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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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marketing executives are fanning out and discovering the strengths of the large rural markets as they try to enlarge their markets. 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. Coke is not the ﬁrst MNC to have cottoned on to the rural lure.4 billion. Four years ago.7 billion for cars. the lure of rural India has been the subject of animated discussion in corporate suites.1 Introduction For quite some time now. the upper income class those with household incomes of over Rs one million [$22. Rural India also accounts for sales of $1. It will have a 22 to 23 per cent rural component. And there is a good reason too. Adi Godrej. A survey by the National Council for Applied Economic Research(NCAER). that represents a market worth a whopping $27 billion. Now Coke’s rural growth of 37 per cent far outstrips its urban growth of 24 per cent. From 55 to 58 per cent of the average urban income in 1994-95. Higher rural incomes have meant larger markets. scooters and bikes and over one billion dollars of durables. the rural tilt is beginning to show. Coke ventured into the hinterland. far ahead of the market for tractors and agri-inputs which is estimated at $10 billion. chairman of the Godrej group that is in a range of businesses from real estate and personal care to agri-foods.700] per annum is projected to go up to 21 million by 2009-10 from four million in 2001-02. It is no wonder that even MNCs have cottoned on to the idea of a resurgent rural India waiting to happen. It is a myth that rural consumers are not brand and quality conscious. Today. A study by the Chennai-based Francis Kanoi Marketing Planning Services says that the rural market for FMCG is worth $14. Even better. Its global rival Pepsico took a wider approach to the business when it was 3 . the idea has grown out of its infancy and dominates discussions in any corporate boardroom strategy session. In total. With urban markets getting saturated for several categories of consumer goods and with rising rural incomes. Already. recently conﬁrmed that rise in rural incomes is keeping pace with urban incomes. India’s premier economic research entity. The rural middle class is growing at 12 per cent against the 13 per cent growth of its urban counterpart. has no hesitation proclaiming.
By the end of 2010. It’s Project Shakti uses self-help groups across the country to push Lever products deeper into the hinterland. successive governments have tripled the spending on rural development from $6. touching the lives of over 600 million people. most of them women. empowers the rural community by creating access to relevant information through community portals and it also works with NGOs to spread literacy. Shakti aims to have 100. 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.000 of India s 640.2 billion. Hindustan Lever Ltd. Its four-pronged programme creates income-generating capabilities for underprivileged rural women. the country’s largest FMCG company. Telecom giant Sunil Mittal. 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. Pepsi is now heralding a citrus plantation drive in the state and other parts of the country for its brand of Tropicana fruit juices. the $2. There are currently over 15. the processor. As Ashok Gulati of the US-based International Food Policy Research Institute put its.000 villages.3 billion Indian subsidiary of Unilever. the retailer and the consumer. Farmers weren’t complaining because even though prices fell. improves rural quality of life by spreading awareness of best practices in health and hygiene.82 billion to $20.400 villages across 12 states.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. In ﬁve years. has also got on the bandwagon. Indian economic policy realises this. With such an emphasis on rural marketing. to replace imported fruit. The future of Indian agriculture in general and the farmer in particular depends on the how soon they can become globally competitive. chairman of the $2 4 .000 Shakti entrepreneurs.000 Shakti entrepreneurs covering 500. in 61. consumption patterns are changing and it signals a change in the regulatory environment. All this potential has got India’s big business houses rushing to enter and expand rural businesses. their incomes increased because of the huge jump in productivity.
