Post on 06-Apr-2018
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ASIAN BUSINESS SCHOOL, NOIDA
The aim of this project report is to understand
RURAL MARKETING
SUBMITTED BY: - Nusrat Makroo
SUBMITTED TO: - Dr.Latika Sahni
THIS THESIS WAS COMPLETED IN PARTIAL FULFILLMENT OF M.B.A FROM
PUNJAB TECHNICAL UNIVERSITY
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CERTIFICATE
This is to certify that Ms. Nusrat Makroo is a bonafide student ofASIAN BUSINESS
SCHOOL, NOIDA and is presently pursuing a Master of Business Administration.
Under my guidance, she has submitted her project report titled on RURAL
MARKETING partial fulfillment of the requirement for the semester project during the
Master of Business Administration.
To the best of my knowledge, this report has not been previously submitted as part of
another degree or diploma of any another Business School or University.
___________________________
(Mrs. Latika Sahni)
Dean, Asian Business School
Noida
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ACKNOWLEDGEMENT
A work is never a work of an individual. I owe a sense of gratitude to the intelligence and
co- operation of those people who had been so easy to let me understand what I needed
from time to time for completion of this exclusive report.
I want to express my gratitude towards respectable dean, Mrs. Latika Sahni my project
guide, who was instrumental in providing me direction, constant encouragement and co-
operation in my attempt to take this project to its logical conclusion.
Last but not the least, I would like to forward my gratitude to teachers at Asian Business
School, who always endured me and stood by me and without whom I could not have
envisaged the completion of my project.
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EXECUTIVE SUMMARY
A debate continued for a long time amongst the Indian Marketers, both practitioners &
academicians, on the justification for the existence of the distinct discipline of rural
marketing. The approach toward rural markets needs to be distinct from the one adopted
for the urban markets. The rural market cannot be tapped successfully with an urban
marketing mindset & would definitely require its thorough understanding. In a large rural
economy like India's, rural marketing has emerged as an important and distinct internal
sub division within the marketing discipline.
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RURAL MARKETING
In recent years, rural markets of India have acquired significance, as the overall growth of the Indian
economy has resulted into substantial increase in the purchasing power of the rural communities. Rural
Marketing involves the process of developing, pricing, promoting, distributing rural specific products.
Rural marketing requires the understanding of the complexities. Indian agriculture industry has been
growing at a tremendous pace in the few decades. On account of green revolution, the rural areas are
consuming a large quantity ofindustrial and urban manufactured products. In this context, a special
marketing strategy, namely, rural marketing has emerged. But often, rural marketing is confused with
agricultural marketing the latter denotes marketing of produce of the rural areas to the urban
consumers or industrial consumers, whereas rural marketing involves delivering manufactured or
processed inputs or services to rural producers or consumers. In the context of rural marketing one has to
understand the manipulation of marketing mix has to be properly understood in terms of product usage.
The concept of rural marketing in India is often been found to form ambiguity in the
minds of people who think rural marketing is all about agricultural marketing. However,
rural marketing determines the carrying out of business activities bringing in the flow of
goods from urban sectors to the rural regions of the country as well as the marketing of
various products manufactured by the non-agricultural workers from rural to urban areas.
Thus, any strategy in rural marketing should be given due attention and importance by understanding the
product usage.
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EVOLUTION OF RURAL MARKETING
Phase I ( from Independence to Green Revolution):
Before the advent of the Green revolution, the nature of rural market was altogether
different. Rural marketing then referred to the marketing of rural products in rural &
urban products.
Phase II (Green Revolution to Pre-liberalization period):
During these times, due to the advent & spread of the Green Revolution, rural marketing
represented marketing of agriculture inputs in rural markets & marketing of rural produce
in urban areas.
Phase III (Post-liberalization period on 20th century):
The third phase of rural marketing started after the liberalization of the Indian economy.
In this period, rural marketing represented the emerging, distinct activity of attracting &
serving rural markets to fulfill the need & wants of rural households, peoples & their
occupations.
Phase IV (21st century):
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Learning from its rural marketing experiences after the independence, the corporate
world has finally realized the quick-fix solutions & piecemeal approaches will deliver
only limited results in the rural markets.
