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N a r s ee M o n j ee C o l l eg e O f C o mme r c e A n d E c o n o mic s

Subject: Rural Marketing Topic: Rural Marketing by ITC

Presented By:
Pratik Bubna Bhushan Mehta Dhiren Nagareya Ninad Save Sahil Shah INDEX
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Introduction to Rural Marketing ITC Company Profile ITC Products

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Product, Distribution

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Promotion

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ITC E-Choupal ITC Rural Hubs and Spokes Conclusion

Introduction to Rural Marketing
Rural markets represent a distinct dynamic in how they come into being and make unique demands on how the product is designed and how the brand is positioned and promoted. Greater the strategic attention to these unique demands, assure greater the chances of product's success in the rural market. Fringe acceptance of consumer products or brands is no indication of market potential. It actually would only result in higher incidence of brand and product mortality as more firms try to choke those segments with competing brands. The effort has to be directed towards reaching out to more and more of rural population offering them the products which they find value for

the successes of Chik shampoo. In fact. thinly populated and widely spread villages in the Indian mainland make it difficult for the marketer to deliver the goods at reasonable costs. HLL with its best distribution network reaches just over 1 lakh villages in total of 6. making agency totally impartial. An essential element of rural marketing is wide distribution of products. and Ghadi detergent. lack of market research. the second largest shampoo brand. An otherwise cost inefficient route would suddenly become very attractive for 12-15 companies combining their cargos. more than advertising. This newly formed agency would deliver products of partnering companies in the most cost effective manner with maximum utilization of space available in cargo trucks. which dilute the hard-earned brand equity. pulled by the demand by village Kirana Wala. the third largest detergent brand. high initial market development expenditure. This is based on hypothesis that fully loaded 10 ton delivery truck is cheaper than 20 half filled 1 ton trucks. But the hurdles faced are plenty. Distribution and presence of counterfeits products being among the most important. These agencies would run as separate entities or companies with seed capital from the participants. Agencies would handle the most demanded products by Kirana Wala and can even add or drop existing brands. Mass Communication and promotion programs which eventually lead to brand building are difficult to achieve which ultimately results in low level of exposure to different product categories and product brands in the presence of counterfeits and spurious products all around the rural market and at times you have more than a dozen substitutes for a branded product. deployed by as many different companies. Agency would maximize its profits by allocating the best mix of products as well as correct service route and by carrying the products timely. High distribution costs. Also partnership with retailers at the rural level must be formulated to tackle counterfeits. Being profit driven. So a heavily advertised product would ultimately capture maximum space in the cargo truck as well as on shopkeeper's shelf.money and are converted to brand loyalist in due course of time. . is the key of building volumes. Distributing agency would drive its profits from the pre-fixed common distributor margins. So the emphasis has to come in the form of innovative strategies in not only promoting the product and the brand to the villagers but also making it available once the pull effect starts working at its fullest. show that distribution.38 lakh villages.

Lal Dant Manjan Dena”. While education. income. lower education and housing expenses makes the disposable income almost equable. ITC Company Profile .407. India has more rural households than all households in Western Hemisphere combined. Special incentives could be given to all genuine product stores on reaching sales target. Genuine Product Stores could be collectively advertised at the end of every participating company's advertisement. Half of India’s GDP comes from rural and semi-urban areas.Another major plague of rural marketing has been widespread availability of fakes.481. agricultural land ownership may still be the major deciding factors accounting for social differentiation. up gradation of store and longer credit period. as consumer asks for things. they do not yield reciprocal cohort behavioral patterns.2 million (1999-00). To counter this nuisance agency would certify specific village Kirana Wala as Genuine Products Store. purchasing decisions and priorities of product ownership. At 125. against urban India’s Rs 19. Failure to comply at surprise checks would result in immediate termination of contract. But. In this way more and more stores can be brought in the preference bracket. mitigating the danger of stores selling cheap fakes. The per capita annual income in rural India is Rs: 9. Store advertisement campaigns could be funded by the agency like reaching every village household through free sample sachets using local school children. not brands like “Laal wala sabun dena. with respect to consumption patterns. Agency would provide special incentives to these stores with better margins. The Indian rural market is a complex mosaic of mind-sets. In return. The companies entering rural market must do so for strategic reasons and not for tactical gains as rural consumer is still a closed book. It is only through unwavering commitment that the companies can make a dent in the market. cultures. and lifestyles. There is huge potential and definitely there is lot of money in rural India but the smart thing would be to weigh in the roadblocks as carefully as possible. employment. educating people about them. Shopkeeper plays a very important role here.

