Rural Marketing Experience
Upon completion of this chapter, you will be able to:
• Appreciate the marketing approaches of some leading companies based on the public–private–partnership (PPP) model
• Understand how information technology can be gainfully employed in the rural marketing context
• Examine the way marketing initiatives are built around social issues
• State the guidelines for designing rural marketing approaches
Encouraged by the growth in sales from rural India, companies are devising new marketing strategies. For Marico, 25 per cent of its sales come from rural India. Milind Sarwate, head of the company’s human resources and strategy division, says, “We have been making products primarily for urban India. But we would focus on increasing our reach in rural areas”. Emami, on the other hand, prefers to promote products through channel-level incentives in smaller towns, including wall paintings, door-to-door activities, in-shop promotions, activities in rural markets, fairs and festivals, kheti mela, mobile traders or shops on wheels, and video vans. Aditya Agarwal, director, Emami Group, says, “We have introduced new super-stockist networks for rural coverage, with a special focus on West Bengal, Andhra Pradesh, Uttar Pradesh and Maharashtra. The van operations model has also been introduced to make the products reach remote villages”.1
Dabur India’s Vice Chairman Amit Burman says, “Rural and semi-urban India account for almost 50 per cent of our domestic sales. New product introductions have always been the key to Dabur’s growth strategy.” A Reliance Capital report says, “While the large potential is true, the reality is that rural people are more likely to spend on items that give them status. Spending on a mobile or motorbike that helps one in improving communication and conveyance is more sought after than upgrading to a higher quality soap. “This is good news to marketers of durables. LG, Samsung, Sansui, Philips, Maruti, M&M, Tata Motors, Hero Honda, Nestlé and P&G are other major corporations who have ramped up their rural focus. In rural markets, the demand has always been greater for entry-level colour TVs and low-end twin-tub washing machines. However, due to the prolonged summer, most durables-makers have not only exceeded their sales targets but have also found “surprisingly good demand” for top-end models of durables from semi-urban markets.2
The emerging rural markets offer exciting opportunities to marketers as well as pose threats of stiff competition from rivals. This chapter discusses the strategies of some leading companies to enable marketing executives and students to come to grips with the diverse elements of an effective rural marketing strategy.
India’s untapped rural market holds tremendous growth opportunities for companies that can design the right marketing mix of 4 P’s (Product, Price, Place and Promotion) to achieve the 4 A’s (Afford ability, Accessibility, Acceptance and Availability) for rural consumers. However, when we observe the rural marketing approaches of some companies, we find that they have not narrowly focused on transaction marketing but have gone beyond by employing principles of conversion and development marketing and strengthened their customer base through relationship marketing designs. Hindustan Unilever, CFCL, ITC, Colgate–Palmolive and Hindusthan Latex are examples of such companies. We will now discuss the important initiatives of these companies to gain insights into rural marketing.
Hindustan Unilever Limited (HUL), formerly known as Hindustan Lever Limited (HLL), is the largest consumer products company in India. The name HUL came into vogue in late June 2007. The head office of the company is located in Mumbai. There are, in all, 41,000 employees of different categories working in the company.
Unilever has declared its commitment to people and to “adding vitality to life.”
Their focus is on meeting everyday needs of nutrition, hygiene and personal care, and effort is spent on creating brands that help people feel good, look good and get more out of life. Though they operate across different cultures, they respect local cultures and ensure that their products and practices are local culture-specific. They are of the view that customer relationship is the basic foundation of business across the globe. The company sees knowledge management as a potent tool to be used in the service of local consumers—this makes it a truly multi-local multinational.
For achieving productivity, profitability and long-term competitive ability, they emphasize on the highest standards of corporate behaviour towards employees, suppliers, consumers, communities and environments on which they have an impact.
The vision of HUL is formulated with the inspiration drawn from the service motto given in its mission. This figures the company as an entity that is sensitive to the changing aspirations of its customers. It is responsive in creating competitive and innovative branded products and services that progressively enhance the quality of life.
Products and markets
The products sold to the extent of about four million tonnes nearly accounting for Rs 137.18 billion. HUL’s distribution network comprises about 2,500 redistribution stockists, covering 6.3 million retail outlets. About 250 million urbanites and another 250 million rural people are consumers of its 35 major Indian brands. The products marketed by the company range from food items such as flour, biscuits, ice creams, etc. to body products such as soaps, face creams, cigarettes, beverages, etc. used by consumers in their day-to-day life. HUL’s brands like Lifebuoy, Lux, Surf Excel, Rin, Wheel, Fair & Lovely, Pond’s, Sunsilk, Clinic, Pepsodent, Close-up, Lakmé, Brooke Bond, Kissan, Knorr-Annapurna, Kwality Wall’s, etc. are household names across the country and span many categories—soaps, detergents, personal products, tea, coffee, branded staples, ice cream and culinary products.
Corporate social responsibility (CSR) programmes
HUL’s corporate social responsibility (CSR) philosophy is embedded in its corporate purpose and “vitality” mission that aims to improve quality of life through their products and their interventions in the communiy.
Adding value to agriculture
HUL has done much to help increase agricultural productivity by introducing the latest technology, sharing and updating best practices, and investing in food processing.
- The average yield of tea at the company’s plantations has grown from 900 kg per hectare in the 1960s to about 2,500 kg per hectare now.
- Their tomato extension programme in Punjab has increased the yield per acre from eight tonnes 10 years ago to 20 tonnes today.
- They are the country’s largest seller of branded animal feeds; their innovation centre in this business has developed poultry feeds that give a high rate of conversion efficiency.
They understand the need for establishing linkages between agri-business and agricultural development to achieve viability because of their early experience with a dairy plant at Etah (Uttar Pradesh). HUL had an early opportunity to learn this lesson when they first set up the dairy in 1964. The company has increased the availability of milk through a series of focused initiatives in animal husbandry and rural development. As a result, milk production has gone up in the last 20 years from 2,500 tonnes per year to over 30,000 tonnes. There has been an improvement in the incomes of the rural community around the factory.3
Water conservation and harvesting
HUL is committed to extending its efforts on water conservation and harversting to the larger community. It has engaged in community water management projects in areas that are adjacent to its manufacturing sites. Box 3.1 describes one such project.
HUL started Sanjivani—a free mobile medical service camp—in 2003 near its Doom Dooma factory in Assam. Villages within a radius of 40 km have been identified for the project. They are centrally located with many bordering villages. The Sanjivani project has provided medical assistance to more than 143,364 patients since its inception. In 2007 alone, more than 22,395 patients were treated in 344 camps. In 2008, 31,790 patients were treated through 437 camps. Box 3.2 provides the operational details.
Another important aspect of HUL’s operations is cause-branding. We briefly describe its causebranding efforts in this section.
Box 3.1 Water Conservation Projects of HUL
HUL started its pilot project on watershed management around its factory at Khamgaon, an arid region of Maharashtra. As a result, a green belt has come up with about 6,300 trees. Inspired by the success of the project, HUL extended this model to other villages.
Joining hands with the Tata Energy Research Institute (TERI) and Bharatiya Agro Industries Foundation, HUL constructed bunds, trenches and check dams in Parkhed village and around 350 families were the beneficiaries. They could cultivate a second crop on a total cultivable area of 470 acres. There was a phenomenal rise in their incomes from around an average of Rs 36,000 to approximately Rs 85,000 per annum per farmer. The experiment was recognized and appreciated at the Johannesburg World Summit on Sustainable Development.
Another project of the kind was taken up in association with an NGO, Vanarai, at HUL’s Silvassa manufacturing hub (in the Union Territory of Dadra and Nagar Haveli). First, community awareness was created with Vanarai’s help, involving every member of the village. Once the response to water conservation was found to be satisfactory, the villagers were trained to make commitments and contributions to water harvesting. Watershed structures were created to benefit 1,491 hectares and 478 families.
Source: “Water Conservation, HUL,” available at www.hul.co.in.
Box 3.2 Project Sanjivani
Project Sanjivani aims at creating proper infrastructure and expertise necessary to prevent and cure diseases in the remote villages of Assam. The two-pronged programme envisages (i) awareness creation on issues such as hygiene, child immunization, family planning, etc. and (ii) provision of free mobile medical facilities and basic medical services.
The project covers a radius of 40 km around the factory with two mobile vans equipped with basic medical equipment such as diagnostic kits, blood pressure measuring units, medicines and a mobile stretcher. It is accompanied by a specialized team of one male and one female doctor, two nurses, a medical attendant and drivers.
On an average, 400 Sanjivini medical camps are conducted every year in remote villages surrounding the factory. The project is run in close co-ordination with the local administration and the progress is reviewed every quarter.