Nature of Rural Market
Rural market in India is large, and scattered into a number of regions.
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Major Income of Rural consumers is from Agriculture: Rural Prosperity is tied with
agriculture prosperity. In the event of a crop failure, the income of the rural masses is
directly affected. Standard of Living and rising disposable income of the rural customers:
It is known that majority of the rural population lives below poverty line and has low
literacy rate, low per capital income, societal backwardness, low savings, etc. But the
new tax structure, good monsoon, government regulation on pricing has created
disposable incomes.
Traditional Outlook: Villages develop slowly and have a traditional outlook. Change is
a continuous process but most rural people accept change gradually. This is gradually
changing due to literacy especially in the youth who have begun to change the outlook in
the villages.
Rising literacy levels: It is documented that approximately 45% of rural Indians are
literate. Hence awareness has increases and the farmers are well-informed about the
world around them. They are also educating themselves on the new technology around
them and aspiring for a better lifestyle.
Diverse socioeconomic background: Due to dispersion of geographical areas and
uneven land fertility, rural people have disparate socioeconomic background, which
ultimately affects the rural market. Infrastructure Facilities: The infrastructure facilities
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like cemented roads, warehouses, communication system, and financial facilities are
inadequate in rural areas. Hence physical distribution is a challenge to marketers who
have found innovative ways to market their products.Is rural marketing transactional or
developmental inits approach?It is true, rural markets have become an attractive
proposition for commercial businessorganizations
RURAL INDIA
The concept ofRural Marketing in India Economy has always played an influential
role in the lives of people. In India, leaving out a few metropolitan cities, all the districts
and industrial townships are connected with rural markets.
The rural market in India is not a separate entity in itself and it is highly influenced by the
sociological and behavioral factors operating in the country. The rural population in India
accounts for approx 74.3 percent of the total population.
The Registrars of Companies in different states chiefly manage: The rural market in
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India brings in bigger revenues in the country, as the rural regions comprise of the
maximum consumers in this country. The rural market in Indian economy generates
almost more than half of the country's income. The rural market in India is vast and
scattered and offers a plethora of opportunities in comparison to the urban sector. It
covers the maximum population and regions and thereby, the maximum number of
consumers.
The steps taken by the Government of India to initiate proper irrigation, infrastructural
developments, prevention of flood, grants for fertilizers, and various schemes to cut down
the poverty line have improved the condition of the rural masses.
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WHAT MAKES RURAL INDIA ATTRACTIVE?
1 Large population
2 Rising prosperity
3 Growth in consumption
4 Life cycle changes
5 Life cycle advantages
6 Market growth rate higher than urban
7 Rural marketing is not expensive
8 Remoteness is no longer a problem
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Rural Consumer
A detailed Profile Size of RCG Rural population about 73% of total population. Acc to
2001 census 74 crore population 12 crore households.
Socio-economic
Low purchasing power/per capita income
Bounded by tradition, culture, religion & community.
60% rural income from agriculture >50% have income < Rs. 25,000 About 14% have
income >50,000 .
70 % rural households have started saving their income. (service class, non-farmers like
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shop keepers)
Literacy level
Rural India has literacy rate of 28% compared with 55% of the whole country.
Literacy rate has increased from 20% to 28%.
Every year 8 million people get added to rural India's literate population
Classification of rural consumers
The rural consumers are classified into the following groups based on their economic
status:
The Affluent Group: They are cash rich farmers and a very few in number. They have
affordability but not form a demand base large enough for marketing firms to depend on.
Wheat farmers in Punjab and rice merchants of Andhra Pradesh fall in this group.
The Middle Class: This is one of the largest segments for manufactured goods and is
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fast expanding. Farmers cultivating sugar cane in UP and Karnataka fall in this category.
The Poor: This constitutes a huge segment. Purchasing power is less, but strength is
more. They receive the grants from government and reap the benefits of many such
schemes and may move towards the middleclass. The farmers of Bihar and Orissa fall
under this category.