which has already become the subject matter of a case study at Harvard Business School. In his own words: "ITC believes that its aspiration to create enduring value for the nation provides the motive force to sustain growing shareholder value.ITC is one of India's foremost private sector companies with a market capitalisation of nearly US $ 18 billion and a turnover of over US $ 5. The Company's 'e-Choupal' initiative is enabling Indian agriculture significantly enhance its competitiveness by empowering Indian farmers through the power of the Internet. Paperboards. effective supply chain management and acknowledged service skills in hoteliering. Information Technology. Chairman Y C Deveshwar calls this source of inspiration "a commitment beyond the market". Safety Matches and other FMCG products. This transformational strategy. ITC is widely perceived to be dedicatedly nation-oriented. ITC is one of the country's biggest foreign exchange earners (US $ 3. While ITC is an outstanding market leader in its traditional businesses of Cigarettes. is expected to progressively create for ITC a huge rural distribution . Over time. Branded Apparel. Packaging and Agri-Exports. Paperboards & Specialty Papers. Branded Apparel. in a study conducted by Brand Finance and published by the Economic Times. ITC's Agri-Business is one of India's largest exporters of agricultural products. among India's Most Respected Companies by BusinessWorld and among India's Most Valuable Companies by Business Today. As one of India's most valuable and respected corporations. Asia's 'Fab 50' and the World's Most Reputable Companies by Forbes magazine. Packaged Foods & Confectionery. Agri-Business. superior brand-building capabilities.2 billion in the last decade).1 Billion. Stationery. ITC also ranks among India's top 10 `Most Valuable (Company) Brands'. Hotels. it is rapidly gaining market share even in its nascent businesses of Packaged Foods & Confectionery. Packaging. Personal Care. ITC practices this philosophy by not only driving each of its businesses towards international competitiveness but by also consciously contributing to enhancing the competitiveness of the larger value chain of which it is a part. ITC has a diversified presence in Cigarettes. Personal Care and Stationery. the strategic forays into new businesses are expected to garner a significant share of these emerging high-growth markets in India. Hotels. ITC is rated among the World's Best Big Companies." ITC's diversified status originates from its corporate strategy aimed at creating multiple drivers of growth anchored on its time-tested core competencies: unmatched distribution reach.

Bristol and Flake. Lifestyle Retailing: ITC's Lifestyle Retailing Business Division has established a nationwide retailing presence through its Wills Lifestyle chain of exclusive specialty stores. ITC employs over 24. Gold Flake. For the nation. it has . This over-arching vision of the company is expressively captured in its corporate positioning statement: "Enduring Value. including e-enabled services and business process outsourcing. Beginning with its initial offering of Wills Sport relaxed wear from the first store at South Extension. it has a leadership position in every segment of the market. India Kings.000 shareholders.81. ITC was the first company in India to voluntarily seek a corporate governance rating. Navy Cut. Scissors. Berkeley.infrastructure. significantly enhancing the Company's marketing reach. The Company continuously endeavors to enhance its wealth generating capabilities in a globalising environment to consistently reward more than 3. safety and environment management systems. Staples and Snack Foods segments.000 people at more than 60 locations across India. For the Shareholder. MintO. Capstan. ITC's production facilities and hotels have won numerous national and international awards for quality. productivity. Foods: ITC made its entry into the branded & packaged Foods business in August 2001 with the launch of the Kitchens of India brand with brand launches in the Confectionery. With its wide range of invaluable brands. ITC's world famous restaurants like the Bukhara and the Dum Pukht and other products like Aashirvaad. ITC's wholly owned Information Technology subsidiary. Sunfeast." ITC Products Cigarettes: ITC is the market leader in cigarettes in India. ITC Infotech India Limited. Its brands include Insignia. is aggressively pursuing emerging opportunities in providing end-to-end IT solutions. fulfill the aspirations of its stakeholders and meet societal expectations.

