Transformative Marketing in Selling to Low Income Consumers

ITC eChoupal Experience

8th Global Marketing Dynamics Conference Jaipur, 25th July 2011

S. Sivakumar

Some Successful Strategies in Selling to Low Income Consumers

Shared Access. No need to Own Single Serve Pack Buy Now. Pay Later Feature Stripped Products
All of these target a larger share of the small wallet
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The Transformative Question

Can we actually do something about increasing their incomes?

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That takes us to the Next Question

Why are their incomes low?

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Arent they entrepreneurial enough?

Of course, they are! (eg. Small farmers of India)
They do work quite hard They assume a lot of risk They absorb new technologies & innovate
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Then why are their incomes low?

Given who they are, where they live, and what their profile is their access to markets is constrained

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And, what are those constraints?

Fragmentation Most of them are small (average < 1.5 Ha) They do not have bargaining power

Dispersion

They live in hinterlands (600,000 villages) Access to real time information difficult

Heterogeneity

Each has a different circumstance Personalised solutions not available

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All of this is further compounded by weak infrastructure

Physical

Social

Institutional

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How do these manifest at a transaction level?

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Example 1
Farmers incur avoidable additional logistics costs

Example: Farm produce selling Video Price discovery at consolidation points after quality check

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Example 2
Lemons Problem on Quality front

Quality not objectively factored into pricing Flow of information & market signals blocked (intermediaries act as Principals)

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Example 3
Product identity lost along the supply chain

Indiscrete aggregation of product along the chain to maximise value at individual legs (intermediaries act as Principals)

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Example 4
Low farm productivity

Agri extension is delivered as a last mile solution Lack of timely availability of production inputs (information, knowledge, credit, farm inputs, insurance)

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eChoupal
The new solution, factoring all these challenges in

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The ITC eChoupal Solution 1

Quality factored price discovery in the village

Video 1 Video 2

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The ITC eChoupal Solution - 2

Bypasses traditional intermediaries in info flow

Yet, leverages their capability in flow of goods & cash

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The ITC eChoupal Solution - 3

Product identity preserved through the chain

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The ITC eChoupal Solution - 4

First mile solutions for crop management

Combined with access to farm inputs

Video
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ITC eChoupal Delivery System

ITC Virtual Collaboration Meta Market

Samyojak Physical Infrastructure Tractorable Distance

Sanchalak Digital Infrastructure

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Walking Distance

Impact of ITC eChoupal

Farmers got empowered with more choices

Mandis reformed to stay competitive

More private sector players entered agribusiness

Higher farm incomes through productivity & prices

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Whats in it for ITC?

Lower Costs Cost competitive sourcing of agri commodities Identity preserved quality Value added products & brands Platform Business Opportunity Rural markets access fee from other companies
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Thank you

S. Sivakumar