Rural Consumer Behaviour
Consumer Buyer Behaviour refers to the buying behaviour of final consumers -
individuals andhouseholds who buy goods and services for personal consumption. All of
these final consumerscombined make up the consumer market.The consumer market in
this case is Rural India. About 70% of Indias population lives in ruralareas. There are
more than 600,000 villages in the country as against about 300 cities and 4600towns.
Consumers in this huge segment have displayed vast differences in their
purchasedecisions and the product use. Villagers react differently to different products,
colours, sizes,etc. in different parts of India. Thus utmost care in terms of understanding
consumer psycheneeds to be taken while marketing products to rural India.Thus, it is
important to study the thought process that goes into making a purchase decision, sothat
marketers can reach this huge untapped segment.
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Roadblocks of Indian Rural Markets
There are several roadblocks that make it difficult to progress in the rural market.
Marketers encounter a number of problems like dealing with physical distribution,
logistics, proper andeffective deployment of sales force and effective marketing
communication when they enterrural markets. The major problems are listed below.
1. Standard of living
2. Low literacy levels.
3. Low per capita income.
4. Transportation and warehousing.
5 Ineffective distribution channels
6. Many languages and diversity in culture
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7. Lack of communication system.
8. Spurious brands
9. Seasonal demand
10. Dispersed markets
MARKRTING STRATEGIES TO CAPTURE RURAL INDIA
SEGMENTATION OF RURAL MARKET The first step is to develop & implement any
strategy for the rural market should include the appropriate segmentation of the rural
market. The important thing is that appropriate segmentation basis need to be applied.
BY COMMUNICATING AND CHANGING QUALITY PERCEPTION Companies are
coming up with new technology and they are properly communicating it to thecustomer.
As a rural Indian customer always wanted value for money with the changed perception.
BY PROPER COMMUNICATION IN INDIAN LANGUAGE The companies have
realized the importance of proper communication in local language for promoting their
products. They have started selling the concept of quality with propercommunication.
BY TARGET CHANGING PERCEPTION If one go to villages they will see that
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villagers using Toothpaste, even when they can useNeem or Babool sticks or Gudakhu,
villagers are using soaps like Nima rose, Breeze, Cintholetc. even when they can use
locally manufactured very low priced soaps. Villagers are constantly looking forward for
new branded products.
BY UNDERSTANDING CULTURAL AND SOCIAL VALUES Companies have
recognized that social and cultural values have a very strong hold on the people. Cultural
values play major role in deciding what to buy. Moreover, rural people are emotional and
sensitive. Thus, to promote their brands, they are exploiting social and cultural values.
BY PROVIDING WHAT CUSTOMER WANT The customers want value for money.
They do not see any value in frills associated with theproducts. They aim for the basic
functionality.
BY PROMOTING PRODUCTS WITH INDIAN MODELS AND ACTORS Companies
are picking up Indian models, actors for advertisements as this helps them to
showthemselves as an Indian company.
BY ASSOCIATING THEMSELVES WITH INDIA MNCs are associating themselves
with India by talking about India, by explicitly saying thatthey are Indian.
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3 PS
.Product Strategies
The specific strategies, which can be employed to develop or modify the products to
targets the rural market, can be classified as follows:.
1. Small unit packing: Given the low per capita income & purchasing habits of the
ruralconsumers, small unit packages stand a good chance of acceptance in rural market.
2. New product designs: Keeping in view the rural life style the manufacturer and
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themarketing men can think in terms of new product designs.
3. Sturdy products: Sturdiness of a product is an important factor for rural consumers.
The product should be sturdy enough to stand rough handling, transportation & storage.
4. Utility oriented products: The rural consumers are more concerned with utility of the
product and its appearance
5. Brand name: For identification, the rural consumers do give their own brand name on
thename of an item. The fertilizers companies normally use a logo on the fertilizer bags
though fertilizers have to be sold only on generic names. A brand name or a logo is very
important for a rural consumer for it can be easily remembered.
Pricing strategies
1. Low cost/ cheap products: This follows from the product strategy. The price can be
keptlow by low unit packagings like paisa pack of tea, shampoo sachets, vicks 5 grams
tin, etc. thisis a common strategy widely adopted by many manufacturing and marketing
concerns
.2. Refill packs / Reusable packaging: In urban areas most of the health drinks are
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available.The containers can be put to multipurpose uses.