The village headman provides support by making arrangements. The unit camps for six hours in a village everyday. Around 100 patients get medical advice and treatment for minor diseases. All patients with critical and chronic diseases are referred to hospitals. About 400 medial camps are conducted in a year.
In association with NGOs and other interested agencies, HUL conducts awareness campaigns on hygiene, child immunization camps, iron supplement therapy, free eye check-ups, family planning awareness camps, anti-tobacco education and anti-alcoholism camps.
Source: “Providing Health Care, HUL,” available at www.hul.co.in/sustainability/MakingaDifference/ProvidingHealthcare.aspx.
Lifebuoy Swasthya Chetna (LBSC)
Lifebuoy Swasthya Chetna (LBSC) is a rural health and hygiene initiative that was started in 2002. The company worked closely with government bodies such as NRHM and also UNICEF (in 2008) for its initiatives on handwashing. The Indian postal department released a special postal cover on Lifebuoy Swasthya Chetna on the occasion of World Health Day (April 7) in 2006. Theprogramme has touched 50,676 villages and 0.12 billion people since 2002. In 2008 alone, LBSC contacted 15,000 villages in Uttar Pradesh, Madhya Pradesh, Maharashtra, Bihar, and Karnataka. Box 3.3 presents the operational details of the programme.5
Fair & Lovely (FAL) Foundation
The Fair & Lovely (FAL) Foundation aims at economic empowerment of women across India by providing information, resources and support in the areas of education, career and enterprise. It specifically targets women from low-income groups. The Foundation has renowned Indian women from various walks of life as its advisors. Among them are educationists, NGO activists, and physicians. The Foundation is implementing its activities in association with state governments.6 A series of projects drawn up to achieve its vision are described in Box 3.4.
Surf Excel—water conservation
Hindustan Unilever’s vision is to continuously innovate technologically to reduce water consumption and to conserve water in their manufacturing operations. They developed Surf Excel Quick Wash that needs two buckets of water less than the generally used quantity per wash and is thus, a considerable water-saver.
Rural marketing operations
The company is a pioneer in rural marketing and it has experimented in many ways to increase its rural reach.
Box 3.3 Lifebuoy Swasthya Chetna
LBSC was initiated in media-dark villages (in UP, MP, Bihar, West Bengal, Maharashtra, Orissa) with the objective of spreading awareness about the importance of washing hands with soap. It demonstrates that “visible clean is not really clean,” thereby proving the importance of washing hands. It targets children as they are the harbingers of change in society and mothers since they are the custodians of health.
LBSC is a multi-phased activity. In the initial phase, a Health Development Officer (HDO) and an assistant initiate contact and interact with students and influencers of the community (Key Opinion Leaders)—village community representatives, medical practitioners, school teachers, etc. A number of tools such as a pictorial story in a flip chart format, a “Glo-germ demonstration” and a quiz with attractive prizes to reinforce the message are used. The “Glo-Germ demonstration” is a unique tool to make unseen germs visible and emphasize the need to use soap to wash hands and kill germs. Each phase of the activity is customized to the needs of the respective group such as interactive games for kids and mothers, etc. The various stages reinforce the message and learnings that are crucial in creating awareness and effecting behaviour change in favour of hand-wash hygiene. The programme involves meeting the local Panchayat bodies, especially the anganwaadi workers and taking their help in its implementation at the village level.
Source: www.hul.co.in, accessed March 2010.
Box 3.4 Programmes Undertaken by the Fair & Lovely Foundation
The programmes run by the Fair & Lovely Foundation focus on women in cities and villages.
- Fair & Lovely Scholarships: The Fair & Lovely Foundation has awarded scholarships to over 600 deserving girls since 2003. Fair & Lovely Scholarships of up to Rs 0.1 million are awarded to women for graduate, post-graduate and doctoral courses within India. Recently, HUL extended the scheme to the children of Shakti Amma who are part of HUL’s social initiatives in rural India.
- Fair & Lovely Career Fairs: To date, over 600,000 students have benefited from Career Fairs conducted in cities all over India. Fair & Lovely Career Fairs are designed to address the needs of girl students passing out of Class X and XII.
- Fair & Lovely Shikhar: This aims at inspiring girls by presenting stories of women achievers through TV presentations.
- Fair & Lovely Project Suvarna: Project Suvarna is an identification and training activity aimed at harnessing available talent in selected events of women athletes in the age groups of under 12, 14, 16 and 18. P.T. Usha chose the candidates and trained them at her academy.
- Fair & Lovely Project Swayam: Project Swayam is an initiative in the area of education and enterprise for women by the Fair & Lovely Foundation in association with VRDC (Vanasthali Rural Development Centre). Under this project, women were trained to become pre-school teachers. After completing their training, these women could start their own schools with help from VRDC, through which they got an opportunity to earn their own living. This project was replicated in Bihar in association with a local NGO, Jan Jagran Sansthan, in 2005.
Source: www.hul.co.in, accessed March 2010.
Each business division of HUL dealt with the rural market on an individual basis earlier. Now a rural market division has been set up to deal with rural markets as a single organization.
On-the-job training for rural markets
The company expects executive recruits to spend at least 8 weeks in the villages of India to get a gut-level experience of India’s bottom-of-the-pyramid markets. The new executives must become involved in some community projects—building a road, cleaning up a water catchments area, teaching in a school, or improving a health clinic. The goal is to make executives engage with the local population to develop better understanding.
HUL also initiated a massive programme for managers at all levels to reconnect with their poorest customers. They are expected to talk with the poor in both rural and urban areas, visit the shops that customers frequent and ask them about their experience with the company’s products and those of its competitors.
Distribution oriented projects
Some of the recognized distribution programmes of HUL are: Operation Harvest, Project Bharat, Project Streamline, and Project Shakti.
HUL launched Operation HARVEST (Harmonize All Resources in Village to Enhance Sales and Turnover) in 1989 as a seeding exercise with an objective to increase the penetration and the awareness of its brands and to generate demand. The objective was to make the routes viable for coverage by route-schedule vans. Thisoperation was conducted in villages that were not covered by route schedules and where the reach of conventional media was weak.
Around 30,000 villages that had a high growth potential were selected for the operation to encourage trials and identify key distribution and retail points. The villages that were selected had a population of at least 2,000 people and were connected by all-weather roads. The company hired vans and had them fitted with public address systems and in some cases, with audio-visual equipment. These vans covered six villages a day for six days a week. The cycle was repeated a couple of times in the same villages. On reaching the village they would play audio cassettes and video films provided by HUL. These tapes and films had song-and-dance sequences from popular films with advertisements of HUL products coming at intervals. The company representatives distributed free samples and also identified key distribution points. Small shops in these villages were serviced by providing primary products like Lifebuoy and Wheel.
The Market Potential Value (MPV) of the village was determined to estimate whether or not avillage had the potential to generate a consistent sale above the minimum threshold of Rs 2,000 per visit per village. If found suitable, the village was included in the standard route schedule of the distributor.
In 1998, HUL’s personal products unit initiated Project Bharat, the first and largest rural home-to-home operation to have ever been undertaken by any company. The project covered 13 million rural households by the end of 1999. During the course of operation, HUL had vans visiting villages across the country distributing sample packs comprising a low-unit-price pack each of shampoo, talcum powder, toothpaste and skin cream priced at Rs 15. This was to create awareness of the company’s product categories and of the affordability of the products. The personal products unit subsequently rolled out a second phase of the sampling initiative to target villages with a population of over 2,000. Along with Operation Bharat, HUL conceptualized Project Streamline to enhance its control on the rural supply chain through a network of rural sub-stockists based in these villages. This gave the company the required competitive edge, and extended its direct reach to 37 per cent of the country’s rural population.
The objective was to penetrate 235,000 villages with less than 2,000 population and to increase HUL’s reach in rural India from 43 per cent to 75 per cent. About 30 Bharat Units were activated to cover 0.6 million households. TV shows (Ramayana and Chitrahaar) were telecast in the evening at a common place in a village. Coupons were also distributed for a lucky draw. As a result, 0.6 million households were contacted in 10 months. Nearly 20,000 villages were covered. The sales of Fair & Lovely increased by 50 per cent. This activation helped in changing perceptions about using Clinic Plus shampoo for cleaning hair instead of using soap.
Project Streamline (super stockist channel)
In a significant move aiming at long-term benefits, HUL initiated Project Streamline, to further increase its rural reach with the help of rural sub-stockists placed under rural distributors (Figure 3.1). Each rural distributor will have around 20 stockists affiliated to him. The company has appointed 6,000 such sub-stockists who distribute products in remote villages using unconventional means of transport such as tractor, bullock cart, etc. About 6,000 sub-stockists were appointed to cover about 5,000 villages and service 250 million consumers. HUL was able to directly reach 37 per cent of the country’s rural population through this initiative.
