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Course Project Report
Rajarshi Rakshit (05305024) M.L.Narasimham (05305025) Ashish Gudhe (05305028) Kartik Vaddadi (05305044) Course Instructor Prof. K. Narayanan
April 2, 2006
Department of Humanities & Social Sciences Indian Institute of Technology, Bombay Mumbai
1 Introduction 2 Strategies 2.1 BY COMMUNICATING AND CHANGING QUALITY PERCEPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2 BY PROPER COMMUNICATION IN INDIAN LANGUAGE 2.3 BY TARGET CHANGING PERCEPTION . . . . . . . . . . 2.4 BY UNDERSTANDING CULTURAL AND SOCIAL VALUES 2.5 BY PROVIDING WHAT CUSTOMER WANT . . . . . . . . 2.6 BY PROMOTING PRODUCTS WITH INDIAN MODELS AND ACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . 2.7 BY ASSOCIATING THEMSELVES WITH INDIA . . . . . . 2.8 BY PROMOTING INDIAN SPORTS TEAM . . . . . . . . . 2.9 BY TALKING ABOUT A NORMAL INDIAN . . . . . . . . . 2.10 BY DEVELOPING RURAL-SPECIFIC PRODUCTS . . . . . 2.11 BY GIVING INDIAN WORDS FOR BRANDS . . . . . . . . 2.12 BY ACQUIRING INDIAN BRANDS . . . . . . . . . . . . . . 2.13 BY EFFECTIVE MEDIA COMMUNICATION . . . . . . . . 2.14 BY ADOPTING LOCALISED WAY OF DISTRIBUTING . 2.15 BY ASSOCIATING THEMSELVES WITH INDIAN CELEBRITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.16 MELAS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.17 PAINTINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Case Studies-1: AKASHGANGA 4 Case-Study 2: ITC e-Choupal 4.1 About ITC-IBD . . . . . . . . . . . . . . . . . . 4.2 ITC e-Choupal and the Strategy . . . . . . . . . 4.3 Operational costs and comparision with Mandis 4.4 Vision and Planning Behind the e-Choupals . . 4.5 Strategies to be followed . . . . . . . . . . . . . 1 3 6 6 6 7 7 7 8 8 8 8 9 9 9 9 12 12 12 13 13 14 14 15 17 17 19
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the lure of rural India has been the subject of animated discussion in corporate suites. the upper income class those with household incomes of over Rs one million [$22. far ahead of the market for tractors and agri-inputs which is estimated at $10 billion. marketing executives are fanning out and discovering the strengths of the large rural markets as they try to enlarge their markets. Its global rival Pepsico took a wider approach to the business when it was 3 . The rural middle class is growing at 12 per cent against the 13 per cent growth of its urban counterpart. India’s premier economic research entity.1 Introduction For quite some time now.7 billion for cars. the average rural income has gone up to 63 to 64 per cent by 2001-02 and touched almost 66 per cent in 2004-05. With urban markets getting saturated for several categories of consumer goods and with rising rural incomes. Coke ventured into the hinterland. From 55 to 58 per cent of the average urban income in 1994-95. Coke is not the ﬁrst MNC to have cottoned on to the rural lure. scooters and bikes and over one billion dollars of durables. Even better. recently conﬁrmed that rise in rural incomes is keeping pace with urban incomes. that represents a market worth a whopping $27 billion. In total. Four years ago. Today. has no hesitation proclaiming. It will have a 22 to 23 per cent rural component. Higher rural incomes have meant larger markets. It is no wonder that even MNCs have cottoned on to the idea of a resurgent rural India waiting to happen. Adi Godrej. the idea has grown out of its infancy and dominates discussions in any corporate boardroom strategy session.700] per annum is projected to go up to 21 million by 2009-10 from four million in 2001-02. It is a myth that rural consumers are not brand and quality conscious. A study by the Chennai-based Francis Kanoi Marketing Planning Services says that the rural market for FMCG is worth $14. And there is a good reason too.4 billion. Rural India also accounts for sales of $1. A survey by the National Council for Applied Economic Research(NCAER). Already. the rural tilt is beginning to show. chairman of the Godrej group that is in a range of businesses from real estate and personal care to agri-foods. Now Coke’s rural growth of 37 per cent far outstrips its urban growth of 24 per cent.
