|
Christabelle Noronha
The next big frontier is opening up and
the rush to woo rural customers has begun, says Prasad
Menon, MD, Tata Chemicals
Well-informed,
discerning and aware of their rights, today's customers
are a force companies can ignore only at their own peril.
Products and services must meet the specific needs of
urban and rural customers. As competition grows fiercer,
companies will be forced to scour the globe for new
customers and markets, and the Indian rural markets
will see more action than they have ever done in the
past.
There
are profound differences between urban and rural areas;
but there are also important, and striking, similarities.
Till recently most companies concentrated their attention
on the urban customer and ignored the rural populace
and those at the bottom of the pyramid. Now companies
are finding that there is substantial latent buying
power in the rural areas.
People
in rural areas are actually buying FMCG products, such
as shampoos and cosmetics, earlier considered the preserve
of urban consumers. Packaged in smaller sizes to suit
the purchasing power and buying habits of rural consumers,
branded products are beginning to feature as regulars
on rural shopping lists.
As
we move forward, we will need to look at how we can
make products that are high-quality as well as affordable
for this burgeoning market.
Technology as trouble-shooter
The big problem facing rural India today is connectivity
and infrastructure, especially for those living in remote
areas. Because of poor infrastructure (power, roads,
etc), companies face hurdles in catering to these consumers.
What do you do in such a scenario? Here lies a tremendous
opportunity, which can be addressed through effective
use of IT and telecommunications.
Look at the Western world, the
US for instance. Here, the revolution in telecommunications
has made it possible for people to live and often work
away from the big cities. IT connectivity through broadband
and mobile telephony can be enablers in assisting the
rural consumer to buy things via the internet.
Progress can be made in other
areas, such as education, healthcare and improving the
availability of credit facilities, through the effective
use of these technologies. If the production of energy
is decentralised and we use alternative forms of energy
such as bio-fuels and agri-mass based energy, the dependence
on power connectivity can be reduced.
If we have to reach out to the
rural customer of the future we will have to think of
ways to overcome the hurdles and this can be done by
creating a backbone through IT and telecom; technological
innovations can drive down costs and regional partnerships
can produce economies of scale. We can then help rural
consumers leapfrog a generation into what urban customers
are doing.
Overcoming socio-economic
hurdles
The fundamental challenge companies
face in rural areas involves distance and the cost associated
with overcoming that distance. One possible solution
is the use of interactive technologies, which overcome
the problems of distance.
The other challenge is related
to affordability and social factors. For example, rural
women are horribly disadvantaged; they grow up without
proper healthcare, education or even proper nutrition.
We can look upon these problems as opportunities by
seeking and finding ways of providing high-class education,
healthcare and nutrition.
Some companies are actively looking
at providing nutrition to women and children. They can
achieve more through networking and partnerships with
public as well as private sector organisations working
in these areas. We need to adopt both the for-profit
and non-profit approaches.
Sustainable success
Tata Chemicals is currently addressing a small part
of the rural population by reaching out to farmers.
Our approach has so far been limited to providing all
the inputs that farmers need, including a host of agricultural
inputs, and with others to provide finance and implements.
We are engaged in working with
farmers in some areas to facilitate marketing of their
produce, which is a big problem for them. If you look
at their hierarchy of needs, their biggest problem is
where to find markets and fair prices. Today there is
no transparency in price discovery because of various
hindrances, which the government has begun to remove.
We are also looking at offering
some low-cost Tata products to rural customers through
our Tata Kisan Sansars (TKS) — we are running pilots,
with Titan for selling their low-cost watches and with
Tata Indicom and Tata BP Solar for telephone and energy
services. A plan is being explored with Indian Oil to
provide packaged kerosene to rural customers.
Biofuels is another area we are
considering — with a hub and spoke model where
we get farmers to grow certain crops and give them a
good return, use a part of the crops to generate fuel
for that area and sell the rest outside. It's important
to assure a certain amount of energy security.
The other thing I'm convinced
about is that through the TKS we can provide good quality
primary education. Through the scheme we are developing
an IT backbone, and if we can work with Tata Indicom,
there is an opportunity there as well.
Before we talk of progress in
the rural areas, we need to connect the Indian farmer
to the national market. Farmers often do not know the
prices of farm produce in the next village, just a few
kilometres away. They just go to the mandi (market)
and sell their produce to a middleman who determines
the price. One of the things organisations like e-Chaupal
and TKS do is to make farmers aware of prevailing prices
in the country. Each of our initiatives, such as TKS,
which is social-service oriented in the beginning, will
become self-sustaining and a business opportunity for
us. I don't think you can divorce a commercial opportunity
from the social needs of a community — the two
need to work in tandem.
If we can improve the quality
of life of farm families, by providing products and
services at affordable rates, they will be willing to
pay. They may not be able to pay much; and that's where
the challenge lies, which can be addressed by technological
innovations. A start has been made.
New vistas
The future looks very bright for our rural economy.
The imminent boom in retail will boost demand for both
fresh and processed foods. We will see a complete backward
integration, which will bring in transportation, cold
chains and other companies investing in increasing the
productivity of the farmer.
This will ensure that 90
per cent of the produce is stored properly and hence
goes directly into retail. The difference between the
price the consumer pays and what the farmer gets will
be reduced and this will improve farmers' profit margins.
Consumers will be prepared to pay more for better quality
produce. This will result in better products being grown
for the market; the seeds, and pre-cultivation and cultivation
practices will improve.
In the final analysis,
all this will improve the lives of the rural poor. And
as India increasingly moves towards a service-oriented
economy, rural India will take off too.
Related articles:
Uploaded on August 28, 2006
|