I-Shakti kiosks have been set up in eight villages in Andhra Pradesh and have been functional since August 2003. During the launch of these kiosks, important village members like the Sarpanch, school teacher and doctor are invited to help reinforce relationships with the villagers. The kiosks remain open from 9 a.m. to 7 p.m., six days a week. The kiosks offer information chiefly in the form of audiovisuals in the following areas:
Figure 3.1 Rural Distribution Model—Streamline
- Health and hygiene
- Legal services
- Veterinary services
The information provided in the above areas is culled from the best available resources, with additional care being taken to ensure that information, especially in areas like agriculture, is locally relevant and includes inputs form home-grown experts. These experts are also available on request to help provide solutions to problems raised by users through a query mailing system. A farmer from the village can obtain a quick solution to a pest problem plaguing his crops. People can also send queries on health and hygiene to a local doctor for a speedy response. Villagers can avail of discount coupons from the kiosk for medical treatment from doctors operating in local areas.
I-Shakti has also tied up with the Azim Premji Foundation to deliver innovative educational modules to students of classes VIII to XII through the kiosk. Local school teachers have also been involved in the process. A similar partnership is in place with Tata Adult Literacy for adult education.
Through I-Shakti kiosks, ICICI Bank and HUL provide a new delivery channel for rural India. This offers a multitude of products and services to the rural customer.
In the first phase, Life and General Insurance will be offered through this channel. Other financial services including investment products (equity, mutual funds, bonds), ICICI Bank Pure Gold (gold coins), personal credit, rural savings accounts and remittances will be introduced subsequently. The I-Shakti vision is to scale up operations for delivering information services to over 10 million rural people across 7,500 villages.4
Drawing from the Bangladeshi Grameen Bank model, various NGOs, multilateral agencies, government bodies, and public sector banks have set up self-help groups (SHGs) in rural India. These groups function as mutual thrift societies. Ten to 15 women in a particular village form a group that meets regularly. Each member contributes a little money to a common pool. Once the pool attains a threshold, the sponsoring agency steps in and offers micro-credit to one or more members of the group for investment in an economic activity approved by the group (Figure 3.2). HUL stepped into the situation with a simple plan of partnering with micro-credit recipients by offering them opportunities for micro-enterprise (Figure 3.3). Thus, Project Shakti was born.
Figure 3.2 Traditional Micro-Credit Models
Figure 3.3 Project Shakti—The Modified Micro-Credit Model
A member of a self-help group (SHG) in each of the 50 chosen villages was appointed as a Shakti entrepreneur. As Shakti brand endorsers—known as Shakti Ammas—they borrowed money from their respective SHGs and with that capital purchased HUL products for sale in their villages. Project Shakti is thus, a highly interactive form of selling and engagement that leverages a unique opportunity to communicate, demonstrate and provide experience of HUL brand benefits.
The whole exercise is not an easy task given the low literacy levels, several languages used locally and the sheer scale and diversity of rural India. HUL’s partnerships with NGOs and support from state governments facilitate these efforts. Project Shakti has played a significant role in aiding economic development in rural India. The Shakti brand endorsers earn close to Rs 750 per month on an average and in some cases, their earnings even touch as much as Rs 2,500 per month. This has helped double their household incomes. After initial pilots in 2001, they now have a network of 35,000 entrepreneurs reaching 100 million rural consumers in 100,000 villages.5
Chambal Fertilisers and Chemicals Limited (CFCL) was promoted by Zuari Industries Limited in 1985. It is theflagship company of the Rs 50 billion professionally-managed Zuari-Chambal Combine. It has diversified interests in the areas of fertilizers, phosphoric acid, agri-inputs and seeds, agri-biotechnology, textiles, information technology, food processing and shipping. It operates two hi-tech nitrogenous fertilizer plants at Gadepan (Rajasthan), having a total re-assessed capacity of 1.7292 million tonnes of urea per annum and represents a total investment of over Rs 25 billion. CFCL is India’s largest urea producer in the private sector.
CFCL’s client base is spread over a large geographic area. Chambal Fertilisers caters to the needs of the farmers in 10 states in the northern, central and western regions of India and is the leading fertilizer supplier in the state of Rajasthan. The remote location of most of their clients, the large number of clients and prospects coupled with the socio-economic factors prevailing in this segment make marketing a challenge.
The company has set up a wide network of 1,100 dealers and 15,000 sales outlets in villages. The company sells its urea under the name “Uttam Veer.” 6
Besides urea, fertilizers such as DAP, MOP, SSP and other agri-inputs such as zinc sulphate, biofertilizers, pesticides and seeds are made available to the farmers under the “single window” concept. These products are sourced from reputed suppliers and sold under the “Uttam” umbrella. Extensive promotion activities are undertaken to promote the “Uttam” brand by a team of dedicated field officers. The Agriculture Development Laboratories at Sriganganagar and Agra use sophisticated soil and water testing tools. Today, the company has attained a leadership position in the pesticides business in North India.
It operates through a network of distributors, dealers, regional sales offices and sales representatives, targeting the end customer—the farmer. There are 10 regional offices, 1,300 dealers and 20,000 village level outlets.
The Uttam Bandhan initiative was started in 2000. It is a community welfare initiative that originated under its present name in the state of Rajasthan where the company has its urea plant.
Chambal’s Uttam Bandhan is a community welfare initiative that tries to enhance the farmer’s income and quality of life. It further seeks to provide employment to educated rural youth.
Under the auspices of the initiative, the unemployed local youth are trained by the company as extension workers who are otherwise called Uttam Krishi Sewaks. About 300 educated, unemployed youth from a rural background are at present acting as Uttam Krishi Sewaks. The extension workers earn commission on the sale of specialized products.
These extension workers are obliged to interact with farmers and render the required assistance in their agricultural practices.
Soil and water test
Soil and water samples are collected and tested for micro-nutrients and balanced inputs. Soil test reports are explained and the farmer is educated on the importance of proper soil health and micro-nutrients. Based on thousands of samples tested over the years, soil mapping is being done. The Agriculture Development Laboratories are located at Agra and Sriganganagar and satellite soil testing facilities have been set up elsewhere. The company does not charge any testing fee from Uttam Bandhan member farmers.
Crop and product demonstrations, field demonstrations and farmer meets are conducted regularly to educate farmers on latest farm practices. Farmers are given training on specialized services that vary from the cultivation of medicinal and horticultural crops, vermi-culture and the use of bio-fertilizers.
Alternate sources of income
Uttam Bandhan looks beyond opportunities provided by land and water to increase a farmer’s income. Breed improvement and animal healthcare camps are regularly organized and farmers are educated on proper feed and mineral mixtures for good returns. Goat rearing, turkey farming, bee keeping, backyard poultry, etc. are other sources of income for farmers. Uttam Bandhan drives them to enhance income through proper training and by making the facilities available at their doorstep.
Farmers’ Web site—www.uttamkrishi.com
Chambal set up www.uttamkrishi.com, a Web site for farmers, in the year 2001. Uttamkrishi.com was one of the first Web sites to be set up for the benefit of the farming community. It has a bottom-up approach to farming solutions as the Web site has been designed region-wise to address the local issues. Broad information on crops and agronomy has been posted. Farmers can access it for free and post queries that are answered by experts.
Farmers’ helpline—Hello Uttam
Telephonic helplines called “Hello Uttam” have been set up. Farmers can raise issues over the phone by calling one of the local “Hello Uttam” helpline numbers. Though the number of centres is limited at the moment, experts are prompt in their response. Information about the helpline is widely circulated and for areas where the helpline is not operational, the farmers are urged to seek clarity from the Government of India’s Farmers’ Call Centre facility, the Department of Agriculture.
Mailers and AVs
Chambal is particular on proper dissemination of information. For that it has a quarterly mailer “Chambal ki Chitthi” that is hand delivered to every Uttam Bandhan farmer. It contains valuable farm-related information on activities pertaining to that quarter. Handouts, leaflets, farm calendars, farmer diaries, etc. are distributed extensively. It arranges radio talks, AVs and programmes for farmers on Doordarshan.
The Uttam Bandhan programme has been initiated in 10 states with around 80,000 farmers as its members. Services provided are customized taking a farmers’ preference into consideration and packaging them according to the agro-climatic zones. Through proper training, demonstrations, expert opinion, quality inputs and non-farm income, the Uttam Bandhan farmer has been a gainer in terms of not just increase in income but also quality of life.