empowers the rural community by creating access to relevant information through community portals and it also works with NGOs to spread literacy. the $2. has also got on the bandwagon. in 61. consumption patterns are changing and it signals a change in the regulatory environment. The future of Indian agriculture in general and the farmer in particular depends on the how soon they can become globally competitive.000 Shakti entrepreneurs covering 500. chairman of the $2 4 .given permission to set up shop in India in the late 1980s and investment in food processing and farming was a pre-condition for entry. productivity improved from 16 tonnes to 52 tonnes per hectare and there was a tomato glut in the state. to replace imported fruit. the retailer and the consumer.2 billion. Telecom giant Sunil Mittal. The company imported a state-of-the art tomato processing plant from Italy to Punjab. Between the 8th (1992-97) and the 10th (2002-07) Five Year Plans. their incomes increased because of the huge jump in productivity. Pepsi is now heralding a citrus plantation drive in the state and other parts of the country for its brand of Tropicana fruit juices. Indian economic policy realises this. the country’s largest FMCG company. With such an emphasis on rural marketing. Farmers weren’t complaining because even though prices fell.000 villages. As Ashok Gulati of the US-based International Food Policy Research Institute put its. Shakti aims to have 100. successive governments have tripled the spending on rural development from $6.400 villages across 12 states. Vertical integration of the food market from farm to ﬁrm to fork becomes the best way to achieve eﬃciency and serve the interest of every stakeholder in the chain the farmer. There are currently over 15. most of them women. Hindustan Lever Ltd.3 billion Indian subsidiary of Unilever.82 billion to $20.000 of India s 640. In ﬁve years. the processor. Its four-pronged programme creates income-generating capabilities for underprivileged rural women. improves rural quality of life by spreading awareness of best practices in health and hygiene. touching the lives of over 600 million people. All this potential has got India’s big business houses rushing to enter and expand rural businesses. It’s Project Shakti uses self-help groups across the country to push Lever products deeper into the hinterland.000 Shakti entrepreneurs. By the end of 2010.
the two operations were merged and Tata Kisan Sansar. Tata Chemicals ran a chain called Tata Kisan Kendra. the 700. has been instrumental in increasing the groundnut yield in Rajasthan through a new seed sourced from the state of Maharashtra. Mittal’s initial investments include an agriculture research centre and model farm in Punjab. ran separate rural initiatives till 2003. In 2004. on the other hand. has operations in 11 states. He is conﬁdent that the next ’explosive’ phase of demand for cellular connections is going to come from the villages. and it has also introduced a new variety of grapes in Maharashtra. The group’s two companies. Like the Tatas. We can replicate our pre-eminence in IT agriculture and transform the country into a global food basket.Ventures. Mahindra Shubhlabh Services. he has tied up with the legendary Rothschilds of Europe for a $51 million food processing venture and export of fruits and vegetables. Rallis. Today. Tata Chemicals and Rallis India. a network of onestop shops providing everything from inputs to know-how to loans. he points out. is another unabashed ﬂag-bearer of the ’go rural’ strategy. Its subsidiary. Almost 80 per cent of 5 . was launched. Its retailing arm. it has also not escaped the radar of the oldest business house. to provide a complete range of products and services to improve farm productivity and establish market linkages to the commodity market chain. In an interesting business diversiﬁcation. head of Mahindra Shubhlabh Services.billion mobile telephony major Bharti Tele. among the country’s most recent entrants to the ranks of big business. Its ﬂagship.6 million farmers. the Tata Kisan Sansar has 421 franchisee-run centres in three states and reaches out to over 3. the $17 billion Tata group.000-strong Mahindra tractor customer base and the 400-plus dealer network. Says Vikram Puri. Mahindra & Mahindra Ltd is India’s largest farm equipment company. which has consolidated its rural operations. and leverages the strong Mahindra brand. the $2.6 billion Mahindra group has successfully established a synergy between its current businesses and the planned rural forays. If the hinterland has caught the attention of Mittal. which oﬀered farmers a host of products and services ranging from agriinputs to ﬁnancing to advisory services. Mahindra Krishi Vihar. was partnering ICICI Bank and Hindustan Lever in oﬀering deals to farmers that covered operations from the pre-harvest to post-harvest stage.
