month
•Plans to offer VAS –Godowns & cold storage facilities

Target: 2,50,000 PCO’s, 25,000 E-Seva Kendras & 25,000 LCV’s in next one year Gujarat,
Maharashtra and etc
 Emergence of organized retail outlets
Driving factors
• Economies of scale
• Quality of service
• Increased brand consciousness
• Fighting fakes (Ex: Philips bulbs through E-choupal)
Shopping mall experience in rural America
• In 1962 – 4 new retailers - Kmart, minneapolis, woolco
&Walmart
• In 1994 sales volume:
Kmart 3800 retail outlets &$34 billion
Walmart 2500 retail outlets & 83 billion
 Emergence of organized retail outlets
Organized retailing in rural India
• Mahindra Shubhlabh Services Ltd (MSSL)
– Subsidiary of M&M
– Retail outlet brand “Mahindra Krishi Vihar”
– Offers complete set of customized products
&services to improve farm productivity
– Platform to bank loans
 Emergence of organized retail outlets
Organized retailing in rural India
• ITC’s Choupal Sagar
– First rural mall- 7000 sq.feet-self service
– Reduction in overhead cost: Located near ITC’s E-Choupal
stock point &partnership with firms
– Product offerings: toothpaste, coconut oil, dress, two
wheeler, tractor & etc
– Popular brands : LG, Philips, Everyday, Marico, TVS, ITC’s
apparels & Eicher
Emergence of organized retail outlets
• Mahamaza
– Offline network of WSO (Web Store Owners-
registration fee Rs.5100) at small towns
– Introduced in the year 2000 – currently more than
2,75,000 WSO
– Range of products: From motorcycles, cycles
(Atlas) to cell phone (Nokia) – 28 brands across 15
industries
Emergence of organized retail outlets

• Mahamaza
– Face to face interaction with customers –
transaction report to nearest office: Delhi,
Lucknow, Dehradun & Pune – payment through
DD/Pay order- 1 week time for delivery
– Significant channel for durable goods – sales
turnover Rs. 90 crores in 2004 – attractive
discounts
– In the 1st month Nokia cell phone sales Rs.1.5
crores