etc. ITC's brands like iKno.expanded with Wills Classic work wear. and Stationary: ITC's stationery brands Paper Kraft & Classmate are the most widely distributed brands across India. drawing. Product Product Levels: (1) Core Benefit It is the fundamental service or benefit that the customer is buying the product for. Wills Clublife evening wear. Sandalwood. Hotels: The 484-room ITC Hotel Maurya Sheraton & Towers at New Delhi is not only amongst the leading business hotel in the country and the 386-room ITC Hotel Grand Maratha Sheraton & Towers. Madhur. Tarangini. Greeting. Safety matches: These matches are available in unique designs and with innovative value added features. VaxLit and Delite. Jasmine. (2) Basic Product . the core benefit is to satisfy hunger. Mangal Deep. The Classmate range consists of notebooks. With respect to ITC. Paperkraft is targeted at working executives and college goers. Gifting. if we take the product line of foods. Bouquet. Anushri. long books. ITC's Greeting & Gifting products include Expressions greeting cards and gifting products. Fabulous Indian meal at the Bukhara.. Durbar. Agarbattis: ITC has launched Mangaldeep Agarbattis across a wide range of fragrances like Rose.

Barbie Dolls. etc. For food products like Bingo and Kitchens of India. (5) Potential Product It emphasizes the importance of customization like P & G. ITC’s Product Assortment Cigarettes Foods Lifestyle Stationary Hotels Retail Paperkraft John Players Classmate Regalia Miss Players Wills Lifestyle Incense sticks Paper Agri Business I. it is 9. the products are confectionary. their attractive packaging and some freebies can be a good augmentation. .T. consumers expect healthy food and harmless ingredients. Here. (3) Expected Product It is a set of attributes a buyer wishes to see in a product. If we take case of stationary it comes to 3.It is conversion of core benefit into basic product which can be sold. With respect to ITC’s food segment. For ITC. Product: Product Width: It refers to the different product category a company has. Product Length: It refers to number of items in each category. (4) Augmented Product They are products whose features exceed the expectation of consumers. snacks etc. However this level is absent in food segment of ITC. Mangaldeep Paperboards Spriha Speciality Foodgrains Edible Nuts Papers Packaging Marine Products Processed Foods Coffee Spices India Kings Classic Gold Flake Navy Cut Bristol Flake Kitchen of India Ashirwad Sunfeast Mint-O Candyman Bingo 1.

ITC is one of the country's biggest foreign exchange earners (US $ 2. Price . Consistency: It refers to the degree of how much the products lines are related in terms of end use. We find that ITC’s product lines can no way be called consistent in any of these terms.Product depth: It refers to number of sizes and variants offered in each product. distribution channels or some other way.8 billion in the last decade). ITC’s agri business can be classified as a mature business as it is at its peak and ITC's Agri-Business is one of India's largest exporters of agricultural products. Product Life Cycle Re ve nu e Inception Growth Maturity Decline Sales Time Maturity: Profits Sales increase as the product is accepted by most potential buyers. If we take example of their classmate books there are 8 various sizes available in it. production requirements.