Chambal has made use of public–private–partnership (PPP) in an intelligent way. It has involved farmers and experts in the government departments, agriculture universities, agriculture research stations and krishi vigyan kendras in various knowledge sharing and promotional activities like crop demonstrations, field days, animal husbandry camps, health check-ups, etc.
Chambal takes several initiatives on its own. They include training farmers, soil testing and encouraging farmers to take advantage of government schemes. It is hailed as a proactive partner in the Government’s Agriculture Technology Management Agency (ATMA) initiative.7
Indian Tobacco Company (ITC) Limited that started as a traditional tobacco and cigarette producer has grown into a premier and diversified Indian business giant dealing with hotels, agri-business, information technology and fast moving consumer goods (FMCGs). It is one of India’s foremost private sector companies with a market capitalization of about USD 4 billion and annual revenues of USD 2 billion. The company, with its philosophy of corporate social responsibility as well as dedication to the cause of nation building, created its International Business Division (IBD) in 1990, as an agri-trading company. To face the challenges of multinational corporations, ITC’s IBD decided to use information technology to create a competitive business resulting in USD 150 million business potential trading in varieties of commodities such as feed ingredients, food grains, coffee, black pepper, edible nuts, marine products, processed fruit, etc.
The social consciousness of the company led to the creation of e-choupals (meaning gathering places) in 2000, to serve as social gathering places for exchange of information and to also act as e-commerce hubs. Initially the e-choupals were engaged to re-engineer the procurement process for soya, tobacco, wheat, shrimp and other cropping systems in rural India. In course of time, it became an e-commerce platform with a low-cost fulfilment system focused on the needs of rural India by creating a highly profitable distribution and product design channel for the company. The system has become a catalyst in transforming rural life by helping to alleviate rural isolation, creating more transparency for farmers and improving their productivity and incomes.
The business model
Unlike pure trading models that do not require much capital investment, the e-choupal model required ITC to make high investments to create and maintain its own IT network in rural India and also to identify and train a local farmer to manage each e-choupal. A computer is located in the house of a farmer and Internet facility is provided through phone lines using a VSAT connection. It serves 600 farmers on an average within a radius of about 5 km. The cost of each e-choupal is between USD 3,000 and USD 6,000 for the set up and about USD 100 per year for its maintenance. It is cost-free to the farmers whereas for the host farmer called sanchalak, some operating costs are incurred. The sanchalak is obliged to serve the entire community by oath. He is paid commissions for all e-choupal transactions.
Benefits to partners
The benefits to the farmers are many.
Through the use of the computer the farmer gets information on various aspects like daily closing prices of commodities at local mandis, local price trends and new farming techniques either directly or through the sanchalak.
Farmers place orders for seeds and fertilizers besides consumer goods from ITC or its partners at prices lower than those available from the village traders, etc. All the products required by the villagers are ordered in bulk by the sanchalak.
Further, ITC directly purchases the crop from any farmer at the closing price of the previous day, enabling him to transport his crop to an ITC processing centre for electronic weighing and for assessing its quality. The payment is made to the farmer directly both for the crop and for its transport. If the quality of the crop is above normal, the farmer is benefited by what are called “bonus points” that are exchanged for ITC products. This is how the e-choupal system bypasses the government mandated trading mandis. The benefits that the farmer receives such as more accurate weighing, faster processing time, prompt payment for his crop, accessibility to a wide range of information like accurate market price knowledge and market trends enable him to decide when, where, and at what price to sell his products. Generally, the farmers selling directly to ITC through an e-choupal receive a higher price for their crops than what they get through the mandi system, the benefit being about 2.5 per cent higher (about USD 6 per tonne). The total benefits accrued by the farmers consist of lower prices for inputs and other goods, higher yields, and a sense of empowerment.
The other benefits the farmer receives include the e-choupal system acting as a channel for soil testing services and educational efforts to help farmers to improve crop quality. By partnering with banks, ITC offers farmers access to credit insurance and other services.
Benefits to ITC
The system benefits ITC because of lower net procurement costs and by its direct control over the quality of what it buys. It also provides the company direct access to the farmers, allows it to inform them about the conditions of the ground, helps it in improving, planning and building relationships and assists in building a secure supply of raw material.
The other benefits to ITC are the use of the e-choupal network and distribution channel for its products, including those of its partners and a source of innovation for new products. There is now demand from farmers to expand ITC services to additional crops such as onions and potatoes. This indicates that the farmers are becoming a source of product innovation for ITC.
When the farmers bring their produce for sale to the ITC processing centre, they can buy seeds, fertilizers and some consumer goods. When some products are aggregated for the whole village and ordered all at once by the sanchalak, the logistic costs for ITC are lowered.
The e-choupal model enhanced the image of ITC. It demonstrated that corporations such as ITC can play a major role in increasing the efficiency of an agricultural system, which in turn benefits farmers, the rural community and shareholders. Further, a corporation can provide and maintain a key role in the information technology that is used by local farmers for gaining transparency, increasing access to information and rural transformation.
Benefits to society
The e-choupal system provides farmers more control over their choices, higher profit margins on their crops and access to information to improve their productivity. The keynotes in the system are more transparent processes and empowerment of local people besides increasing trust and fairness. The increased efficiency and potential for improving crop quality together make Indian agriculture more competent.
However, as the result of introduction of the e-choupal, many players in a multi-system have suffered loss of revenue. They are commission agents, mandi labourers, bazaars near the mandi, some mandi operators and competing processes. The commission agents have lower incomes after the introduction of e-choupals in spite of ITC’s best efforts to compensate them for it. The mandi labourers engaged in the weighing and bagging produce have been severely impacted by the drop in volume. The revenue of the local bazaars that offer products to the farmers has fallen as they have been replaced by shops near ITC hubs. Some regional mandis lost taxes for their operations due to diversion of tax payment nearer to the procurement centre.
Spread and operations
Table 3.1 provides details of the coverage of the e-choupal. It is spread across 40,000 villages in Madhya Pradesh, Uttar Pradesh, Maharashtra, Karnataka, Andhra Pradesh, Rajasthan, Haryana and Uttarakhand. In these choupals, there are 6,000 sanchalaks and over 17,000 upa-sanchalaks. It has emerged as the gateway of an expanding spectrum of commodities leaving farms—wheat, rice, pulses, soya, maize, spices, coffee, aqua-products, etc. The reverse flow carries FMCGs, durables, automotives, banking and insurance. By 2012, ITC has planned to expand the project to 15 states in India reaching 100,000 villages.
Table 3.1 Spread of e-choupals
|No. of e-choupals||6,500|
|Farmers e-empowered||4 million|
Problems and solutions
The problems encountered while setting up and managing these e-choupals primarily arise due to infrastructural inadequacies, including power supply, telecom connectivity and bandwidth, apart from the challenge of imparting skills to first time Internet users in remote and inaccessible areas of rural India. Several alternative and innovative solutions—some of them expensive—are being deployed to overcome these challenges, for example, power back-up is being provided through batteries charged by solar panels, BSNL exchanges are being upgraded with RNS kits, VSAT equipment is being installed, mobile choupals are being set up, local caching of static content on Web sites is being provided to stream in the dynamic content more efficiently, 24Χ7 helpdesk is being set up, etc.
Choupal pradarshan khet
This path-breaking initiative brings the benefits of the best agricultural practices to small and marginal farmers. Backed by intensive research and knowledge, this initiative provides agri-extension services that are qualitatively superior and it involves pro-active handholding of farmers to ensure productivity gains. The services are customized to meet local conditions, ensure timely availability of farm inputs including insurance and credit. They also provide a cluster of farmer schools for capturing indigenous knowledge. This initiative that has covered over 70,000 hectares, has a multiplying impact and reaches out to over 1.6 million farmers. In 2006–2007, ITC’s unique paid choupal khet pradarshan farm extension service conducted over 15,000 field demonstrations in nine states.
The brand “choupal saagar” of e-choupal plans to establish shopping complexes that house a procurement centre, retail store, food court, farmer-facility centre and healthcare clinic. Positioned within tractorable distance from 30 e-choupal centres and their user communities, these malls are one-stop destinations for farmers (Box 3.5). ITC has so far launched 24 choupal saagar hubs in three states and has plans to open 700 such rural malls by 2012.
New role for traditional middlemen
As the company’s e-choupal initiative has squeezed out the middlemen or traders who have traditionally bought farmers’ produce at mandis, there is an attempt at the mall to “integrate the middleman”—by appointing them as samyojaks (co-ordinators). The middleman was earlier a principal to transactions. He used to buy from someone and sell to somebody else, and his profit was made out of blocking information and market signals about the price of the farmer’s produce. Even though farmers can now get that information at the e-choupal, these middlemen still play a very critical role.