2 2. rural customer started asking for value for money. As a rural Indian customer always wanted value for money with the changed perception. With their promotion. 6 . No wonder even MNCs have cottoned on to the idea of a resurgent rural India. The perception of the Indian about the desired product is changing. Their main focus is to change the Indian customer outlook about quality. improving the crop yield and decreasing the cost of crop production. this positioning of technology is very crucial. 2.the farmers registered with us have less than ﬁve acres land.1 Strategies BY COMMUNICATING AND CHANGING QUALITY PERCEPTION Companies are coming up with new technology and they are properly communicating it to the customer.2 BY PROPER COMMUNICATION IN INDIAN LANGUAGE The companies have realized the importance of proper communication in local language for promoting their products. The activities of Mahindra Shubhlabh Services have attracted the attention of the International Finance Corporation. They have started selling the concept of quality with proper communication. Rural India accounts for a market worth $27 billion. which recently picked up a 27 per cent stake in the company. one can notice diﬀerence in current market scenario. Thus. We are making farming an attractive proposition through three basic guiding steps growing what the market requires. the ﬁnancial arm of the World Bank. Now they know the diﬀerence between the products and the utilities derived out of it. There is a trade-oﬀ between Quality a customer perceives and a company wants to communicate.
they are exploiting social and cultural values. As ”Motorola” has launched. Thus.4 BY UNDERSTANDING CULTURAL AND SOCIAL VALUES Companies have recognized that social and cultural values have a very strong hold on the people. What can one infer from these incidents.3 BY TARGET CHANGING PERCEPTION If one go to villages they will see that villagers using Toothpaste. 2. They aim for the basic functionality. even when they can use locally manufactured very low priced soaps. They do not see any value in frills associated with the products. Cultural values play major role in deciding what to buy. rural people are emotional and sensitive. Moreover. to promote their brands. is the paradigm changing and customer no longer price sensitive? Indian customer was never price sensitive. Villagers are constantly looking forward for new branded products.5 BY PROVIDING WHAT CUSTOMER WANT The customers want value for money. However. They are ready to pay premium for the product if the product is oﬀering some extra utility for the premium. 7 . villagers are using soaps like Nima rose. ”Nokia” has launched a simple product. Cinthol etc. On the other hand. even when they can use Neem or Babool sticks or Gudakhu. 2. but they want value for money. Breeze. They are happy with such a high technology that can fulﬁll their need. which has captured the market. seven models of Cellular Phones of high technology but none took oﬀ. if the seller provide frills free of cost they are happy with that.2.
8 BY PROMOTING INDIAN SPORTS TEAM Companies are promoting Indian sports teams so that they can associate themselves with India. ITC is promoting Indian cricket team for years. If he/she can visualize himself/herself with the product.9 BY TALKING ABOUT A NORMAL INDIAN Companies are now talking about normal India. LG has launched a campaign ”LG ki Dua. 2.7 BY ASSOCIATING THEMSELVES WITH INDIA MNCs are associating themselves with India by talking about India. It is a normal tendency of an Indian to try to associate himself/herself with the product. 2. Whirlpool has also launched a campaign during world cup. 8 . M-TV during Independence Day and Republic daytime make their logo with Indian tri-color. with the India tri-colour and a ringing tone of ”Sare Jahan se achcha”. he /she becomes loyal to it. Diana Hyden and Shahrukh Khan are chosen as a brand ambassador for MNC quartz clock maker ”OMEGA” even though when they have models like Cindy Crawford. With this. Nokia has designed a new cellular phone 5110. Similarly. during world cup they have launched a campaign ”Jeeta hai jitega apna HindustanIndia India India”. actors for advertisements as this helps them to show themselves as an Indian company.2. 2. That is why companies like Daewoo based their advertisements on a normal Indian family. they inﬂuence Indian mindset.6 BY PROMOTING PRODUCTS WITH INDIAN MODELS AND ACTORS Companies are picking up Indian models. by explicitly saying that they are Indian. all the best”.