For promotions in southern states. the nature of competition is much greater. Surrogate advertising: Here well known celebrities are promoting the products. 'itc-iltd. ‘Ashageet’ and ‘Nivedan’ brands as national brands.com'. The business also maintains a website. In April 2005. as the official sponsor of the WTA tennis championship -. that rural consumers view the purchase-tradeoff dilemma across a much wider range of product categories. It signed on Hindi film actor. When it signed Shah Rukh khan. Sun feast has signed Tamil super star Surya as a brand ambassador. The implication is that pack sizes and price points are critical to sales. 10 but also other products that consumers may consider one-off luxury purchases such as shampoo. Sales promotions is basically providing discounts. Sunfeast launched its major campaign fro promoting the product. No product advertisement relating to tobacco is published by the business.titled the Sun feast Open -.ITC believes that a significant portion of the rural population is paid in daily wages. In the same year. ITC promotes its agarbathi by giving free small samples of agarbathi packets. which provides the details of Tobaccos grown in different regions of India. a beverage manufacturer is not only competing with other manufacturers in its category. Shah Rukh Khan as its brand ambassador. and therefore tend to make purchases only to meet their daily needs. and Sania mirza it gave a tremendous boost to the confectionary products like biscuits and all others products. the Value for money is the most important concept that differentiates ITC from the rest Promotion Promotion through Advertising: For ITC advertising is the main the tool for promoting its food products. As a result. samples etc. In the case of consumer durable one way is to work through rural bank and offer higher purchase terms to consumer. In short. ITC uses sales promotion because it is facing tough competition from . and importantly. Sales promotions ITC indulged in sales promotion basically only for its small products. But that's not all. ITC Ltd’s agarbathi business division concentrates to promote its ‘Spriha’. Daily wage earners tend to have little stock of money.the company had teenage sensations Sania Mirza and Mahesh Bhupathi campaigning for it. So ITC examines method by which it can make the product more affordable.

Distribution costs and non availability of retail outlets are major problems faced by the marketers. to promote its confectionary products. The project had already started in about five schools.500 crore.) Rural Marketing Vehicle (RMV) Marketers need to make more on. the company tied up with Bey Blades. This advertisement of contributing one rupee is done by the brand ambassador Shah Rukh Khan. b. to carry out its activities in the district. Besides these melas.ground contact with their target audience as well as make demonstration of products as consumers in rural markets rely on the 'touch and feel' experience.According to the Indian Market Research Bureau. rural markets have the practice of fixing specific days in a week as Market Days when exchange of goods and services are carried out. Also.3. Fifty-two schools had been identified in Mettupalayam and Karamadai up with a Chennai based non-governmental organization (NGO). distribution poses a serious problem. A survey of nearly 50 schools conducted by ITC in Coimbatore revealed that most of them were in need of facilities such as girl’s toilets.) Melas and Haats:. around 8000 melas are held in rural India every year and annual sales at melas amount to Rs. Also through the confectionary products like Sunfeast it is contributing to the rural education like if you buy a Sunfeast pack your one rupee will go in rural education development. Public Relations . ITC Limited plans to provide infrastructure facilities at select rural Government schools in the Coimbatore district under its “Project Classmate. Also in case of brand apparel like john players there are various cash discounts. a. The company had tied play materials.others competitors like cycle brands agarbathi. every region consisting of several villages is generally served by one satellite town where people prefer to go to buy their durable . One of the ways could be using company delivery vans which can serve both the purposes.” ITC has undertaken this project as part of its corporate social responsibility. black board and blocks. Distribution For most companies wanting to enter the rural markets. V-Excel.Public welfare activities ITC is involved in social welfare activities. Also. the popular television series that was a rage among children. benches and desks.

Madhur. Durbar. manufacture of high quality paperboards and the creation of innovative packaging solutions to offer Indian consumers high quality agarbattis. This business leverages the core strengths of ITC in nation-wide distribution and marketing. brand building. these brands have been . Sandalwood. Jasmine. Bouquet.commodities. Anushri and Mogra.Agarbattis in Rural Market As part of ITC's business strategy of creating multiple drivers of growth in the FMCG sector. Mangaldeep is also available in 3in1 and 5in1 varieties giving the consumer three and five fragrances in one pack respectively. Marketing managers can use these feeder towns they will easily be able to cover a large section of the rural population. Tarangini. Attractively packaged. the Company has commenced marketing agarbattis (incense sticks) sourced from small-scale and cottage units. To offer better value proposition to the consumer. Case Study . ITC has launched Mangaldeep Agarbattis across a wide range of fragrances like Rose. supply chain management.