Rallis. Tata Chemicals and Rallis India.Ventures. has been instrumental in increasing the groundnut yield in Rajasthan through a new seed sourced from the state of Maharashtra. on the other hand. Mittal’s initial investments include an agriculture research centre and model farm in Punjab. In 2004. Says Vikram Puri.6 million farmers. was partnering ICICI Bank and Hindustan Lever in oﬀering deals to farmers that covered operations from the pre-harvest to post-harvest stage. has operations in 11 states. Today. If the hinterland has caught the attention of Mittal. the 700. the two operations were merged and Tata Kisan Sansar. Mahindra Shubhlabh Services.000-strong Mahindra tractor customer base and the 400-plus dealer network. ran separate rural initiatives till 2003. head of Mahindra Shubhlabh Services. We can replicate our pre-eminence in IT agriculture and transform the country into a global food basket. Almost 80 per cent of 5 . and leverages the strong Mahindra brand. he points out. Its retailing arm. Like the Tatas. which has consolidated its rural operations.6 billion Mahindra group has successfully established a synergy between its current businesses and the planned rural forays. which oﬀered farmers a host of products and services ranging from agriinputs to ﬁnancing to advisory services. He is conﬁdent that the next ’explosive’ phase of demand for cellular connections is going to come from the villages. The group’s two companies. it has also not escaped the radar of the oldest business house. the Tata Kisan Sansar has 421 franchisee-run centres in three states and reaches out to over 3. is another unabashed ﬂag-bearer of the ’go rural’ strategy. In an interesting business diversiﬁcation. and it has also introduced a new variety of grapes in Maharashtra. to provide a complete range of products and services to improve farm productivity and establish market linkages to the commodity market chain. Mahindra & Mahindra Ltd is India’s largest farm equipment company. a network of onestop shops providing everything from inputs to know-how to loans.billion mobile telephony major Bharti Tele. among the country’s most recent entrants to the ranks of big business. the $2. was launched. the $17 billion Tata group. Its ﬂagship. Its subsidiary. he has tied up with the legendary Rothschilds of Europe for a $51 million food processing venture and export of fruits and vegetables. Mahindra Krishi Vihar. Tata Chemicals ran a chain called Tata Kisan Kendra.
rural customer started asking for value for money. this positioning of technology is very crucial.2 BY PROPER COMMUNICATION IN INDIAN LANGUAGE The companies have realized the importance of proper communication in local language for promoting their products. The perception of the Indian about the desired product is changing. There is a trade-oﬀ between Quality a customer perceives and a company wants to communicate. With their promotion.the farmers registered with us have less than ﬁve acres land. We are making farming an attractive proposition through three basic guiding steps growing what the market requires. improving the crop yield and decreasing the cost of crop production. Now they know the diﬀerence between the products and the utilities derived out of it. Thus. 6 . They have started selling the concept of quality with proper communication. Their main focus is to change the Indian customer outlook about quality. The activities of Mahindra Shubhlabh Services have attracted the attention of the International Finance Corporation. Rural India accounts for a market worth $27 billion.1 Strategies BY COMMUNICATING AND CHANGING QUALITY PERCEPTION Companies are coming up with new technology and they are properly communicating it to the customer. No wonder even MNCs have cottoned on to the idea of a resurgent rural India. the ﬁnancial arm of the World Bank. 2 2. As a rural Indian customer always wanted value for money with the changed perception. one can notice diﬀerence in current market scenario. 2. which recently picked up a 27 per cent stake in the company.
2. 2. Cinthol etc. What can one infer from these incidents. They aim for the basic functionality. to promote their brands. Moreover. villagers are using soaps like Nima rose. Breeze.3 BY TARGET CHANGING PERCEPTION If one go to villages they will see that villagers using Toothpaste. rural people are emotional and sensitive. They do not see any value in frills associated with the products. Villagers are constantly looking forward for new branded products.4 BY UNDERSTANDING CULTURAL AND SOCIAL VALUES Companies have recognized that social and cultural values have a very strong hold on the people. is the paradigm changing and customer no longer price sensitive? Indian customer was never price sensitive. ”Nokia” has launched a simple product. but they want value for money. even when they can use locally manufactured very low priced soaps. However. On the other hand. They are happy with such a high technology that can fulﬁll their need. even when they can use Neem or Babool sticks or Gudakhu. 7 . they are exploiting social and cultural values. if the seller provide frills free of cost they are happy with that. seven models of Cellular Phones of high technology but none took oﬀ. which has captured the market. Cultural values play major role in deciding what to buy. As ”Motorola” has launched.5 BY PROVIDING WHAT CUSTOMER WANT The customers want value for money. Thus. 2. They are ready to pay premium for the product if the product is oﬀering some extra utility for the premium.