keep cooked food fresh. Electrolux is working on a made-for India fridge designed to serve basic purposes: chill drinking water. 2. Gold Spot. LG has sold one lakh 20-inch Sampoorna TVs. Citra and Limca so that they can kill these brands. but later on they realized that to survive in the market and to compete with their competitor they have to rejuvenate these brands.2. The traditional media include 9 . 2. In the past one year. Like LG has used India brand name ”Sampoorna” for its newly launched TV.13 BY EFFECTIVE MEDIA COMMUNICATION Media Rural marketing is being used by companies. a ﬁrm develops these products. By the end of 1999. Hindi. and to withstand long power cuts. 2. As well as trust of people. MNCs have found that it is much easier for them to operate in India if they acquire an Established Indian Brand.000. Keeping into consideration the requirements. roughly 12Thats Rs 114 crore worth of TV sets sold in the villages in a year.11 BY GIVING INDIAN WORDS FOR BRANDS Companies use Indian words for brands. Electrolux has acquired two Indian brands Kelvinator and Allwyn this has gave them the well-established distribution channel.12 BY ACQUIRING INDIAN BRANDS As Indian brands are operating in India for a long time and they enjoy a good reputation in India. all in towns with a population of around 10.10 BY DEVELOPING RURAL-SPECIFIC PRODUCTS Many companies are developing rural-speciﬁc products. Similarly Coke has acquired Thumps up. as people believe these brands. They can either go for the traditional media or the modern media. The word is a part of the Bengali. Marathi and Tamil tongue.
melas. LIC uses puppets to educate rural masses about its insurance policies. The rural areas are consuming a large number of industrial and urban manufactured products. Marketing is the process of identifying and satisfying customers needs and providing them with adequate after sales service. products and processes. which in turn is characterised by various peculiarities in terms of nature of market. which signiﬁes marketing of rural products to the urban consumer or institutional markets. The rural agricultural production and consumption process plays a predominant role in developing the Indian economy. Rural marketing scientists also term it as developmental marketing. farmers. Andhra Pradesh. dealers. 10 . radio. puppetry. modalities. Rural marketing basically deals with delivering manufactured or processed inputs or services to rural producers. ITC’s e-chaupal (chaupal is the common place where villagers gather) has been the most elaborate and extensive venture in this ﬁeld so far. products. The concept of rural marketing has to be distinguished from Agricultural marketing. the demand for which is basically a derived outcome. while the modern media includes TV. e-chaupal.2 million in ﬁve states – Madhya Pradesh. Uttar Pradesh and Maharashtra. Brook Bond Lipton India ltd used magicians eﬀectively for launch of Kadak Chap Tea in Etawah district. Rural marketing is diﬀerent from agricultural marketing. Govt of India uses puppetry in its campaigns to press ahead social issues. This has designed a new way for understanding a new process called Rural Marketing. Rural marketing requires the understanding of the complexities and this article reviews some of the key issues. In between such a show. Rural marketing diﬀers from agricultural or consumer products marketing in terms of the nature of transactions. which includes participants. Indian agricultural industry has been growing at a tremendous pace in the last few decades. Conceived by ITC’s international business division and launched in 2000. The participants in case of Rural Marketing would also be diﬀerent they include input manufacturers. Karnataka.700 chaupals covering a population of around 1. as the process of rural marketing involves an urban to rural activity. the lights are switched oﬀ and a torch is ﬂashed in the dark(EVEREADYs tact). norms and outcomes. the e-chaupal project has since grown to around 2. folk theatre etc.
consumer goods. The market for input gets interlocked with other markets like output. Strategic aspects Rural marketing in India is not much developed there are many hindrances in the area of market. type of crops and other agro-climatic conditions. pesticides. distribution. Further the percentages were higher at 81of land. Companies need to understand rural marketing in a broader manner not only to survive and grow in their business. Product usage is central to price. promotion. The importance of rural marketing can be understood from the fact that today modern inputs i. but also a means to the development of the rural economy.e. there are signiﬁcant buyer and user diﬀerences across regions as well as within that requires a diﬀerential treatment of the marketing problems. electricity. which distort the marketing environment. health and environmental sectors. but in practice. government agencies and traders. besides being titled towards proﬁt. pricing. Most of the jobs of marketing and selling is left to the local dealers and retailers. 11 . distribution and promotion. Rural market for agricultural inputs is a case of market pull and not market push. branding. company image and more important farmer economics. One has to understand the market norms in agricultural input so as to devise good marketing strategies and to avoid unethical practices.opinion makers. One has to have a strategic view of the rural markets so as to know and understand the markets well. money and labour. Many of the inputs used for production process have implications for food. Rural marketing needs to combine concerns for proﬁt with a concern for the society. all elements of marketing mix can be better organised and managed. These diﬀerences could be in terms of the type of farmers. product design and positioning. fertilisers. seeds account for as much as 70Green Revolution areas. diesel. The existing approach to the rural markets has viewed the markets as a homogeneous one. In the context of rural marketing one has to understand the manipulation of marketing mix has to be properly understood in terms of product usage. thus any strategy in rural marketing should be given due attention and importance by understanding the product usage.