who are also setting up agarbatti units. bouquet. 4) These agarbattis are available in ‘fragrance-locked’ packets. Over 100 village women are gaining from the training that this organisation imparts in rolling agarbattis. 2) ITC has also kept cost for each stick that is 75 paisa. This collaborative venture is expected to result in employment generation. jasmine.appropriately priced to appeal to a cross-section of consumers at various price segments. ITC is also beginning to extend similar support to other NGOs in other states like Bihar. . Tripura and Andhra Pradesh. a non-profit organisation founded by the renowned spiritual guru Sri Sri Ravishankar and located near Bangalore. sambrani and nagchampa. 2) ITC has sold these Agarbattis in the name of ‘Spriha’ and ‘Mangaldeep’. madhur. training village women in rolling agarbattis and employing these women in these units. particularly in the semi-urban and rural areas. Pricing: 1) ITC is selling these agarbattis at very low cost seeing the economy of the people staying in rural areas at Rs five for 10 sticks for every pack. Marketing Mix Product: 1) ITC Limited has launched agarbattis in Indian Rural Market. 3) These agarbattis have got different fragrances like rose. sandalwood. ITC is also supporting an 'Agarbatti Community Participation Programme' run by the Vyakti Vikas Kendra. and to distribute agarbattis through the Khadi Bhavan / Khadi Bhandar outlets across the country. ITC has also entered into an MOU with the Khadi & Village Industries Commission (KVIC) to source agarbattis from KVIC approved units. These agarbattis are available in innovative 'Fragrance-Locked' packaging.

Promotion: 1) ITC had chosen to promote their agarbattis in rural markets hrough wall paintings in different languages so that it should be understood by everyone. one of India’s largest exporters of agricultural commodities. ITC E-Choupal The Big Picture: ITC’s International Business Division. has conceived e-Choupal as a more efficient .Place: 1) ITC has promoted this product through the melas and Haats. 2) ITC had also chosen formal media to promote their product by TV and Radio. 2) Some agarbattis had been given to co-operative societies to help in distributing the agarbattis to different consumers.

among others. weak infrastructure and the involvement of numerous intermediaries. The Value Chain . Such a market-led business model can enhance the competitiveness of Indian agriculture and trigger a virtuous cycle of higher productivity. higher incomes. a growth in rural incomes will also unleash the latent demand for industrial goods so necessary for the continued growth of the Indian economy. The e-Choupal model has been specifically designed to tackle the challenges posed by the unique features of Indian agriculture.supply chain aimed at delivering value to its customers around the world on a sustainable basis. and enlarged capacity for farmer risk management. . characterized by fragmented farms. Further.Farm to Factory Gate: ‘e-Choupal’ also unshackles the potential of Indian farmer who has been trapped in a vicious cycle of low risk taking ability > low investment > low productivity > weak market orientation > low value addition > low margin > low risk taking ability. despite rich & abundant natural resources. larger investments and higher quality and productivity. This will create another virtuous cycle propelling the economy into a higher growth trajectory. This made him and Indian agribusiness sector globally uncompetitive.

village internet kiosks managed by farmers – called sanchalaks – themselves. delivering the same benefits as vertical integration does in mature agricultural economies like the USA. The aggregation of the demand for farm inputs from individual farmers gives them access to high quality inputs from established and reputed manufacturers at fair prices. ‘e-Choupal’ makes use of the physical transmission capabilities of current intermediaries – aggregation. counter-party risk and bridge financing –while disintermediating them from the chain of information flow and market signals. With a judicious blend of click & mortar capabilities. enable the agricultural community access ready information in their local language on the weather & market prices. ‘e-Choupal’ eliminates wasteful intermediation and multiple handling. facilitate the sale of farm inputs (now with embedded knowledge) and purchase farm produce from the farmers’ doorsteps (decision making is now informationbased). virtually linked to the ‘mandi’ system for price discovery. As a direct marketing channel. logistics. Real-time information and customized knowledge provided by ‘eChoupal’ enhance the ability of farmers to take decisions and align their farm output with market demand and secure quality & productivity.The Model in Action: Appreciating the imperative of intermediaries in the Indian context. . ‘e-Choupal’ ensures world-class quality in delivering all these goods & services through several product / service specific partnerships with the leaders in the respective fields. ‘eChoupal’ leverages Information Technology to virtually cluster all the value chain participants. Thereby it significantly reduces transaction costs. disseminate knowledge on scientific farm practices & risk management. in addition to ITC’s own expertise.

