Rural Marketing Case Study.docx

Rural Marketing Group No. 9

Usha International’s Silai School Case Study

Group members Harshal Thakur – 20182069 Prathami Gore – 20182111 Sana Shaikh – 20182144 Sarthak Arora – 20182165 Dhwani Vyas – 20182162

Case –

Usha International Ltd is part of the Siddharth Shriram group which owns the brand, USHA. The brand has become a household name in India. A review revealed that although the company’s product were available in small town with sub-dealers and retail, the company’s direct than one lakh. The company realized it was not tapping into its biggest market, the rural consumer. The company makes household and kitchen appliances, fans, engines pump sets and electric pump sets. The sewing machine continues to be the largest selling item of the company. The company realized that it did not have enough rural coverage and wanted a method to reach rural women. It devised two strategies: hire enough representative to cover new markets that had sprung up in rural areas which also involved rural women it its best-selling product. It launched a pilot and a small team was constituted to spend three months in the Gorakhpur Region in Uttar Pradesh to understand markets and Geographies, with the aim to visit all the towns which had a population below one lakh. The team collected market intelligence, estimated market potential and brand share and studied the primary distribution network. The research showed that 95 per cent of consumers prefer to purchase from small towns, instead of travelling long distance to larger town. It also found that rural consumers were aware of most brands and wanted quality products at reasonable price. As a consequence, the company realized that it was necessary to have an authorised representation in small-town markets. A rural initiative was launched in Uttar Pradesh in April 2013, called “Project Sampark”, to reach out to consumers in 648000 villages and

7500 small towns. The idea was to ensure brand presence and product availability at the last mile. Project Sampark helped the company reach out to over 400000 households by 2013. It has subsequently conducted over 2000 rural haats and reached 10 lakh rural customers. The company appointed a team of ‘rural business officer’ to do an in-depth study of the rural markets and set up network of more than 3600 authorized retail dealer (ARD’s) stocking all USHA products. This helped reach the brand in remote markets. Within one year of the project’s inception, the company attained a leading position in eastern Uttar Pradesh in terms of sale growth. ARDs actively promote USHA’s products by strategically tying up with other companies and undertaking development activities such as haats, melas and working with SHGs. ARDs are appointed in every small town and are trained in-product features so that they can recommend the right product to consumers. They act as a one –stop shop where consumers find all product lines displayed. This resulted in sales of USHA products increased by almost 40 per cent in rural markets. Rural India Continues to remain the focus for the company, which aims to cover all 7500 towns. The rural business team has also identified another set of 800 places in rural India, which have the potential and are the business hubs for many villages nd rural consumers, The company plans to expand its rural retail format ‘ Usha Joy Stores’ in rural pockets and Tier-IV towns with population of less than 50000 reports Business Standard(2016). To reach village women, it adopted a unique initiative, that is, to partner with NGOs to set up Silai Schools in some of the country’s most remote and rural corners. Under the model, women are given a sewing machine and are imparted with sewing skills to earn their livelihood and become financially independent =. They generate income by stitching clothes and also serving up their own Usha Silai

Schools. They charge a fee from new learners, do job-work in the community and also earn from repair of sewing machines. The Silai Schools have helped village women tailors operating out of their homes become confident and economically liberated. In Dewas district, 15000 women have been liberated from scavenging and 50 women are being are being rehabilitated through tailoring with financial support of UNDP and technical support of Usha International Ltd. (UIL). Across India, HIV-positive women, transgender and the disabled are being rehabilitated through Usha Silai Schools. Till the end of 2014, there were 5542 Silai Schools in the country, with Rajasthan leading 519, followed by West Bengal (467), Uttar Pradesh (446) and Madhya Pradesh (403). Based on the UIL Syllabus, the trained teacher teach others for a fee that varies from Rs.30 to Rs. 300 a month. The Silai Schools have raised the selfesteem of women within their own family and in the community. Many women who did not have any say in their family are today key decision-makers.

Question Q1. Comment on the future of rural marketing in the lights of this case study.

 Rural marketing is a process that consist of developing and empowering people in rural communities through capabilities enhancement and social innovation to facilitate a two way marketing of economic and socio goods between rural and urban case.

 This case talks about how Usha has worked towards capabilities enhancement which lead to developing and empowering rural communities.

 Usha realized that 95% of rural population preferred buying products from their town or nearby town and did not prefer travelling to bigger towns to purchase their products, so it focused on the ‘A’-Availability out of 4A’s. It started the SILAI School thereby promoting ‘A’Awareness of a product which priced ‘Affordably’ as is it was highly acceptable by the rural consumers.

 Out of the 3BOP strategies companies should focus on 2nd and 3rd ones co-creation of production with the help of rural consumers and investment in social business.

 Unless the consumers aren’t reachable and if they aren’t aware about the products/services of the companies they have no ways of purchasing it.  By developing a bond between companies’ offerings and consumers, sales can be boosted, companies can enjoy consumer’s loyalty and they can gain consumer trust and acceptance.