S. Sivakumar explains, “The samyojak at the saagar is in charge of storage, transportation and other logistics and management of bridge financing. He pays first and later collects the money from us in the evening. While we have invested Rs 40 million in setting up the mall, he invests the working capital of about Rs 20 million.”8
Box 3.5 One-stop Destination for Farmers
S. Sivakumar, ITC’s Chief Executive, Agri-business, says Choupal Saagar has cost the company Rs 40 million. Every day it may get about 1,100 to 1,200 footfalls and in the week before Diwali, this number may go up to 1,600 to 1,800, with daily sales exceeding Rs 0.2 million.
Coupal saagar is, in real terms, an expansive area with a good variety of outlets and facilities to serve occupational and household needs of farmers. Farm output purchasing counters, a godown, a digital weighing machine, a diesel pump, a soil-testing laboratory and a sale point for fertilizers, pesticides and other agro-inputs are the primary facilities at choupal saagar.
An add on to all this is a shopping area with stalls selling daily-purchase convenience products such as soaps, detergents and toothpaste, occasional-purchase products such as watches, clothing and shoes, a range of consumer durables that include entertainment goods such as TVs and DVD players, domestic appliances such as pressure cookers, room heaters, sewing machines and grinders, and automobiles such as motorbikes and tractors. There is an entertainment area too, with video games and swings for kids to while away their time when their parents are on a purchasing spree. To make the place a one-stop centre, a doctor, a bank, an insurance company office and a training centre for farmers have also been made available on the premises. Good quality products, offered at discounted prices with attractive gifts, entice the consumers to become regular customers.
The farmer, accompanied by his family members, brings his produce in order to sell them. While he is busy with weighing and unloading at the godown, his kids enjoy the swings and video games and his wife shops for household items. Together, they enjoy lunch at the cafeteria and drive back home by evening. Before leaving, he buys fertilizers and pesticides and fills his tractor with diesel. The entire shopping experience is so much fun and so purposeful that consumers view it as an “unusual store.”
Source: Rasheeda Bhagat, “Ryot choice,” The Hindu Business Line, 26 November 2004, available at www.thehindubusinessline.com/life/2004/11/26/stories/2004112600290400.htm.
Health and education
The company has initiated projects to promote health and education.
- A pilot project in healthcare services has been launched to provide reliable and quality healthcare services to the remotest villages through leading corporate healthcare service providers.
- Delivery of quality education services to rural areas is another project of interest piloted by the system to provide physical and digital infrastructure for commodity sourcing and consumer retail services.
Colgate–Palmolive India Ltd (CPIL) is a 51 per cent subsidiary of Colgate–Palmolive Company (CPC), USA. CPC’s main business is manufacturing and marketing of oral-care products, toilet soap, and shaving products. With an employee strength of 1,130, CPIL has grown to a USD 230 million company with a wide distribution network in India.
Colgate employees worldwide share a commitment to the three core corporate values: caring, global teamwork and continuous improvement. These values are reflected not just in the quality of its products and its reputation, but also in its dedication to serve the communities in which it does business.
Colgate is a household name in India with one out of two consumers using Colgate toothpaste. Rural areas contribute to 35 per cent of Colgate’s sales. Colgate has maintained its leadership and emerged as India’s number 1 brand across all categories for eight out of nine years since 1992.
It is a provider of scientifically proven oral-care products with multiple benefits at various price points. The range includes toothpastes, toothpowder and toothbrushes under the “Colgate” brand, as well as a specialized range of dental therapies under the banner of Colgate Oral Pharmaceuticals. The company also provides a range of personal-care products under the “Palmolive” brand name.
Colgate has been ranked as India’s number 1 “most trusted brand” across all categories for four consecutive years from 2003–2007 by Brand Equity’s “most trusted brand” survey. It is the only brand to have been in the top three since the survey commenced in 2001. Prior to this, Colgate was also rated as the number 1 brand by the A&M—MODE Annual Survey for India’s top brands for eight out of nine years between 1992 and 2001.
Results of market research
In order to create new demand for oral-care products, CPIL has chosen to increase its reach in rural areas. A Colgate “usage and attitude”9 survey showed the following:
- More than 20 per cent of India’s population still does not use any kind of modern dentifrice.
- About 60 per cent of people surveyed have never visited a dentist.
- While urban consumers appreciate that teeth health depends on one’s brushing habits, a high proportion of rural consumers consider “being born with bad teeth” as the most important reason for dental problems.
- Over 90 per cent of the urban consumers use dentifrice products, over a third of rural consumers still use non-dentifrice products.
To increase the sales volume of the toothpaste and toothpowder segment, the following initiatives were craft ed:
- New product launches
- Significant hike in marketing expenditure
- Targeting schools to create oral awareness among children
- Sales promotion measures such as small volume low-priced sachets
- Distribution of free toothbrushes
- Rural van distribution and participation in local festivals.
With rapidly evolving consumer preferences, Colgate has been spearheading changes across different product categories through a series of product innovations. The company launched Cibaca Top and Colgate Herbal, two low-priced brands targeted at the semi-urban market. Colgate’s low-price offers have also helped to enhance usage levels. The shift in consumer preference from gel-based to white toothpastes has also worked in Colgate’s favour, since the company has traditionally been the market leader in this segment.
Pricing for price-sensitive consumers
Colgate resorted to keep its products priced lower than its arch-rival, Hindustan Unilever. As a result, Colgate Gel, Total, etc. are priced marginally lower than similar offerings from HUL. Colgate’s dominant position in toothpowder and lower-priced products has helped in increasing the company’s sales.
From a modest start in 1937 when hand-carts were used to distribute Colgate Dental Cream, Colgate-Palmolive India today has one of the widest distribution networks in India. It spans 2.7 million retail outlets across the country, of which the company services 800,000 outlets directly.
Educational campaigns and programmes: “bright smiles, bright futures”
The company has been delivering oral health education to children in rural and urban India in partnership with the Indian Dental Association (IDA). Colgate’s community outreach efforts have touched the lives of millions of children, providing the information, insight and inspiration they need for a healthy life and a healthy smile. Believing that the mouth is the gateway to good oral hygiene, Colgate with its initiatives like “bright smiles bright future” since 1976 and the “oral health month” since 2004, has left no stone unturned to contribute towards the oral health of the nation.
Sports and other events
Joining hands with NGOs, the company has been sponsoring events that encourage children of the less privileged sections of society.
- Colgate has been sponsoring the inter-Mumbai cricket tournament for the physically challenged, organized by Omkar Krida Mandal, an NGO.
- Colgate supported Network in Thane by People Living with HIV/AIDS (NTP+), an NGO. The con-tribution/pledges supported the education and nourishment of the children infected and affected by HIV/AIDS, thus allowing them to live a life of dignity.
- Colgate has been supporting the Madhu Mehta Foundation, an NGO in Mumbai that hosts a Diwali party for the less privileged children of the city of Mumbai, bringing them joy, cheer and happiness during the festive occasion.
Bright smiles, bright futures (1976)
Colgate–Palmolive, India, undertook a novel oral health educational programme captioned “Colgate Bright Smiles, Bright Futures.” It has the twin objectives of teaching children positive oral health habits of basic hygiene, diet and physical activity and encouraging dental professionals, public health officials, civic leaders and, most importantly, parents to play an active role in promoting a child’s overall physical and emotional development.
The programme involves dental professionals nominated by the Indian Dental Association who give instructions to children with the aid of audio-visuals and printed literature created by the company. Free samples of toothpaste and healthcare tips are distributed among the participants.
To make teachers active campaigners, teachers’ training is made an integral part of the School Dental Health Programme. Besides the on-site programmes, an online school curriculum featuring fun and entertaining activities was also launched. Till date, 235,000 teachers have been trained under the programme.10
Oral health month campaigns (2004)
Oral Health Month (OHM) is an oral health awareness campaign that establishes and promotes the importance of good oral-care habits. OHM was first initiated by Colgate in association with the Indian Dental Association (IDA) in 2004 as a six-city programme with 70 participating dentists. The theme for Oral Health Month, 2007 was, “Towards Zero Tooth Decay” and it focused on spreading awareness among the rural population about common oral health problems. It had outreach events like free dental check-ups and oral-care education in schools and villages. It covered 175 cities and towns across 19 states all over the country and included 250 rural and remote corners. The programme staged a unique “Brush Up Challenge” aimed at breaking the existing Guinness World Record for simultaneous brushing by people at multiple locations.