. Rajasthan and Kerela). has already become the largest initiative among all Internet-based interventions in rural India. Andhra Pradesh.000 villages through nearly 6000 kiosks across nine states (Madhya Pradesh. wheat. Maharashtra. rice. coffee. The Status of Execution: Launched in June 2000. Karnataka.5 million farmers growing a range of crops . telecom connectivity and bandwidth. Uttar Pradesh.While the farmers benefit through enhanced farm productivity and higher farm gate prices. apart from the challenge of imparting skills to the first time internet users in remote and inaccessible areas of rural India. 'e-Choupal'. ITC benefits from the lower net cost of procurement (despite offering better prices to the farmer) having eliminated costs in the supply chain that do not add value. including power supply. shrimp . Haryana. The problems encountered while setting up and managing these ‘eChoupals’ are primarily of infrastructural inadequacies.'eChoupal' services today reach out to more than 3. Uttaranchal.soyabean.in over 36. pulses.

24x7 helpdesk etc. On the anvil are plans to channelise other services related to micro-credit.Several alternative and innovative solutions – some of them expensive – are being deployed to overcome these challenges e. Mobile Choupals.g. Going forward. upgrading BSNL exchanges with RNS kits. . installation of VSAT equipment. This enthusiastic response from farmers has encouraged ITC to plan for the extension of the ‘e-Choupal’ initiative to altogether 15 states across India over the next few years. health and education through the same 'e-Choupal' infrastructure. Power back-up through batteries charged by Solar panels. the roadmap includes plans to integrate bulk storage. As India’s ‘kissan’ Company. handling & transportation facilities to improve logistics efficiencies. The active participation of farmers in this rural initiative has created a sense of ownership in the project among the farmers. . They see the ‘e-Choupal’ as the new age cooperative for all practical purposes. ITC has taken care to involve farmers in the designing and management of the entire ‘e-Choupal’ initiative. local caching of static content on website to stream in the dynamic content more efficiently.

social services. Sivakamar was proved right. Within a short while of being rolled out. it makes use of their physical transmission capabilities like aggregation. But S. He was convinced that as long as the process was simple and visibly useful and beneficial. Operating out of village internet kiosks managed by the farmers. called sanchalaks. the e-Choupal gave to the agricultural community convenient access in their local language to information on weather. while eliminating them from the chain of information flow and market signals. head. was unfazed. ITC. the Indian farmer would learn to use IT to his advantage. Appreciating the imperative of the much-abused middlemen in the Indian rural context. the concept caught on. Sivakumar Its aim is to ultimately become a universal platform for any kind of information-farming. it was initially dismissed as 'unrealistic and impractical'. scientific farm practices and risk management and facilitating the sale and purchase of farm inputs (with embedded knowledge on how to use optimally). The Article says: Successfully building a farmer-centric ecosystem that is not government-owned and run and creating virtual markets in rural India Entrepreneur: S. international business and agricultural division. Sivakumar. finance-that villagers would want access to. market scenarios. But like all transforming ideas. logistics and bridge financing. .e-Choupal among the '10 biz ideas that changed India’ The August 31 2008 issue of The Week magazine features e-Choupal among the '10 biz ideas that changed India'.

000 villages with 20. Since it was aimed at making markets more transparent and enhancing the bargaining power of farmers. C. it saw some resistance from traders. they were taken by surprise when they completed the first phase of training in only three hours. But he finally fell in with Sivakumar's concept and the first e-Choupal became operational in June 2000.000 choupals. Rajasthan and Kerala). UP. the choupal web portal became operational. covering 1.00. Deveshwar had initially suggested using models similar to that of Ebay and Amazon. Andhra Pradesh. Haryana. But the problem was just in the mind. It also plans to expand its horizon of services: including fruits and vegetables in its portfolio of agricommodities. Uttaranchal. Said Sivakumar: "Unlike the typical urban methodology of starting with the basics. Having set aside two days for training six sanchalaks to begin with. besides adding information on health services. we started with the benefits of e-Choupal and how farmers could derive them. Maharashtra. it needed to pump in more money along the value chain. ITC aims to reach 15 states by 2010. e-Choupal became firmly established through nearly 6. .But how did the idea germinate? It all started when Sivakumar emphasised to group chairman Y. Karnataka.500 kiosks across nine states (MP. Sivakumar admitted though that initially even he was not sure whether the project would be able to establish trust with the farmers." With input from the farmers. Deveshwar that if the company wanted to grow in the agri business. But by 2004. vocational education and micro-financing.