Reebok. who is promoted by Reebok. The distribution channel could be a Big scale Super markets. they were wrong.14 BY ADOPTING LOCALISED WAY OF DISTRIBUTING Proper distribution channels are recognized by companies.2. Companies are promoting players like Bhaichung Bhutia. Recently Luxor Writing Instruments Ltd. NCAER estimates that around half of items sold in these melas are FMCG products 12 . MNC shoe giants. They have to reach the ”local Paan wala. so that they can associate their name with players like him and get popularity. This pen is signed by Mr.16 MELAS Melas are places where villagers gather once in a while for shopping. 2.15 BY ASSOCIATING THEMSELVES WITH INDIAN CELEBRITIES MNCs have realized that in India celebrities enjoyed a great popularity so they now associate themselves with Indian celebrities. and to capture the market share in India they have to go the local market shoe sellers. priced at Rs. 5000. soon they realized that to succeed in India they have to reach the nook and the corner of the country. Local Baniya” only they can succeed. Companies take advantage of such events to market their products. they thought that a similar system can be grown in India. Dabur uses these events to sell products like JANAM GHUTI(Gripe water). They have to reach to local cities with low priced products. However. Adidas. a JV of Gillette and Luxor has launched 500 ”Gajgamini” range of Parker Sonnet Hussain special edition fountain pens. Nike started with exclusive stores but soon they realized that they do not enjoy much Brand Equity in India. Makbul Fida Hussain a renowned painter who has created ”Gajgamini” range of paintings. 2.
PEPSI and TATA traders advertise their products through paintings. it ran up against the skepticism of the Indian rural people against unproven technology. SKEPL got around this problem by oﬀer13 . of course. When SKEPL wanted to market this service. The money can be collected immediately. it’s weighed and the amount of fat measured and immediately an entry is made on the farmer’s swipe card. 3 Case Studies-1: AKASHGANGA This case study is about a product and service named Akashganga sold by a small. the major ones being low productivity of Indian cows. and is reluctant to try it till he trusts it. COKE. Akashganga is a computerized system. This is marked contrast to the previous system where the ﬁnancial calculation was done later to avoid holding up the queue of farmers ready for milking. low quality caused by manual handling. the delays in processing milk. Rural people like the sight of bright colours. calculation is done automatically which makes it possible to pay the farmer on the spot rather than having him wait for a couple of days. This is the classic catch-22 situation as the farmer does not trust the tool till he tries it. Akashganga attempts to alleviate some of these issues. The message is simple and clean.17 PAINTINGS A picture is worth thousand words. An entry is made electronically on the farmer’s swipe card. With the new system. When a farmer gets milk into the collection point. 2.and consumer durables. Escorts also displays its products like tractors and motorcycles in such melas. (SKEPL). corruption and mismanagement. The Indian diary industry is plagued by several problems. Also the potential for cheating is reduced. entrepreneurial business named Shree Kamadhenu Electronics Private Ltd. Akashganga is for diary farmers and it is intended to enable to them to increase their eﬃciency and productivity. the calculation was done by hand and was somewhat complicated. and. endemic dilution of milk with water.