In 2007, in addition to the above, free dental check-ups through 500 ITC e-choupals were conducted in Uttar Pradesh, Madhya Pradesh and Maharashtra and toothpaste samples were given to children. The camps taught children the right way to brush, giving free dental health packs with tips and urged them to spread the message of good oral hygiene in their homes and communities. In its sixth year, it was organized for two months through September and October, 2009. It aimed at reaching over 1,000 towns and 40 cities with 15,000 dentists participating through free dental check-ups and awareness generating activities.
The importance of libraries in knowledge promotion has been well recognized by HUL. In partnership with “Pratham,” it has set up libraries for underprivileged children in economically backward areas in Mumbai. Children are encouraged to imbibe the habit of reading and exploring new avenues of knowledge.
Summer is the time for relaxation and recreation for children. Colgate has brightened the lives of children between 6 and 16 years of age by sponsoring Summer Camps at Dominic Savio since 1981. Not only students of the school but also children from the nearby hutments are also given an opportunity to take part in them. Creative workshops are conducted at the camp. Children who have benefited from this camp often come back as grown-ups to volunteer.
Hindustan Latex Ltd (HLL) is a public-sector unit set up by the Government under the Ministry of Health and Family Welfare in 1966. Today, it has five manufacturing units located across the country with state-of-the-art facilities. In 2009, it was rechristened HLL Lifecare Ltd.11
HLL Lifecare Ltd is confident of meeting future challenges to provide products and services to people worldwide, particularly in rural and underserved areas of the nation.
In the global contraceptive market, the company has emerged as a leader with a market share of nearly 10 per cent. In India, it has a market share of over 18 per cent and its target turnover by 2010 is Rs 10 billion. HLL is actively associated with public health programmes of international agencies, the Union Government’s National Rural Health Mission, Reproductive and Child Health Project and National Aids Control Programme.
Through diversification from contraceptives to family health care, with a focus on women-driven lifecycle products, and an expansion of manufacturing capacity made recently, a 50 per cent increase in turnover was achieved in the last year. The company’s logo was changed to reflect the changes in its operations and focus. The move is from “innovating for generations” to reaching the “bottom of the pyramid in villages.”
The company focused on innovation, value addition and development of new products to beat competition. New products such as the spiral condom, the phosphorescent glow condom and the “Moods get closer pack” had all turned out to be hits in the market. It has recently launched the “confidom female condom,” a female-controlled HIV/pregnancy prevention device. Two new products—a “vibrating ring condom” and a “three-in-one (dotted, ribbed and foam-fitted) condom” are due to be launched soon. In the healthcare segment, it recently introduced a reuse-prevention syringe under the brand name “Bsure.” It had earlier come out with an “auto destructive syringe” called “Autolok” for the National Immunization Programme.
According to the managing director, the company is now into the diversification mode and would shortly come out with vaccines. It will launch a Hepatitis B vaccine and typhoid vaccine. The company tied up with Acumen Fund, a New York-based philanthropic venture fund to set up a network of “Lifespring Hospitals” with 25–30 bed capacity throughout India to help address the dearth of low-income maternal and child healthcare services. HLL will set up hospitals in 500 villages by 2010. The first such hospital was set up in Maula Ali, Hyderabad.12
In Chennai, in a 500-acre facility near NH-7, Hindustan Latex is coming out with the country’s first medical park according to the PPP model in the organized sector. About 30–35 medical equipment manufacturing units, including MNCs will be located and Hindustan Latex with its Rs 1 billion vaccine will be the anchor-customer.13
The company has focused on social marketing as a thrust area to ensure that quality contraceptives are available to the people at an affordable price. Exports and direct marketing operations have been profitable to the company. However, the company realized the need for family planning and healthcare programmes aimed at the poor and disadvantaged sections of the society and ventured into social sector projects aimed at bringing about planned social change. Hindustan Latex Family Planning Promotion Trust (HLFPPT), a non-profit organization was promoted by HLL to meet this end.
Since its establishment in 1992, HLFPPT has been undertaking the conceptualization and implementation of various social sector projects. The Trust’s area of operations extends to the various states of India. Although the Trust was established for promoting the agenda of family planning, its activities have now been broad-based to focus on reproductive and sexual health. Some of the initiatives undertaken by HLL are discussed here.
Mobile health clinic project
A concentrated village-based mobile medical van promotion and distribution programme was proposed to overcome the difficulty in physical distribution of healthcare services and other methods of contraception. This proposal was developed to operationalize a mobile Primary Healthcare Model in the van and to link it to the network of static referral centres at district/town level.
Merrygold health network
HLFPPT has launched Merrygold Health Network in the state of Uttar Pradesh as a social franchising initiative through State Innovations in Family Planning Services Project Agency (SIFPSA) in partnership with USAID, Government of India and the State Government of UP. The trust has committed to establish 70 level 1 franchisees (Merrygold) at district levels as the hubs connected to the next two levels. Level 2 comprises fractional franchisees (Merrysilver) established at subdivision and block level. Level 3 (MerryAYUSH) comprises providers like ANMs, ASHA and AYUSH and acts as the first point of contact with the community and also as the referral support to Merrysilver and Merrygold hospitals. Emphasis is on affordable pricing, quality assurance, customer servicing and efficient service delivery through standardized operating protocols. IT-enabled Hospital Management Information System (HMIS) is also being established. A team of public health and clinical professionals facilitate capacity building and quality assurance. An integrated health insurance policy for the coverage of risk during maternity has been introduced. A branded pharmacy and chain of diagnostic facilities are also being strategized.
Community care centres
Community care centres were conceived to bridge the gap between the community and the hospital in providing health care to HIV patients and to mitigate the impact of HIV on children and women-headed households. HLFPPT is planning to set up 24 such centres in Madhya Pradesh, Uttar Pradesh and Rajasthan drawing support from PACT (Promoting Access to Care and Treatment) and Population Foundation of India (PFI).14
Social marketing projects
The highlights of some of the projects are provided here.
Swasthya gram pariyojana
Location: Nearly 2,950 villages of Gwalior, Bhind, Morena, Datia and Shivpuri districts of Madhya Pradesh are covered under this.
Collaboration: The funding from the government for a period of 3 years is Rs 270 million. It was implemented by HLFPPT for the Ministry of Health and Family Welfare (MOHFW), Government of India.
Promotion of CSM brands of contraceptives, ORS and sanitary napkins.
“Reduction of Total Fertility Rate (TFR)” and “advancement of family health” in rural areas.
Lack of access, affordability and lack of motivation.
Through unemployed, educated and mobile rural youth.
A comprehensive local media-based Information Education and Communication (IEC) programme.
Achievements: In the project area, the usage of condoms has gone up by 34 per cent and that of oral contraceptive pills by 18 per cent.15
Community-based distribution of contraceptives project
Location: Select districts of the socio-economically backward states of Bihar, Orissa and Jharkhand.
Collaboration: Sponsored by MOHFW, Government of India.
Development objectives: To promote the usage of spacing methods, right age of marriage and male responsibility for family welfare among the eligible couples in rural areas.
Sales objectives: To promote and distribute Oral Rehydration Salts (ORS) among children to prevent diarroheal disorders and sanitary napkins to address reproductive hygiene among women.
Distribution: Convergence with existing health service delivery channels. Product distribution through a network of community service providers and aanganwadi workers.
Promotion: Promotion elements include the following:
- Information, education and communication
- Brand promotion
- Advocacy with the help of village-based institutions, community representatives, government agencies, etc.
Location: Rural areas of Andhra Pradesh for a duration of 3 years starting from October 2000.
Collaboration: Sponsored by MOHFW and the Government of Andhra Pradesh. Funding of more than Rs 44.8 million from the European commission.
Sales objectives: Selling condoms, oral contraceptive pills, iron and folic acid tablets (for pregnant women) and ORS. Product planning through consumer research.
Development objectives: To reduce the total fertility rate in Andhra Pradesh, child mortality due to diarrhoea by promotion of ORS, reduce the incidence of nutritional anaemia and reduce the incidence of sexually transmitted diseases such as AIDS through the promotion of condom use.
Distribution and promotion:
- Linkages with community-based distribution networks of NGOs, cooperatives, SHGs and women’s groups and linkages with government departments such as DRDA, Panchayats, etc.
- Enhance capability of graduate medical practitioners to provide family planning services like IUD insertion.