Nokia has designed a new cellular phone 5110. all the best”. That is why companies like Daewoo based their advertisements on a normal Indian family. Similarly. 2. LG has launched a campaign ”LG ki Dua. he /she becomes loyal to it. 2. ITC is promoting Indian cricket team for years. by explicitly saying that they are Indian.2. Whirlpool has also launched a campaign during world cup.9 BY TALKING ABOUT A NORMAL INDIAN Companies are now talking about normal India. 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. It is a normal tendency of an Indian to try to associate himself/herself with the product.6 BY PROMOTING PRODUCTS WITH INDIAN MODELS AND ACTORS Companies are picking up Indian models. they inﬂuence Indian mindset. 8 . during world cup they have launched a campaign ”Jeeta hai jitega apna HindustanIndia India India”.8 BY PROMOTING INDIAN SPORTS TEAM Companies are promoting Indian sports teams so that they can associate themselves with India. M-TV during Independence Day and Republic daytime make their logo with Indian tri-color.7 BY ASSOCIATING THEMSELVES WITH INDIA MNCs are associating themselves with India by talking about India. With this. with the India tri-colour and a ringing tone of ”Sare Jahan se achcha”. If he/she can visualize himself/herself with the product. actors for advertisements as this helps them to show themselves as an Indian company. 2.
roughly 12Thats Rs 114 crore worth of TV sets sold in the villages in a year. As well as trust of people. The traditional media include 9 . Gold Spot. 2.10 BY DEVELOPING RURAL-SPECIFIC PRODUCTS Many companies are developing rural-speciﬁc products. 2. The word is a part of the Bengali. and to withstand long power cuts.12 BY ACQUIRING INDIAN BRANDS As Indian brands are operating in India for a long time and they enjoy a good reputation in India. keep cooked food fresh. a ﬁrm develops these products. Similarly Coke has acquired Thumps up. Marathi and Tamil tongue. Hindi. In the past one year.11 BY GIVING INDIAN WORDS FOR BRANDS Companies use Indian words for brands. 2. but later on they realized that to survive in the market and to compete with their competitor they have to rejuvenate these brands. Electrolux has acquired two Indian brands Kelvinator and Allwyn this has gave them the well-established distribution channel. Like LG has used India brand name ”Sampoorna” for its newly launched TV. Keeping into consideration the requirements.13 BY EFFECTIVE MEDIA COMMUNICATION Media Rural marketing is being used by companies. Citra and Limca so that they can kill these brands. as people believe these brands. They can either go for the traditional media or the modern media. all in towns with a population of around 10. LG has sold one lakh 20-inch Sampoorna TVs. Electrolux is working on a made-for India fridge designed to serve basic purposes: chill drinking water. By the end of 1999.2.000. MNCs have found that it is much easier for them to operate in India if they acquire an Established Indian Brand.
Karnataka. The concept of rural marketing has to be distinguished from Agricultural marketing. Marketing is the process of identifying and satisfying customers needs and providing them with adequate after sales service. the demand for which is basically a derived outcome. The rural agricultural production and consumption process plays a predominant role in developing the Indian economy. In between such a show. folk theatre etc. The rural areas are consuming a large number of industrial and urban manufactured products. 10 . products. Govt of India uses puppetry in its campaigns to press ahead social issues. radio. the lights are switched oﬀ and a torch is ﬂashed in the dark(EVEREADYs tact). puppetry. while the modern media includes TV. Uttar Pradesh and Maharashtra.2 million in ﬁve states – Madhya Pradesh. e-chaupal. Rural marketing diﬀers from agricultural or consumer products marketing in terms of the nature of transactions. Rural marketing scientists also term it as developmental marketing. which in turn is characterised by various peculiarities in terms of nature of market. dealers. This has designed a new way for understanding a new process called Rural Marketing. farmers. Brook Bond Lipton India ltd used magicians eﬀectively for launch of Kadak Chap Tea in Etawah district. Rural marketing is diﬀerent from agricultural marketing. which signiﬁes marketing of rural products to the urban consumer or institutional markets.melas. the e-chaupal project has since grown to around 2. 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. which includes participants. LIC uses puppets to educate rural masses about its insurance policies. Andhra Pradesh. The participants in case of Rural Marketing would also be diﬀerent they include input manufacturers. modalities. as the process of rural marketing involves an urban to rural activity. Indian agricultural industry has been growing at a tremendous pace in the last few decades.700 chaupals covering a population of around 1. Rural marketing requires the understanding of the complexities and this article reviews some of the key issues. products and processes. Rural marketing basically deals with delivering manufactured or processed inputs or services to rural producers. norms and outcomes. Conceived by ITC’s international business division and launched in 2000.