SKEPL gained a threshold in this large market and earned respect among farmers. the agricultural commodity trading business was small compared to international players. Hotels. Its International Business Division (ITC IBD) was created in 1990 as an agricultural trading company. This was a very important factor that helped the farmers relate to and trust the company. Large international companies had better margin-to-risk ratios because of wider options for risk management 14 . etc. Greeting Cards and other FMCG products. By 1996. it now generates US $150 million in revenues annually. Of course. It’s important to note that the company’s local presence whether for marketing. 4 4. Agri-Business. The company also used a name Akashganga that Indian villagers can relate to. Packaged Foods & Confectionery. the opening up of the Indian market had brought in international competition. sales. Initially. As a result of these factors.1 Case-Study 2: ITC e-Choupal About ITC-IBD ITC is one of India’s foremost private sector companies with a market capitalisation of over US $14 billion and a turnover of US $3 billion. This helped earn the trust of the villagers. since the villagers would not be disposed to make a journey to a town or city to learn about their products. sales or service helped tremendously. etc. Also. transparency. ITC has a diversiﬁed presence in Cigarettes.ing free trials and delayed payment schemes stretching up to several months. fairness. The company also provided responsive and eﬃcient after-sales service. service. and typically would attend to a compliant within a few hours of receiving it. Shree Kamadhenu Electronics used local people for marketing. Branded Apparel. Packaging. the company had a solution that was superior in terms of time. and that played a big role in their success. Paperboards & Specialty Papers. It established a service network covering the rural areas.
Today.2 ITC e-Choupal and the Strategy ITC followed a diﬀerent media/communication strategy which is more elaborate and extensive in rural marketing so far. has required that ITC make signiﬁcant investments to create and maintain its own IT network in rural India and to identify and train a local farmer to manage each e-Choupal.000 and US $6. and processed fruits. The company has initiated an e-Choupal eﬀort that places computers with Internet access in rural farming villages. coﬀee.and arbitrage. For an Indian company to replicate the operating model of such multinational corporations would have required a massive horizontal and vertical expansion. A pure trading model does not require much capital investment. fertilizers and pesticides and other products like consumer goods. after competition forced ITC to explore the options of sale. The computer. is linked to the Internet via phone lines or. The ITC-IBD taken the challenges to use information technology to change the rules of the game and create a competitive business that did not need a large asset base. 4. and closure of IBD. which beneﬁts both the farmers and the organization. ITC ultimately decided to retain the business. increasingly. Each e-Choupal costs between US $3. IBD is a US $150 million company that trades in commodities such as feed ingredients. In 1998. marine products. merger. The strategy is use the Information Technology and bridge the information and service gap in rural INDIA which gives an edge to market its products like seeds. by a VSAT connection. edible nuts. typically housed in the farmers house. With this strategy it can also enhance its competetiveness in global market for agri exports.000 to set up and about US $100 per year to main15 . food-grains. The eChoupal model. black pepper. and serves an average of 600 farmers in 10 surrounding villages within about a ﬁve kilometer radius. in contrast. the e-Choupals serve as both a social gathering place for exchange of information (choupal means gathering place in Hindi) and an e-commerce hub.
Using the system costs farmers nothing. coﬀee. the sanchalak beneﬁts from increased prestige and a commission paid him for all e-Choupal transactions.in over 31. shrimp . where the crop is weighed electronically and assessed for quality. Karnataka. as well as to track global price trends or ﬁnd information about new farming techniqueseither directly or.5 million farmers growing a range of crops . via the sanchalak (the village farmer who runs the e-Choupal and acts as ITCs representative in the village).tain.000 villages through 5200 kiosks across six states (Madhya Pradesh.soyabean. ’e-Choupal’ services today reach out to more than 3. Launched in June 2000. and other products such as consumer good from ITC or its partners. rice. ITC oﬀers to buy the crop directly from any farmer at the previous days closing price. because many farmers are illiterate. called a sanchalak. has already become the largest initiative among all Internet-based interventions in rural India. ’e-Choupal’. the farmer then transports his crop to an ITC processing center. They also use the e-Choupal to order seed. pulses.Uttar Pradesh. at prices lower than those available from village traders. The farmer is then paid for the crop and a transport fee. wheat. The farmers can use the computer to access daily closing prices on local mandis(governmentmandated markets). 16 . but the host farmer. In addition they can also know about weather forecast(local) and best practices in the world from e-Choupal website. the sanchalak typically aggregates the village demand for these products and transmits the order to an ITC representative. At harvest time. Maharashtra and Rajasthan). fertilizer. Andhra Pradesh. incurs some operating costs and is obligated by a public oath to serve the entire community.