- Enhance the capabilities of non-medical healthcare providers to provide counselling and referral services for IUDs.16
Sukhi sansar project
HLFPPT undertook the project in rural Uttar Pradesh to create awareness about the use of condoms and oral contraceptive pills (OCPs). During 1997–1999, it implemented the Chota Sansar project in villages that had a population of less than 20,000. During 2000–2003 it took up the Sukhi Sansar Project 1 in villages with population up to 1,000 persons and distributed condoms and OCPs through non-traditional rural outlets. During 2003–2006, the second phase of the Sukhi Sansar Project was rolled out. At this time the direct distribution system of condoms was strengthened and about 25,000 villages were served on a regular basis.
HLFPPT has initiated social projects in other states too. To make promotion programmes more effective, it has developed a network of RMPs. The networks are named “Tarang Network” and the members are called “Tarang Partners.” RMPs, in the absence of MBBS doctors, make good substitutes for treatment and healthcare counselling purposes.
In Bihar, 6,000 villages in 11 districts of the state are covered through a distribution network of 8,000 outlets, 6,400 retailers and 28 stockists. About two area managers, 25 field sales officers and 12 promotion staff played an active role in supporting the promotion and sales. Around 5.8 million condoms and 0.15 million OCPs were marketed.
Similar results were obtained in Jharkhand. Around 5,000 villages in 11 districts were reached through 6,000 outlets, 8,000 retailers and 22 stockists. They were supported by three area managers, 22 field sales officers and 15 promotion staff. The sale of condoms and OCPs were 5.5 million and 0.12 million, respectively.
In Orissa, the project has started off and so far covered three districts and 1,200 villages. About 1,500 outlets have been activated and 600 retailers have been roped in to sell condoms and OCPs. HLL has appointed two area managers, three field sales officers and six promotion staff to carry the project forward. The resulting sales are commendable. About 5.6 million condoms and 0.08 million OCPs were sold.17
Companies aiming at selling in rural areas have to go one step beyond normal transactional marketing. The marketing mix should be tested in terms of the 4 A’s. Acceptable products, affordable prices, accessible purchase points, and awareness-creating promotions are essential. The development of products within an affordable range requires small packs at low price points. The development of products for acceptance may sometimes require overcoming barriers such as water or power scarcity. A shining example is HUL’s detergent that requires less water than other detergents. Promotion should aim not only at creating awareness but also at seeking to develop, transform, and involve rural consumers to secure sustainable sales. Designing wider distribution networks and training channel members to reach the consumer are other vital points in creating accessibility to consumers.
With the mission of adding vitality to life, HUL has developed a product mix that is represented by 35 key brands. The company has marketed them in urban and rural areas through 2,500 redistribution stockists and 6.3 million retail outlets. To woo both the urban and rural markets, HUL has taken the route of CSR and cause branding. Projects that enhance agricultural productivity, water conservation and health care are significant social responsibility initiatives. Lifebuoy Swasthya Chetna, Fair & Lovely Foundation and Surf Excel water conservation are the important cause-branding programmes. Rural marketing is facilitated by the rural division, training of rural salesmen and projects like Operation HARVEST, Project Bharat, Project Streamline, I-Shakti and Project Shakti.
CFCL, an agri-input marketer, has wide geographic markets. For effective reach, it has a wide network of distributors, dealers, regional offices and sales personnel. It has about 20,000 village outlets. To promote sales, it has started the Uttam Bandhan programme based on the PPP model. Unemployed youth are trained as extension workers. They interact with workers and provide services like soil and water testing, farm education, and alternate sources of employment. A Web site (uttamkrishi.com), a telephone helpline (Hello Uttam), mailers and audio-visuals are employed to promote awareness and interest in products.
ITC, a company with a diversified product portfolio, has decided to use information technology to create a competitive business. The social consciousness of the company led to the creation of e-choupals (meaning gathering places) for selling products. In course of time it became an e-commerce platform. A choupal serves about 6,000 farmers within a radius of 5 km. Sanchalaks (mostly middlemen at mandis, who can make investments) and upa-sanchalaks provide services required for entire farming operations and sales. It is a place where farmers can sell their produce and buy required goods and services. Now 40,000 villages are covered by e-choupals. Choupal saagars—large shopping complexes containing a procurement centre, retail store, food court, farmer-facility centre and healthcare clinic have been started. About 24 such malls are presently operating. Besides these, there are projects to promote health and education.
CPIL is committed to three core corporate values: caring, global teamwork and continuous improvement. It is a provider of scientifically proven oral-care products with multiple benefits at various price points. Rural areas contribute to 35 per cent of Colgate’s sales. Colgate has been ranked as India’s number 1 “Most Trusted Brand” across all categories. Having found that rural people do not use oral-care products, the company developed a strategy that involves initiatives such as new product launches, hike in marketingexpenditure and targeting schools to create oral awareness among children. It has taken up sales promotion measures such as selling small-volume, low-priced sachets, distribution of free toothbrushes, rural van distribution and participation in local festivals.
Colgate-Palmolive has set up one of the widest distribution networks in India. It spans 2.7 million retail outlets across the country, of which the company services 800,000 outlets directly. The educational programmes include campaigns like “Bright Smiles, Bright Futures” and “Oral Health Month,” summer camps and libraries.
Hindustan Latex Limited, now christened as HLL Lifecare, is a global giant in the contraceptives market with a market share of nearly 10 per cent worldwide (18 per cent in India). It is committed to innovation and reaching the bottom-of-the-pyramid population in villages. It has rolled out several new products and diversified into manufacturing vaccines and setting up Lifespring hospitals. Hindustan Latex Family Planning Promotion Trust (HLFPPT), a non-profit organization, was promoted to work for the poor and disadvantaged sections of the society. HLFPPT has implemented several social sector projects that aim at bringing about planned social change in family planning and health care. Some of the initiatives of HLL are: mobile health clinic, Merrygold health network, Health Management Information Systems (HMIS), community care centres, and social marketing projects (Swasthya Gram Pariyojana, community-based distribution of contraceptives, Sukha Parivaram and Sukhi Sansar). These initiatives are based on the PPP model.
- Name the cause-branding initiatives of HUL.
- Is Project Shakti a viable and capable model for to this? selling in rural areas?
- Evaluate the effectiveness of Uttam Bandhan as a sales promotional mechanism of CFCL.
- What are the significant benefits of e-choupals to the farmers? What will be the reaction of middlemen who lose their business due to this?
- Is Colgate right in targeting children?
- The task of HLL is removing stigma and ignorance. Hence, it needs a more person-to-person-based education strategy. Do you agree?
- The Project Shakti model is expensive and difficult to manage. Instead, companies do well by relying on the transactional model of distribution. Malhotra (Linterland) supports this view by saying, “While Project Shakti might have worked for HUL, it is not an established channel. Reasons like relatively high capital investment, gender roles, and taboos could present an upper limit to those sales numbers. I think a hub-and-spoke model of distribution is the future.” Discuss.
- As Adi Godrej, chairman of the Godrej Group, says, “The challenge [for brands] is to understand the [psyche] of the rural consumer, create better distribution, and [appreciate] the heterogeneity.” Discuss the validity of this view by referring to the initiatives of HUL, CFCL and Colgate.
- Explain the cause-branding initiatives of HUL.
- Explain the significance of “Uttam Bandhan” in the marketing strategy of Chambal Fertilisers.
- ITC’s e-choupal signifies how information technology advantage can benefit rural consumers. Explain this business model and its benefits.
- Colgate has taken the route of educating children and adults. Evaluate the initiatives taken up by Colgate and suggest innovative initiatives.
- HLL has balanced its social and economic goals in a judicious way. Do you agree? Support your answer with a discussion on the rationale of its projects.
- Develop a framework of rural marketing based on the experiences of HUL, ITC, CFCL, Colgate and HLL.
- Develop a paper on Coca-Cola’s Parivartan programme and present it in the classroom.
- Compile information on Tata Tea’s “Gaon Chalo” programme and examine its applicability to other competitive firms.
Form a research team of four members. Develop a questionnaire to collect data from FMCGs and agri-input companies on their initiatives to develop, transform, and involve rural consumers to secure sustainable sales. Conduct a survey and report the findings to the class.
Case 3.1 Biostadt’s Big Leap
Biostadt India Ltd believes that “the growth of India is directly related to the growth of the rural areas.” Farmers being the central focus of rural India, it becomes necessary to give them a helping hand by providing them with top-of-the-line agricultural inputs and services. The mission statement provides action guidelines in clear terms.
The belief that India’s growth is directly related to the growth of rural areas has been the driving force behind the proactive functioning of Biostadt India Ltd. Recognizing the strategic importance of the farming community to the development of the nation, Biostadt has developed its mission, vision and operational systems to serve the cause of agriculture.