.3. Application of value engineering: in food industry, Soya protein is being used instead
of milk protein. Milk protein is expensive while Soya protein is cheaper, but the nutrition
content of both is the same. .
4. Large volume-low margins (Rapid or slow penetration strategy): Marketers have to
focus on generating large volumes & not big profit margins on individual products.
5. Overall efficiency & passing on benefits to consumers: For rural products, the strategy
should be to cut down the production, distribution & advertising costs & passing on these
benefits to the customers to further increase the turnover.
6. Low volume-low price strategy: This strategy of reducing prices by reducing the
packagesize in order to make it appear more affordable, is delivering very good results
for a largenumber of FMCG product categories, in the rural markets of India.
7. Ensuring price compliance: Rural retailers, most of the times, charges more than the
MRP.The manufacture has to ensure price compliance either through promotional
campaigns.
promotional campaigns for the rural markets:
1. Think Global Act Local Rural population is diverse, but the commonalities of their ethos
& simple living habits need to be understood for advertising to succeed. For that, the
theme of the advertisement needs to revolve among universal themes, such as family-
love.
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. 2. Think in Local Idiom This is the need of the advertising professionals who can think like
the rural people. The only we can have insights like Thanda matlab Coca Cola. There
should be the use of language writers who understands the rural & regional pulse better.
3. Simplicity & Clarity All promotional messages targeted at rural audience need to be
simple & clear, which can be easily understood, & they should not include any confusing
elements.
4. Narrative Story Style The promotional message can be delivered in the form of an
entertaining story with a message depicting how the brand delivers larger good to the
family & society. .
5. Choice of Brand Ambassador Brand Ambassador for the rural markets need to be picked
carefully as urban successes might not get replicated in the rural markets.
FACTORS INFLUENCING BUYER BEHAVIOUR
Geographical Variations in Market Behaviour The rural market is not a homogeneous
one. Variations in eco- nomic development and in consumer willingness to accept innov-
ations are evident in rural markets. Geographical variations in exposure to urban centers
and variations in development have resulted in tremendous heterogeneity even within a
state.
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a brand. They ask for products they have seen or heard on radio or TV (Khatri, 2002).
The influence of children on choice is mostly for personal care products.
- Retailers also influence consumers in rural markets. An im- portant reason for this is the
credit that the retailer extends to many of his customers.
4 As approach of Indian Rural Market
Availability, affordability,acceptability and awareness (the so-called 4 As)
AvailabilityThe first challenge is to ensure availability of the product or service.
Indias 627,000 villagesare spread over 3.2 million sq km; 700 million Indians may
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live in rural areas, finding them isnot easy. However, given the poor state of roads, it
is an even greater challenge to regularlyreach products to the far-flung villages. Any
serious marketer must strive to reach at least13,113 villages with a population of
more than 5,000. Marketers must trade off the distributioncost with incremental
market saturation. Over the years, Indias largest MNC, Hindustan Lever,a subsidiary
of Unilever, has built a strong distribution system which helps its brands reach
theinteriors of the rural market.To service remote village, stockiest use
autorickshaws, bullock-carts and even boats in thebackwaters of Kerala. Coca-Cola,
which considers rural India as a future growth driver, hasevolved a hub and spoke
distribution model to reach the villages. To ensure full loads, thecompany depot
supplies, twice a week, large distributors which who act as hubs. Thesedistributors
appoint and supply, once a week, smaller distributors in adjoining areas.
LGElectronics defines all cities and towns other than the seven metros cities as rural
and semi-urban market. To tap these unexplored country markets, LG has set up 45
area offices and 59rural/remote area offices.
AffordabilityThe second challenge is to ensure affordability of the product or service.
