“Don’t predict the future create it”
Markets in the third world nations, with their traditional perceptions have grown up over the years, not only in terms of income, but also in terms of thinking. Innovation was never referred important by companies of these nations because they used to dump whatever was outdated in the western nations to their own nations; advertise it and sell it. Practicing marketing as a concept started quite late in the third world nations, but since then the companies have realized the importance of marketing and generating demand rather than pushing the product into the markets. Here innovation steps in.
Invention is creating new things, whereas on the contrary innovation is improving existing things in order to suit the particular cause; it is basically tailoring the processes and things according to the demand. Innovation hence is a constant process. Innovation can be applied anywhere wherever demand is.
Still innovation for these countries is a new phenomenon, when it comes to innovation companies practice in the markets and products which are luxury, for the niche and are expensive rather than on the mass products. Although, according to a survey conducted by Mckinsey in 2009, rural India with a population of 645 million (approximately) would become bigger than total consumer market in countries such as South Korea or Canada in another 20 years and it will grow at least four times from its existing size. The rural markets are growing at about two time faster pace than urban markets, not surprisingly, rural India accounts for 60 per cent of the total national demand. The major question here is whether it will be advisable to focus on innovation for the mass?
Rural markets in the third world nations like India have started attracting attention of maximum number of marketers recently but still the approach, understanding and interpretation of rural markets is altogether different for different people, some still treat the rural markets as a dumping ground for the products which don’t work in the urban markets. Some think that not much of attention and innovation is needed for the rural markets and anything will hold good for them which is cheap. People need to understand that there is a lot of scope for innovations in the rural markets and products need to be designed for the rural markets especially.
There are a lot of myths relating to the rural markets, some major ones have been classified as under:
Myth 1- Rural market is a homogeneous mass
Myth 2- Disposable income in rural areas is low
Myth 3- Individuals decide about purchase
Myth 4- Rural people do not buy brands
Myth 5- Rural India buys cheap products
Clarifications:
1. There are various tiers in rural markets like small traders, farmers, artisans etc.
2. If we study the per capita income of the middle class in India the urban population constitutes to 29.5 million INR whereas rural India constitutes to 27.4 million INR.
3. Decision making process in the rural markets in collective, influencers are generally out of the family and the purchase process is influencer, decider, and buyer, one who pays.
4. Branded FMCG rank for 80% sales in rural India
5. Rural consumer wants value for money; he does not like to pay for frills he cannot use.
Innovations for the rural markets-
Working on similar lines one can illustrate quite a few examples of the companies who have been successful to capture the rural markets in India with the help simple but innovative products. These products have proved to be a boon for the nation, people and the companies too by generating a massive source of revenue.
Indian Tobacco Company’s - e choupal
Traditionally, agricultural produce was procured in "mandis" (major agricultural marketing centres in rural areas of India), where the middleman used to make most of the profit. These middlemen used unscientific and sometimes outright unfair, means to judge the quality of the product to set the price. Difference in price for good quality and inferior quality was less, and hence there was no incentive for the farmers to invest and produce good quality output. ITC Limited has now established computers and Internet access in rural areas across several agricultural regions of the country, where the farmers can directly negotiate the sale of their produce with ITC Limited. The PCs and Internet access at these centers enable the farmers to obtain information on mandi prices, good farming practices and place orders for agricultural inputs like seeds and fertilizers. This helps farmers in improving the quality of produce, and also helps in realizing a better price. Each ITC Limited kiosk having an access to Internet is run by a sanchalak — a trained farmer.
Unilever (Hindustan)– shakti amma
This project proved to be a win-win situation for a giant like Unilever, in order to expand its operations in the rural market and to increase market penetration; it offered the unemployed Indian housewife a chance to become their direct retailers for small villages, Following the pioneering work carried out by Grameen Bank of Bangladesh , Self Help Groups (SHGs) of rural women were formed by several institutions, NGOs and government bodies in villages across India. Partnering with these SHGs, HLL started its Project Shakti. The social side of the Project Shakti is that it is aimed to create income-generating capabilities for underprivileged rural women, by providing a sustainable micro enterprise opportunity, and to improve rural living standards through health and hygiene awareness. Most SHG women viewed Project Shakti as a powerful business proposition and are keen participants in it. There after it was extended in other states with the total strength of over 40,000 Shakti Entrepreneurs.
Muhammad Yunus- Grameen Bank
The concept of micro finance was incorporated by Mr. Muhammad Yunus of Bangladesh. In 1976, during visits to the poorest households in the village of Jobra near Chittagong University, Yunus discovered that very small loans could make a disproportionate difference to a poor person. Jobra women who made bamboo furniture had to take out usurious loans for buying bamboo, to pay their profits to the
moneylenders. His first loan, consisting of USD 27.00 from his own pocket, was made to 42 women in the village, who made a net profit of BDT 0.50 (USD 0.02) each on the loan. Self help groups of usually 15 members contributed a small amount of money to a common pool and then offered a micro-credit to a member of the group to invest in a commonly approved economic activity. Thus, vastly improving Bangladesh's ability to export and import as it did in the past, resulting in a greater form of globalization and economic status.
The above mentioned are just a few examples, from the pool in order to illustrate that innovation can reap huge benefits for companies, one needs to innovate constantly, the only constant thing being change, one should always keep this in mind and keep improvising on the products, processes and practices.
Thanking you,
Shaurya Rao Nigam
Consultant, IKYA Human Capital Solutions
Munbai, India
Email- shauryarao@gmail.com
shauryarao@live.in