seeds account for as much as 70Green Revolution areas. promotion. distribution and promotion. health and environmental sectors.e. diesel. Strategic aspects Rural marketing in India is not much developed there are many hindrances in the area of market. Companies need to understand rural marketing in a broader manner not only to survive and grow in their business. The importance of rural marketing can be understood from the fact that today modern inputs i. pesticides. branding. thus any strategy in rural marketing should be given due attention and importance by understanding the product usage. all elements of marketing mix can be better organised and managed. company image and more important farmer economics. type of crops and other agro-climatic conditions. which distort the marketing environment. but in practice. product design and positioning. One has to understand the market norms in agricultural input so as to devise good marketing strategies and to avoid unethical practices.opinion makers. Product usage is central to price. fertilisers. Rural market for agricultural inputs is a case of market pull and not market push. Most of the jobs of marketing and selling is left to the local dealers and retailers. The existing approach to the rural markets has viewed the markets as a homogeneous one. government agencies and traders. These diﬀerences could be in terms of the type of farmers. Rural marketing needs to combine concerns for proﬁt with a concern for the society. 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. One has to have a strategic view of the rural markets so as to know and understand the markets well. Many of the inputs used for production process have implications for food. but also a means to the development of the rural economy. 11 . pricing. money and labour. besides being titled towards proﬁt. consumer goods. electricity. The market for input gets interlocked with other markets like output. Further the percentages were higher at 81of land. there are signiﬁcant buyer and user diﬀerences across regions as well as within that requires a diﬀerential treatment of the marketing problems. distribution.
Companies take advantage of such events to market their products. Companies are promoting players like Bhaichung Bhutia. 5000. they thought that a similar system can be grown in India. Local Baniya” only they can succeed. Adidas. 2. However. so that they can associate their name with players like him and get popularity. priced at Rs. Nike started with exclusive stores but soon they realized that they do not enjoy much Brand Equity in India. They have to reach the ”local Paan wala. MNC shoe giants. They have to reach to local cities with low priced products. The distribution channel could be a Big scale Super markets. a JV of Gillette and Luxor has launched 500 ”Gajgamini” range of Parker Sonnet Hussain special edition fountain pens.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. soon they realized that to succeed in India they have to reach the nook and the corner of the country. 2. NCAER estimates that around half of items sold in these melas are FMCG products 12 . Makbul Fida Hussain a renowned painter who has created ”Gajgamini” range of paintings. they were wrong.14 BY ADOPTING LOCALISED WAY OF DISTRIBUTING Proper distribution channels are recognized by companies. who is promoted by Reebok.2. This pen is signed by Mr.16 MELAS Melas are places where villagers gather once in a while for shopping. Dabur uses these events to sell products like JANAM GHUTI(Gripe water). Reebok. Recently Luxor Writing Instruments Ltd. and to capture the market share in India they have to go the local market shoe sellers.