With low disposableincomes, products need to be affordable to the rural consumer, most
of who are on daily wages.Some companies have addressed the affordability problem by
introducing small unit packs.Most of the shampoos are available in smaller packs. Fair
and lovely was launched in a smallerpack. Colgate toothpaste launched its smaller packs
to cater to the travelling segment and therural consumers.Godrej recently introduced
three brands of Cinthol, Fair Glow and Godrej in50-gm packs, priced at Rs 4-5 meant
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specifically for Madhya Pradesh, Bihar and Uttar Pradesh the so-called `Bimaru
States.Hindustan Lever, among the first MNCs to realize the potential of Indias rural
market, haslaunched a variant of its largest selling soap brand, Lifebuoy at Rs 2 for 50
gm. The move ismainly targeted at the rural market. Coca-Cola has addressed the
affordability issue byintroducing the returnable 200-ml glass bottle priced at Rs 5. The
initiative has paid off: Eightyper cent of new drinkers now come from the rural markets.
Coca-Cola has also introducedSunfill, a powdered soft-drink concentrate. The instant and
ready-to-mix Sunfill is available ina single-serve sachet of 25 gm priced at Rs 2 and
multi serve sachet of 200 gm priced at Rs 15.
AcceptabilityThe third challenge is to gain acceptability for the product or service.
Therefore, there is a needto offer products that suit the rural market. One company which
has reaped rich dividends bydoing so is LG Electronics. In 1998, it developed a
customized TV for the rural market andchristened it Sampoorna. It was a runway hit
selling 100,000 sets in the very first year. Becauseof the lack of electricity and
refrigerators in the rural areas, Coca-Cola provides low-cost iceboxes a tin box for
new outlets and thermocol box for seasonal outlets.The insurance companies that have
tailor-made products for the rural market have performedwell. HDFC Standard LIFE
topped private insurers by selling policies worth Rs 3.5 crores intotal premium. The
company tied up with non-governmental organizations and offeredreasonably-priced
policies in the nature of group insurance covers. With large parts of ruralIndia
inaccessible to conventional advertising media only 41 per cent rural households have
access to TV building awareness is another challenge. Fortunately, however, the
ruralconsumer has the same likes as the urban consumer movies and music and for
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both theurban and rural consumer, the family is the key unit of identity. However, the
rural consumerexpressions differ from his urban counterpart. Outing for the former is
confined to local fairsand festivals and TV viewing is confined to the state-owned
Doordarshan. Consumption ofbranded products is treated as a special treat or luxury.
AwarenessBrand awareness is another challenge. Fortunately, however, the rural
consumer has the samelikes as the urban consumer movies and music and for both
the urban and rural consumer,the family is the key unit of identity. However, the rural
consumer expressions differ from hisurban counterpart. Outing for the former is confined
to local fairs and festivals and TV viewingis confined to the state-owned Doordarshan.
Consumption of branded products is treated as aspecial treat or indulgence.Hindustan
Lever relies heavily on its own company-organized media. These are promotionalevents
organized by stockiest. Godrej Consumer Products, which is trying to push its soapbrands
into the interior areas, uses radio to reach the local people in their language.Coca-Cola
uses a combination of TV, cinema and radio to reach 53.6 per cent of ruralhouseholds. It
doubled its spend on advertising on Doordarshan, which alone reached 41 percent of
rural households. It has also used banners, posters and tapped all the local forms
ofentertainment. Since price is a key issue in the rural areas, Coca-Cola advertising
stressed its`magical price point of Rs 5 per bottle in all media. LG Electronics uses vans
and road showsto reach rural customers. The company uses local language advertising.
Philips India uses wallwriting and radio advertising to drive its growth in rural areas.The
key dilemma for MNCs ready to tap the large and fast-growing rural market is
whetherthey can do so without hurting the companys profit margins.
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Radio: Radio reach is highest in Kerla (62%) followed by Tamil Nadu (35%) and
Karnataka (32%). Example : Colgate, Jyoti Labs, Zandu Balm are some of the company
using radio communication programme. A ten second spot in Regional station would cost
only about Rs. 2000/-
Cinema :1. Films on products like Vicks, Lifeboy, Colgate and Shampoos are shown in
rural cinemas halls. 2.LIC and Private insurance companies have been showing short
movies in rural theatres to create awareness about life insurance Outdoor Advertisement
Form of media which includes signboard, wall painting, hoardings, tree boards, bus
boards etc.