the company will have access to 100. Built on 5 acres. However. depending on the price of real estate. savings through procurement of cheaper farm produce. given the importance of the rural economy. each the size of Delhi’s Khan Market. What ITC gets in return is a dedicated customer base.000 villages with about 700 million people in all. and a cut ranging from 3%-40% of sales value from the brands which use its shelf space. The focus at present is Madhya Pradesh. there is a need for a hub.1 million]. India has about 600. The Economic Times writes about their plan to set up rural malls: ITC is setting up 45 shopping malls in the countryside. where ITC has already managed to set up an exhaustive network of e-chaupals for procurement of soyabeans and sale of agri-inputs. ITC will have 20. he said.000 villages. The first five malls. Since each choupal covers around five villages. costing more than Rs 20 crore.ITC'S RURAL HUBS AND SPOKES: ITC is one of the most active companies in rural India.500 e-choupals in the villages and expect income from echoupals to be more than their tobacco business by 2010." To complete the picture.1. adding that this would have a multiplier effect on the economy. To put . He said at present the propensity to spend was low among villagers because surplus income was low. will be ready for shoppers in 16 weeks. each mall would cost ITC anything between Rs 3-5 cr [USD 650K . Each choupal currently serves 500-600 farmers.000 choupals. to retail everything from John Players clothes and ICICI life insurance to Eicher motorbikes. "In the next 5-7 years. and where there are spokes. They have set up over 2." The e-choupals are spokes. "[ITC chairman Yogi] Deveshwar explained that the revenue estimated from choupals in the coming years was not unfounded. the choupal network would boost farmers' income and increase their propensity to spend.

It synchronizes investment decisions so as to reduce risk. shelf display. RISC is designed to coordinate the activities of a host of entities?commercial. and parking. It creates a mechanism that reduces transaction costs and therefore improves the functions of markets. NGOs. ERP & CRM capability F A R M E R S e-choupal rural two-way fulfillment capability M A R K E T S Expanded FMCG distribution capability Brande d Foods Lifestyle retailing Greetin g cards/st ationery Matches & Agarbatti s . Each mall will be a self-contained unit. This interests us is the context of our RISC ideas. We are working to set up a pilot by mid-2004. governmental. Each store will be manned by at least five full-time ITC sales staff. RISC's goals are broader: "Fundamentally. with facilities for storage of goods. warehousing of agricultural produce procured by ITC. It essentially acts as a catalyst that starts off a virtuous cycle of introducing efficient modern technology to improve productivity that increases incomes and thus the ability of users to pay for the services. and so on. and the number could go up in busy seasons of the year. most malls in the large metros are built on just 2-3 acres of land. the specific market failure that RISC addresses is that of coordination failure.that area in perspective." Future Positioning of ITC a leading FMCG player in India VPN providing SCM.

Natu for his valuable advice. A radical change in attitudes of marketers towards the vibrant and burgeoning rural markets is called for. We also take this opportunity to express our gratitude to all those who directly or indirectly helped us to successfully complete this project. It’s been an adventurous and learning experience. On the successful completion of this project. Acknowledgement We would like to take this opportunity to thanks Prof. so they can successfully impress on the 230 million rural consumers spread over approximately six hundred thousand villages in rural India.A basis for strategic partnerships with other FMCG brand owners Conclusion Thus looking at the challenges and the opportunities which rural markets offer to the marketers it can be said that the future is very promising for those who can understand the dynamics of rural markets and exploit them to their best advantage. we feel worthwhile to convey our acknowledgement to all those associated with it. It’s been a pleasure working on this project. . suggestions and the help given to us in completion of this project.