corruption and mismanagement. the major ones being low productivity of Indian cows. 3 Case Studies-1: AKASHGANGA This case study is about a product and service named Akashganga sold by a small. it’s weighed and the amount of fat measured and immediately an entry is made on the farmer’s swipe card. PEPSI and TATA traders advertise their products through paintings. The message is simple and clean. Also the potential for cheating is reduced. entrepreneurial business named Shree Kamadhenu Electronics Private Ltd. and is reluctant to try it till he trusts it. low quality caused by manual handling. endemic dilution of milk with water. of course. Rural people like the sight of bright colours. With the new system. The Indian diary industry is plagued by several problems. and. Akashganga attempts to alleviate some of these issues. The money can be collected immediately. This is the classic catch-22 situation as the farmer does not trust the tool till he tries it. When SKEPL wanted to market this service. Akashganga is a computerized system. the calculation was done by hand and was somewhat complicated. (SKEPL). 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.17 PAINTINGS A picture is worth thousand words. COKE. 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. Akashganga is for diary farmers and it is intended to enable to them to increase their eﬃciency and productivity. it ran up against the skepticism of the Indian rural people against unproven technology. 2. SKEPL got around this problem by oﬀer13 . When a farmer gets milk into the collection point.and consumer durables. An entry is made electronically on the farmer’s swipe card. the delays in processing milk. Escorts also displays its products like tractors and motorcycles in such melas.
since the villagers would not be disposed to make a journey to a town or city to learn about their products. This helped earn the trust of the villagers.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. Initially. transparency. and that played a big role in their success. the agricultural commodity trading business was small compared to international players. Shree Kamadhenu Electronics used local people for marketing. 4 4. Packaged Foods & Confectionery. The company also used a name Akashganga that Indian villagers can relate to. The company also provided responsive and eﬃcient after-sales service. sales. etc. and typically would attend to a compliant within a few hours of receiving it. It established a service network covering the rural areas. ITC has a diversiﬁed presence in Cigarettes.ing free trials and delayed payment schemes stretching up to several months. sales or service helped tremendously. the opening up of the Indian market had brought in international competition. This was a very important factor that helped the farmers relate to and trust the company. fairness. Also. Large international companies had better margin-to-risk ratios because of wider options for risk management 14 . Hotels. Paperboards & Specialty Papers. Of course. By 1996. As a result of these factors. It’s important to note that the company’s local presence whether for marketing. Its International Business Division (ITC IBD) was created in 1990 as an agricultural trading company. the company had a solution that was superior in terms of time. it now generates US $150 million in revenues annually. Greeting Cards and other FMCG products. service. SKEPL gained a threshold in this large market and earned respect among farmers. Packaging. Branded Apparel. Agri-Business. etc.
The computer. and closure of IBD. ITC ultimately decided to retain the business. IBD is a US $150 million company that trades in commodities such as feed ingredients. black pepper. 4. The company has initiated an e-Choupal eﬀort that places computers with Internet access in rural farming villages. coﬀee. increasingly. is linked to the Internet via phone lines or. 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. 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. edible nuts. 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. in contrast. marine products. and serves an average of 600 farmers in 10 surrounding villages within about a ﬁve kilometer radius. For an Indian company to replicate the operating model of such multinational corporations would have required a massive horizontal and vertical expansion. With this strategy it can also enhance its competetiveness in global market for agri exports. and processed fruits. The eChoupal model. A pure trading model does not require much capital investment. Each e-Choupal costs between US $3. 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. typically housed in the farmers house. food-grains. 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. after competition forced ITC to explore the options of sale.and arbitrage.000 to set up and about US $100 per year to main15 . merger. which beneﬁts both the farmers and the organization.000 and US $6. In 1998. by a VSAT connection. fertilizers and pesticides and other products like consumer goods.
’e-Choupal’. but the host farmer. The farmer is then paid for the crop and a transport fee. Andhra Pradesh. where the crop is weighed electronically and assessed for quality. ITC oﬀers to buy the crop directly from any farmer at the previous days closing price.tain. At harvest time. wheat. Karnataka. 16 . and other products such as consumer good from ITC or its partners. rice. Maharashtra and Rajasthan). because many farmers are illiterate.Uttar Pradesh. coﬀee.in over 31. ’e-Choupal’ services today reach out to more than 3. pulses.5 million farmers growing a range of crops .soyabean. shrimp . Launched in June 2000. via the sanchalak (the village farmer who runs the e-Choupal and acts as ITCs representative in the village).000 villages through 5200 kiosks across six states (Madhya Pradesh. called a sanchalak. has already become the largest initiative among all Internet-based interventions in rural India. at prices lower than those available from village traders. In addition they can also know about weather forecast(local) and best practices in the world from e-Choupal website. the farmer then transports his crop to an ITC processing center. They also use the e-Choupal to order seed. The farmers can use the computer to access daily closing prices on local mandis(governmentmandated markets). incurs some operating costs and is obligated by a public oath to serve the entire community. the sanchalak typically aggregates the village demand for these products and transmits the order to an ITC representative. as well as to track global price trends or ﬁnd information about new farming techniqueseither directly or. the sanchalak beneﬁts from increased prestige and a commission paid him for all e-Choupal transactions. fertilizer. Using the system costs farmers nothing.