ITC has worked in Indian 17 .000 4.000 30000 122.3 Operational costs and comparision with Mandis Fixed Cost of Equipment at e-Choupal (in Rs.000 27000 107.Figure 1: Transactional costs under Mandi & e-Choupal system 4.4 Vision and Planning Behind the e-Choupals Implementing and managing e-Choupals is a signiﬁcant departure from commodities trading.000 24000 92. Through its tobacco business.) Printer Power related 19000 15000 15000 14000 12000 VSAT 90000 70000 70000 60000 50000 PC Total 2001-02 2002-03 2003-04 2004-05 2005-06 7000 7000 7000 6000 6000 39000 155.000 30000 122.
ITCs translation of the tactical and strategic challenges it faced and its social commitment into a business model demonstrates a deep understanding of both agrarian systems and modern management. he reduces overall transaction costs by aggregating services. not just the marketing channel. First.. As a result. the trader enjoys two competitive beneﬁts. fertilizer. Currently. his intimate knowledge of the farmer and village dynamics allow him to accurately assess and manage risk. Second. It retained the eﬃcient providers and created roles for ineﬃcient people.e. Already ITC has trading agents in local mandis for its tobacco business. seed. pesticides. Not Reconstruct Present Mandi system have some success factors in it. The principles followed in implementing the e-Choupals are • Re-engineer. from research to procurement to distribution. Functioning as a viable procurement alternative. the village trader services the spectrum of farmers needs. Not Just One Part The farmers various activities range from procuring inputs to selling produce. With this principle ITC can avoid the reinventing the system in areas where it can add no value with its presence i.agriculture for decades. These eﬀorts cannot compete against the traders bundled oﬀer. therefore. It recruites and engages members of landscape thereby making their expertise available to ITC. Cooperatives have tried to provide agricultural inputs. ITC decided to build e-Choupal on existing system. Rural development eﬀorts thus far have focused only on individual pieces rather than what the entire community needs. but create a cycle of exploitative dependency in the long-term. 18 . and also the only marketing channel. He is a centralized provider of cash. The linked transactions reduce the farmers overall cost in the short term. and mandis have tried to create a better marketing channel. • Address the Whole. in areas where eﬃcient agents are there. must eventually address a range of needs. rural banks have tried to provide credit.
e. Build the concept of traceability into the supply chain which will allow to address the food safety concerns. thus allowing the farmer an empowered choice of where and when to sell his crop. which decays quickly with in short 19 . e.g: Wheat (2). thus binding the farmer to an agent. E-Choupal was seen as a medium of delivering critical market information independent of the mandi. there is a threat of unionization and rent extraction. and sales happen simultaneously. In the mandi system.5 Strategies to be followed (1). – If ITC fails to fulﬁll the aspirations of farmers.ITC e-Chopal provide services as a bundle what the entire agricultural community needs. • An IT-Driven Solution Delivery of real-time information independent of the transaction. delivery. and as their power and numbers increase. pricing. – The sanchalaks are ITCs partners in the community. • Risk analysis & challenges – Radical shifts in computing access will break community-based business models. Adopt the ability to determine the grades of the crop(grains) in the ﬁeld which commands the price premium for the crop. – The scope of the operation: the diversity of activities required of every operative and the speed of expansion create real threats to eﬃcient management. they will look elsewhere for satisfaction.g: For perishables such as shrimps. 4.
Provide the service as market-place for commodities where ITC is not a sole buyer. (3). (4). traditional medicine and traditional crafts are some of the services that can be sourced from rural INDIA. 4. 20 . including retaining the integral importance of local partners. e. ecotourism . it need to deﬁne standards of production and product quality. It will reduce the operational cost of e-Choupal such as IT infrastructure and transaction costs. (5). Critical factors in the apparent success of the venture are ITCs extensive knowledge of agriculture.6 Conclusion ITC e-Choupal. an innovative strategy which is elaborative and extensive in rural markets sofar.g: coﬀee grains. through e-Choupal system. the companys commitment to transparency. Marketing value added products and services to rural INDIA . the eﬀort ITC has made to retain many aspects of the existing production system. and the respect and fairness with which both farmers and local partners are treated. in addition to marketing agri inputs. Telemedicine. Sourcing IT-enabled services from rural INDIA.period of time.
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