Marketing to Rural India & Microfinance Institutions

Scenario of Micro Finance in India

India’s population is more than 1000 million, around 350 million, are living below the poverty.

Only 20% access loan from the formal sources and 80% from the informal sources.

Out of that 20% only 10% have access to Micro finance.

Annual credit demand by the poor is estimated to be about Rs 60,000 crores. And only 12,000 crores are disbursed. (April 11)

Customers of Micro Finance are “Small and marginal farmers", " rural artisans" and "economically weaker sections”

Micro - Credits model

Focus on, providing the capital for poor women to use their innate "survival skills" to pull themselves out of poverty.

Lend mostly to women in small groups (credit circles), say of five or seven.

Draw up a weekly or bi-weekly repayment schedule.

In case any member defaults the entire circle is denied access to credit

SWOT Analysis of micro finance Strength

• Helped in reducing the poverty.• Huge networking available.

Weakness• Not properly regulated.• High number of people access to informal sources of finance.• Concentrating on few people only and mainly in urban areas.

Opportunity • Huge demand and supply gap.• Employment Opportunity.• Huge Untapped Market.• Opportunity for Pvt. Banks, NBFCs, Foreign Banks to enter this

business segment.

Threat • High Competition.• Neophyte Industry. • Over involvement of Govt.

Introduction of Rural India

Rural India is potentially the largest segment of the Indian market.

Executives have long recognized that to build real sales volumes they will have to reach outside the big cities.

67% of the total sales is contributed by Rural Markets.

Facts of Rural India According to MART

› Rural India buys 46% of all soft drinks sold, 49% of motorcycles, 59% of cigarettes and 11% of rural women use lipstick.

According to NCAER › Rural households form 71.7% of the total

households in the country.› Spending in this segment is growing rapidly and

consumption patterns are closing in on those of urban India.

Cont.. Rural marketing involves persuading people to try and adopt

products they may not have used before› Colgate has to build toothpaste by convincing› Coca-Cola is growing at 37% in rural markets, compared

with 24% in urban areas.

In rural India low penetration rates can be attributed to three major factors› Low income levels› inadequate infrastructure facilities› different lifestyles.

Project Shakti : Empowering Women Consumers

The objectives of Project Shakti› To create income-generating capabilities for under privileged

rural women.

In 2001, with rural self-help groups (SHGs) started to educate rural women, while also making them part of the company's marketing network

This micro-enterprise offers low risks and high returns

Direct-to-home distributors

A typical Shakti distributor sells products worth Rs 10,000-15,000 a month & earn Rs 700-1,000

Cont..

The Shakti model was piloted in 50 villages of the Nalgonda district in Andhra Pradesh.

› Now it has created 26,000 women distributors covering 80,000 villages.

› By 2010, the goal is to recruit 100,000 Shakti distributors covering 500,000 of India's more than 600,000 villages.

› Shakti project includes Shakti Vani (or voice), a social awareness program, and iShakti, a community portal

Advantages to rural Women from Project Shakti

Increase in income Education to children Social Recognition to rural women Knowledge about health and Hygiene Knowledge of urban areas Enhancement of purchasing power ICICI partnership gave micro credit

ITCs E-Choupal ITC's enhanced distribution network came from the

recognition that the existing agri-produce distribution channels› The company exports various agricultural products --

soybean, rice and wheat› In 2000, ITC embarked on an initiative to deploy

technology to reengineer the procurement of soybeans from rural India

E Choupal’s connectivity - both physical and informational -- between the farmer and the market that it facilitated has allowed ITC to use it for distribution of goods and services from the market to the farmer

Cont..

The E Choupal infrastructure consists of:› A collaborative network of companies orchestrated by ITC

with a pan-India presence.

In 2004, ITC introduced the Choupal Sagar› A rural retail outlet at the hub.› First was set up at Sehore in Madhya Pradesh.› This is 7,000 sq. ft. mall sells consumer goods as well as

agri-products

Advantages of E-Choupal to rural people

Better content of information Transport Cost Knowledge to access technology Weighing Accuracy Transaction Durations

Room for all

Indian rural market is huge just to strengthen the distribution

Reliance Infocomm, a mobile services provider. Its network now encompasses 240,000 towns and villages, accounting for 42% of the rural population

Godrej Aadhaar -- plans to set up 1,000 stores across India in the next five years.