ITC has worked in Indian 17 .3 Operational costs and comparision with Mandis Fixed Cost of Equipment at e-Choupal (in Rs.000 30000 122.000 24000 92.000 4.) 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 27000 107. Through its tobacco business.000 30000 122.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.
seed. 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. and also the only marketing channel. but create a cycle of exploitative dependency in the long-term. It recruites and engages members of landscape thereby making their expertise available to ITC. Not Just One Part The farmers various activities range from procuring inputs to selling produce. As a result. his intimate knowledge of the farmer and village dynamics allow him to accurately assess and manage risk. not just the marketing channel. These eﬀorts cannot compete against the traders bundled oﬀer. The principles followed in implementing the e-Choupals are • Re-engineer. Currently. 18 . The linked transactions reduce the farmers overall cost in the short term. rural banks have tried to provide credit. With this principle ITC can avoid the reinventing the system in areas where it can add no value with its presence i. ITC decided to build e-Choupal on existing system. must eventually address a range of needs. First.agriculture for decades. It retained the eﬃcient providers and created roles for ineﬃcient people.. Cooperatives have tried to provide agricultural inputs. therefore. and mandis have tried to create a better marketing channel. Second. the village trader services the spectrum of farmers needs. Already ITC has trading agents in local mandis for its tobacco business. from research to procurement to distribution. he reduces overall transaction costs by aggregating services. Not Reconstruct Present Mandi system have some success factors in it. Rural development eﬀorts thus far have focused only on individual pieces rather than what the entire community needs. Functioning as a viable procurement alternative. in areas where eﬃcient agents are there.e. He is a centralized provider of cash. fertilizer. • Address the Whole. the trader enjoys two competitive beneﬁts. pesticides.
– The sanchalaks are ITCs partners in the community. e.5 Strategies to be followed (1). and sales happen simultaneously. – If ITC fails to fulﬁll the aspirations of farmers.ITC e-Chopal provide services as a bundle what the entire agricultural community needs. 4. • Risk analysis & challenges – Radical shifts in computing access will break community-based business models. In the mandi system.g: Wheat (2). they will look elsewhere for satisfaction. and as their power and numbers increase. thus binding the farmer to an agent. – The scope of the operation: the diversity of activities required of every operative and the speed of expansion create real threats to eﬃcient management. delivery. e. which decays quickly with in short 19 . pricing. thus allowing the farmer an empowered choice of where and when to sell his crop. Build the concept of traceability into the supply chain which will allow to address the food safety concerns. 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.g: For perishables such as shrimps. Adopt the ability to determine the grades of the crop(grains) in the ﬁeld which commands the price premium for the crop. • An IT-Driven Solution Delivery of real-time information independent of the transaction.
Sourcing IT-enabled services from rural INDIA. (4). It will reduce the operational cost of e-Choupal such as IT infrastructure and transaction costs. traditional medicine and traditional crafts are some of the services that can be sourced from rural INDIA. including retaining the integral importance of local partners.6 Conclusion ITC e-Choupal. 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. (3). ecotourism . Provide the service as market-place for commodities where ITC is not a sole buyer. Critical factors in the apparent success of the venture are ITCs extensive knowledge of agriculture.period of time. an innovative strategy which is elaborative and extensive in rural markets sofar. 4. Marketing value added products and services to rural INDIA . 20 . Telemedicine. it need to deﬁne standards of production and product quality. in addition to marketing agri inputs. e. through e-Choupal system.g: coﬀee grains. the companys commitment to transparency. (5).
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