Q.2. Is the way forward converting into social business? Is there an alternative?  BOP strategy 3 says- Go beyond, co-creation of products to changing the very approach by companies towards marketing-a complete change in purpose and mindset of companies and investment in social business.  This is the highest level a company go upto. By doing so, not only the rural people will benefit but also the companies. Capability enhancement of rural people and by doing social innovations or social business, the companies will open the gates for the unserved or underserved millions of rural customers.  If the companies succeed in connecting with these rural people and build their trust, then the sales of the company will pick up and so the standard of living of rural consumers will improve as they will get access to so many products and services.  Best way to attract rural population is by showing them that the company cares for them, is aware about their problems will solve their problem.  Connecting with rural consumers through social business is a great way of entering and/or sustaining in rural market. Another strategy is BOP2- Co-creation. But investment in social business is a better alternative amongst these two as it helps in empowering rural consumers.

Q3. What are the benefits to companies of empowering rural consumers?

 The potential of rural market is visible when we consider two factors: 1. The general rise in the level of prosperity as people move away from agriculture and find other employments 2. Large government investments and schemes for rural areas.  The general rise in the level of prosperity has bought in two dominant shifts in the rural consumption patterns.  First, because of lifestyle marketing, people want to use the products that are used in urban marketing.  There is also an element of conspicuous consumption, as people want to show their neighbors that they are modern by consuming the latest products and brands. Second, better communications and branding have caused a shift in preference for branded goods.  That is the reason that rural markets are said to represent huge opportunities. The factors that have contributed to some amount of modernization of villages are:  Large Population: According to the census 2011, 833 million people, representing more than two-thirds of Indian population, live in villages. This population is also increasing annually. More over, these consumers are underserved, that is many companies simply do not have a presence in rural market. This attracts companies who see an immense opportunity as urban markets are saturated.  Market growth :According to a study by India Brand Equity Foundation (IBEF), 2015), per capita Gross Domestic Product (GDP), In India has grown at a compound as annual growth rate (CAGR) OF 6.2 per cent in its rural regions since 2000.  Rural per capita consumption increased by 19 per cent annually in the period from 2009-10 to 2011-12. In the same period, spending in rural India touched US$69 Billion.

 The market has been growing at 3-4 per cent per annum adding more than one million new consumers every year.  Impact of globalization: Improved global information is also providing rural areas an exposure their productivity and earn better prices.  Increase in income and rural indebtedness: Dependence on agriculture is decreasing due to people finding alternative livelihoods and also because of the development and social security programmers undertaken by the government. This has resulted in an increase in income in rural areas and a consequent increase in purchasing power.  Accessibility of market: Improved roads and communications are changing Indian villages. They are improving access to villages to sell produce on the one hand and for providing market access to companies on the other.  Improved literacy and awareness: Due to increased literacy and education as well as greater awareness in rural markets , there has also been change in consumer behavior. Rural customers are no longer willing to accept inferior products and are gradually becoming discriminating buyers.  Mainly, the companies can benefit by educating and empowering rural people so as to increase their standard of living which will ultimately lead to rise in income so they will purchase the companies products and these consumers will eventually be responsible for the companies profit generation.  Empowering rural communities may also mean formulation of salesforce within that rural community. In either ways companies will benefit by empowering rural consumers and the rural population as a whole.

Q.4. Is Gandhian economics the way forward? Gandhian economics is a school of economic thought based on the spiritual and socio-economic principles expounded by Indian leader Mahatma Gandhi. It is largely characterized by

rejection of the concept of the human being as a rational actor always seeking to maximize material self-interest that underlies classical economic thinking. Where Western economic systems were (and are) based on what he called the “multiplication of wants,” Gandhi felt that this was both unsustainable and devastating to the human spirit. His model, by contrast, aimed at the fulfilment of needs – including the need for meaning and community. As a school of economics the resulting model contained elements of protectionism, nationalism, adherence to the principles and objectives of nonviolence and a rejection of class war in favour of socio-economic harmony. Gandhi's economic ideas also aim to promote spiritual development and harmony with a rejection of materialism. The revival of the economy is made possible only when it is free from exploitation, so according to Gandhi industrialization on a mass-scale will lead to passive or active exploitation of the people as the problem of competition and marketing comes in. Gandhi believes that for an economy to be self-contained, it should manufacture mainly for its use even if that necessitates the use of modern machines and tools, provided it is not used as a means of exploitation of others.it is the quality of the human being that has to be raised, refined and consolidated. In other words, economic planning is for the citizen, and not the citizen for national planning. Everybody should be given the right to earn according to his capacity using just means. Gandhi has often quoted that if mankind was to progress and to realize the ideals of equality and brotherhood, it must act on the principle of paying the highest attention to the prime needs of the weakest sections of the population. Therefore, any exercise on economic planning on a national scale would be futile without uplifting these most vulnerable sections of the society in a direct manner. a distinction is to be made between

'Standard of Living' and 'Standard of Life', where the former merely states the material and physical standard of food, cloth and housing. A higher standard of life, on the other hand could be attained only if, along with material advancement, there was a serious attempt to imbibe cultural and spiritual values and qualities. Human needs and wants are infinite. And rural population has purchasing power. They too are shifting their consumption preferences from local items to branded items. In this era where, companies are pushing their products in the markets and even investing in social businesses or co-creating products with the rural people, it will be difficult to adapt to the Gandhian economics.