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Transformative Marketingin Selling to Low Income Consumers

e oupa xper ence

8th Global Marketing Dynamics Conference

Jaipur, 25th

July 2011S. Sivakumar

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Some Successful Strategies

in Selling to Low Income Consumers

Shared Access. No need to Own

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 actuall do somethin about

increasing their incomes?

S. Sivakumar

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That takes us to the Next Question

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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 riskThey absorb new technologies & innovate

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Then why are their incomes low?

Given who they are, where they live, andwhat 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

Heterogeneity

They live in hinterlands (600,000 villages)

Access to real time information difficult

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

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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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e oupaThe 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

Sanchalak

Digital Infrastructure Walking Distance

SamyojakPhysical Infrastructure Tractorable Distance

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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?

Cost competitive sourcing of agri commodities

Lower Costs

Value added products & brands

Rural markets access fee from other companies

Platform Business Opportunity

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Thank you

S. Sivakumar