Mission and Logo
Biostadt’s focus is on the needs of the farmer and it is committed to offer topline agricultural inputs and services to the farming community with care and responsibility, in India and beyond. It seeks to pursue research to evolve innovative, customized biological tools for sustained productivity and sup-ply to develop high-quality seeds, novel crop protection and aquaculture inputs. It seeks to form alliances with business associates to provide one-stop solutions for crop, animal and health care.
Biostadt’s corporate logo depicts three birds signifying the company’s main goals—speed, growth and team work.
Growth and Products
Biostadt India has been serving the farming community for over two decades. The growth in the business in a span of just 15 years (from Rs 40 million in 1994 to Rs 2 billion in 2008) is encouraging. It is expecting to touch Rs 5 billion by 2012. Its product range includes insecticides, herbicides, fungicides, hybrid seeds, aqua products and farm services. Biostadt offers an extensive range of high-quality products consisting of insecticides, fungicides, hybrid seeds, aqua products and farm services. Biostadt has ventured into many business areas such as biotechnology inputs, crop protection chemicals, hybrid seeds, Biostadt HI-Q seeds, aquaculture inputs and farmer service centres.
The market for agricultural products in India was highly competitive. Biostadt was competing with Market Competition The market for agricultural products in India was highly competitive. Biostadt was competing with rivals such as Dupont and UPL, who were well established in the market.
Biostadt Aastha Clinic (BAC) is a commercially viable rural departmental and service mega store initiated by Biostadt India Ltd. These clinics are opened in partnership with young and dynamic rural entrepreneurs who act as the franchisee for the clinic. A detailed study of the problems faced by the farmers revealed a crying need for initiatives in the fields of health care (human and animal) and farm care. In light of this, BAC was started with the aim of working for the welfare of the farming community by providing professional services for farm care, human health care and animal health care along with all necessary inputs and technology. BAC will provide overall facilities and thereby facilitate better productivity in terms of farm yields, which means prosperity for the farm community.
Loyalty clubs are formed with the objective of developing a closer relationship with valuable customers. Biostadt endeavours to regularly keep the members informed about the new happenings in the field of agriculture and aquaculture across the globe. Suggestions to improve the company’s products and services are also invited. Members are provided a unique membership card to receive special benefits/privileges.
Biostadt Retailer’s Club
Biostadt Retailer’s Club (BRC) is a unique concept designed for Biostadt’s business partners, for a holistic growth. It’s a platform to relish the company’s objectives of speed, teamwork and growth. It provides a win–win situation to steadfast customers to grow and show their loyalty to Biostadt. As a part of this loyalty programme, each one’s endeavour is recognized and rewarded. BRC provides a platform to dealer/retailer friends to interact directly with company personnel.
Tie-ups for Sales
Biostadt has tied-up with petrol pumps such as Hindustan Petroleum (HP), Bharat Petroleum (BP), and Indian Oil Company (IOC) to sell its products in rural areas. The initiative brought multiple advantages to the company for creating awareness, sales and customer feedback.
Biostadt organizes farmer meetings and dealer meetings in villages. The meetings educate both parties about latest innovations, technologies and methods of improvement. The farmers are also encouraged to ask questions on the use of products or technologies. The company has appointed a field force of 150 trained people for the same. These people are graduates in agriculture and capable of handling queries.
Video on Wheels
Besides educating farmers, Biostadt brought in the element of entertainment to attract more people. It started playing commercial movies in the villages. The whole idea was called the “video on wheels campaign.” Not only the farmers but the whole family was invited to watch the movie. The company also played movies regarding the usage of products and the benefits of using them correctly.
Biostadt gives live demonstrations of its products by using them on crops to convince farmers as well as to show them the right methods of usage. This is an effective method for advertising and promoting their products.
Biostadt also took another innovative initiative in the form of the “Biostadt aqua mall.” The first aqua mall was opened in Andhra Pradesh. It was a branded concept and acted as an exclusive hub for the farmers to not only buy all the aqua products of the company under one roof but also to access “complete farming solutions.”
In the light of the mission of the company, do you think it has taken right and adequate initiatives to promote its products?
Outline your action plan to help the company increase its turnover from Rs 2 billion in 2008 to Rs 5 billion by 2012.
Source: www.biostadt.net, accessed March 2010.
Case 3.2 Godrej Focuses on Rural Markets
Godrej Consumer Products Limited (GCPL) is a major player in the Indian FMCG market with presence in personal, hair, household and fabric care categories. It has reported sales of Rs 4.39 billion and a net profit of Rs 0.7 billion in the quarter that ended on 30 June 2009.
Goals and Targets
The company says that it is focused on growth. It estimates that it will have its best year ever in 2009–2010. The growth in the first half of the year will be in terms of price as well as volume. In the second half of 2009–2010, the growth will be largely led by volumes. Currently, revenues from rural India account for 25 per cent of overall revenues and this will increase in the coming years as rural markets are growing at a higher pace than urban markets. In 2001, the rural–urban sales ratio for GCPL was 23:76. At present, rural business accounts for about 38 per cent of GCPL’s revenues. Total sales from the rural market is 50 per cent in case of HUL and 60 per cent in the case of Nirma. The company has set itself a target of raising this to 50 to 55 per cent of revenues over the next three years.
The company has renewed its emphasis on rural retailing with the formation of the FMCG cell. Hoshedar K. Press, vice-chairman of Godrej Consumer Products (GCPL), says that historically, the company had primarily been an urban Indian brand. “Post the creation of the FMCG cell, we expect to provide an increased thrust to our rural business. Our objective is to first take the share of rural business to the industry average of around 45 per cent and then, raise it to the predominant share of our revenues,” said Press. Widening and deepening penetration in rural areas and small towns and expansion of the portfolio of lower-priced stock keeping units have been identified as the two prongs of its growth strategy.
As part of its strategy to push up revenues, the company plans to introduce a mix of new products and variants of existing brands in the soap and hair colour category. Its soap brands: Cinthol, Godrej FairGlow and Godrej No. 1 contribute to 65 per cent of GCPL’s total sales. GCPL enjoys a market share of 32.6 per cent in the hair colour category. The product category represents 21 per cent of GCPL’s total sales. Its hair colour brands include Kesh Kala, Renew, ColourSoft and it also has the mehendi brand Nupur. The company’s rural share in hair colour is higher than the urban share. The case of soaps is exactly the opposite. Action is necessary to boost the sales of soaps in rural areas.
GCPL plans to strengthen its rural foothold by strengthening its rural distribution network. “We are planning to double our presence in 8,000 small towns in the next couple of years. We are also looking at increasing our footprint in 50,000 villages compared to the 15,000 villages we are now present in,” Dalip Sehgal, MD, GCPL said.
The company is experimenting with a super stockist distribution system in certain rural markets. Joint rural initiatives among group companies have also been kicked off to leverage each others’ strengths. For instance, Godrej Agrovet and GCPL are jointly under-taking certain rural activities to explore the growth potential in rural areas. Godrej Agrovet is into the animal feeds business. In 2008–2009, Godrej increased its reach by 200,000 outlets. The company claims that a Godrej product can now be found in 3 million out-lets across the length and breadth of the country.
GCPL has launched a variants strategy where it has increased its focus on low-unit packs especially at the Rs 5 and Rs 10 price points. The company has also seen the market and demand for these segments expand rapidly.
The Godrej group plans to increase its rural reach using regional media, rural haats, ads on walls and participation in rural fairs, among other initiatives. GCPL is also planning to spend 35 per cent more in advertising and promotions compared to last year. This amounts to around 9 to 10 per cent of the company’s total sales. A large part of its focus is going to be brand building.
The company is working on tapping salons across the country to promote its brands, especially in smaller towns and rural areas. It has plans to rope in up to 50,000 salons and barber shops in semi-urban and rural areas across the country to promote its hair care brands such as Nupur mehendi and Expert hair colour. These barber shops and salons would showcase the entire range of hair colour and other products and serve as a point for promoting them. The company will place combipacks of products such as shaving creams, talcum powders, soaps and hair colours in these salons.
Analyse the situation and goals of GCPL. Are the marketing goals realistic?
Evaluate the steps taken by GCPL to reach the targets and suggest improvements.
Source: Priyanka Dasgupta Brahma and Yassir A. Pitalwalla, “Godrej Plans to Increase Revenue From Rural Market,” 3 August 2009, available at www.mydigitalfc.com/companies/godrej-plans-increase-revenue-rural-mkt-835; Kakoly Chatterjee, “Godrej to Beef up Rural Distribution,” The Financial Express, 1 September 2009, available at www.financialexpress.com/news/Godrej-to-beef-up-rural-distribution/509605/.