Direct Mail Advertising: Mailers for seed and pesticides to be sent as per agricultural
season. Direct mailers on consumer durables to be sent during the harvesting season so
that the farmers will,. have money for purchasing the same.
Farm to Farm / House to House Many LIC agents and companies dealing with high value
consumer durables have tried this approach with success in rich rural areas. ACC
representatives retailers make house-to house visit and give information about product
stability.
Group Meeting The Banker once in a week visit a village get the villagers in school hall
or Panachyat office and explain to the villagers the various financial facilities offered by
the bank MRF conduct tractor owners meet in association with local distributors.
Opinion Leaders Asian Paints promoted its Utasv brand of paint by painting the village
Sarpanchs house a few months prior to the launch to demonstrate that the paint does not
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peel off and is an ideal replacement of chuna. The health development assistant of HUL
regularly meets school teachers to promote Lifebuoy soap in Villages.
The Melas ( It is estimated that over 20,000 melas are conducted every year) Paint
companies supporting Pola fair in Maharashtra by painting the horns of the bulls.
Sonepur Mela, Vaisakh Purnima Mela( Bihar). Navaratri Fair, Ambaji (Gujarat)
Naucahndi Mela, Ramlila Mela(UP) Kartik Mela, Gawlier Trade Fair( MP)
Haats ( On certain days of the week , both the sellers and buyers meet in the village to
buy and sell goods and services). Parachut Oil, Nirma washing powder and tiger brand
biscuits have been promoted through haats. About 40,000 Haats are held in rural areas in
our country, highest number haats in U.P (10,000).
Audio Visual Van ( The van is a mobile promotion station having facilities for screening
films, slides and mike publicity. Nippo promotes batteries through specially designed
vans called melavans. The van are equipped with TV/VCR for showing products
awareness films. Colgate India makes extensive use of VANs. ITCs mobile Vans take
the message of e-choupal to new village.
TRADITIONAL FARMERS TO NEW AGE MARKETERS
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Through the e-Choupal initiative, ITC aims to confer the power of expert
knowledge on even the smallest individual farmer. Thus enhancing his
competitiveness in the global market
the e-Choupal initiative; the single-largest information technology-based intervention by
a corporate entity in rural India. Transforming the Indian farmer into a progressive
knowledge-seeking netizen. Enriching the farmer with knowledge; elevating him to a
new order of empowerment. e-Choupal delivers real-time information and customised
knowledge to improve the farmer's decision-making ability, thereby better aligning farm
output to market demands; securing better quality, productivity and improved price
discovery. The model helps aggregate demand in the nature of a virtual producers' co-
operative, in the process facilitating access to higher quality farm inputs at lower costs for
the farmer. The e-Choupal initiative also creates a direct marketing channel, eliminating
wasteful intermediation and multiple handling, thus reducing transaction costs and
making logistics efficient. The e-Choupal project is already benefiting over 3.5 million
farmers. By 2012, the e-Choupal network will cover over 100,000 villages, representing
1/6th of rural India, and create more than 10 million e-farmers.
A digital transformation
Smart Cards enable farmer identification to provide customised information on the
echoupal.com website. Online transactions are captured to reward farmers for
volume and value of usage.
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BIBLIOGRAPHY
Book- Text & Practice, New Delhi: Biztantra,2005-06,381p
http://www.itcportal.com/sets/echoupal_frameset.htm
http://www.echoupal.com/ http://www.itcportal.com/sets/agriexp_frameset.htm
http://www.slideshare.net/hemanthcrpatna/a-project-report-on-rural-marketing
Projectsformba.blogspot.com
http://www.slideshare.net/sumankalyan14/rural-marketing-2859640
http://www.outsourcing-buzz-blog.com/2011/09/wipro-launches-rural-bpo-program.html
http://www.slideshare.net/hemanthcrpatna/a-project-report-on-rural-marketinghttp://www.slideshare.net/sumankalyan14/rural-marketing-2859640http://www.slideshare.net/hemanthcrpatna/a-project-report-on-rural-marketinghttp://www.slideshare.net/sumankalyan14/rural-marketing-2859640