Rural Indian Customer - Ten Myths

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A presentation on some keys aspects of the Rural Indian Consumer based on experiences in the Nemmadi Project

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Rural Indian Customer - Ten Myths

  1. 1. The Rural Indian Customer A Presentation to the Chief Consumer Officers Forum 5 June 2009 Ten Myths Ravi Rangan, Comat
  2. 2. Rural India <ul><li>70% Indians by population live in 638,387 villages </li></ul><ul><li>87% of villages have a population of < 2,000 </li></ul><ul><li>35% of villages lie beyond standard access </li></ul><ul><li>Number of “middle income and above” in rural areas favorably compares with urban India </li></ul><ul><li>Markets exist in every cluster of villages </li></ul><ul><ul><li>3.6 Million retail outlets </li></ul></ul><ul><ul><li>Served by traditional Kirana shops and Mandis </li></ul></ul><ul><ul><li>Products supplied from nearby semi-urban areas </li></ul></ul>06/10/09 Ravi Rangan, Comat
  3. 3. The Rural Business Center (RBC) <ul><li>Initiative by Comat to deliver services in Rural India </li></ul><ul><li>1,000 Operational Centers located in Large Villages </li></ul><ul><li>Consists of </li></ul><ul><ul><li>Two Computers and Peripherals </li></ul></ul><ul><ul><li>VSAT Connectivity </li></ul></ul><ul><ul><li>3-4 Hours Power Backup </li></ul></ul><ul><li>Over 50 Services delivered: </li></ul><ul><ul><li>Government Certificates </li></ul></ul><ul><ul><li>Education </li></ul></ul><ul><ul><li>Insurance </li></ul></ul><ul><ul><li>Railway Tickets… </li></ul></ul>06/10/09 Ravi Rangan, Comat
  4. 4. Evolution of the RBC <ul><li>Comat has delivered e-governance solutions to several governments </li></ul><ul><li>Successful implementation resulted in centralization of services </li></ul><ul><ul><li>Citizen received better and transparent services, but had to travel to the Taluk </li></ul></ul><ul><ul><li>Cost of Infrastructure and Connectivity prevented service delivery points closer to citizen </li></ul></ul><ul><ul><li>Government service delivery alone did not create financial viability </li></ul></ul><ul><li>Comat decided to setup a “super market” for services that would deliver government and other services </li></ul>06/10/09 Ravi Rangan, Comat
  5. 5. RBC Achievements <ul><li>100,000 footfalls and 50,000 customer served daily </li></ul><ul><ul><li>200,000 transactions sustained across 15 days </li></ul></ul><ul><ul><li>Over 15 Million paid transactions since Oct 06 </li></ul></ul><ul><li>30%* of covered families visit their RBCs annually </li></ul><ul><li>Recognition and Awards </li></ul><ul><ul><li>Microsoft e-Governance Award 2007 </li></ul></ul><ul><ul><li>National Silver Award for e-Governance 2007 </li></ul></ul><ul><ul><li>NASSCOM Innovation Award 2007 </li></ul></ul><ul><ul><li>Legatum FORTUNE Technology Prize in 2008 (Shared the $1Mn prize) </li></ul></ul>06/10/09 Ravi Rangan, Comat
  6. 6. The Ten Myths Anecdotal Experience during RBC Implementation
  7. 7. The Ten Myths <ul><li>Poor Infrastructure Prevents Quality Product Delivery </li></ul><ul><li>Addressing Market Requires Reaching All Villages </li></ul><ul><li>Franchising is Only Option </li></ul><ul><li>Cannot Manage Rural Employees </li></ul><ul><li>Rural customer unwilling to pay for premium services </li></ul><ul><li>Rural Customers are Demanding </li></ul><ul><li>Rural customer is not sophisticated </li></ul><ul><li>They will buy – awareness is all that is required </li></ul><ul><li>Packaging in small size is the only customization that is required </li></ul><ul><li>Business Opportunities are Limited </li></ul>06/10/09 Ravi Rangan, Comat
  8. 8. Poor Infrastructure Prevents Quality Product Delivery <ul><li>The Myth </li></ul><ul><ul><li>Uneconomical Last Mile Logistics creates barriers for coventional distribution models </li></ul></ul><ul><ul><li>Infrastructure and Power makes technology enablement difficult </li></ul></ul><ul><li>Reality </li></ul><ul><ul><li>Comat uses inexpensive off the shelf infrastructure to create delivery channel </li></ul></ul><ul><ul><li>Community is willing to offset costs in many situations </li></ul></ul><ul><ul><li>VSAT bridges digital divide and enable high-quality services delivery </li></ul></ul>06/10/09 Ravi Rangan, Comat
  9. 9. Addressing Market Requires Reaching All Villages <ul><li>Myth </li></ul><ul><ul><li>Reaching all villages is essential </li></ul></ul><ul><li>Reality </li></ul><ul><ul><li>Citizens prefer visiting larger villages for their multiple needs and their Masala Dosa </li></ul></ul><ul><ul><li>Their purchase is driven by Habit and not by Choice </li></ul></ul><ul><ul><li>Creating a distribution point for 5-10 villages at carefully chosen locations will cover 90% of population* </li></ul></ul><ul><ul><li>Distribution point for 25-30 villages will reach 70% of population* </li></ul></ul>06/10/09 Ravi Rangan, Comat
  10. 10. Franchising in the Only Option <ul><li>Myth </li></ul><ul><ul><li>Franchising is only option that works </li></ul></ul><ul><ul><li>Cannot align remote staff with corporate culture </li></ul></ul><ul><li>Reality </li></ul><ul><ul><li>Owned and Employee Operated Models can also be successful </li></ul></ul><ul><ul><li>Careful selection and training of remote staff creates a loyal and efficient workforce </li></ul></ul><ul><ul><li>Allows flexibility to experiment and innovate </li></ul></ul>06/10/09 Ravi Rangan, Comat
  11. 11. Cannot Manage Rural Employees <ul><li>Myth </li></ul><ul><ul><li>Cannot manage employees across thousands of remote locations </li></ul></ul><ul><li>Reality </li></ul><ul><ul><li>Biometrics Fingerprint ensures attendance and transaction security </li></ul></ul><ul><ul><li>Technology enabled controls and inherent loyalty, dearth of choices makes it easier to manage rural employees </li></ul></ul>06/10/09 Ravi Rangan, Comat
  12. 12. Rural customer unwilling to pay for premium services <ul><li>Myth </li></ul><ul><ul><li>Rural customer is unwilling to pay for premium products and services </li></ul></ul><ul><li>Reality </li></ul><ul><ul><li>Rural customers will choose premium services if they are available and deliver value </li></ul></ul><ul><ul><li>Citizens many times “TIP” Rs. 50 & Rs. 100 (keep the change) for a service worth Rs. 15 </li></ul></ul><ul><ul><li>These are land records, income and other certificates that are served across the counter </li></ul></ul>06/10/09 Ravi Rangan, Comat
  13. 13. Rural Customers are Demanding <ul><li>Myth </li></ul><ul><ul><li>Rural customers are demanding and Impatient </li></ul></ul><ul><ul><li>They are quality conscious and unforgiving </li></ul></ul><ul><li>Reality </li></ul><ul><ul><li>Absence of Choice, Sub-standard products and Cheap clones have reduced quality expectations </li></ul></ul><ul><ul><li>Citizens are patient and do not mind waiting their turn (do not value their time as much) </li></ul></ul><ul><ul><li>Much more forgiving product and delivery errors </li></ul></ul>06/10/09 Ravi Rangan, Comat
  14. 14. Rural Delivery Chain is not Sophisticated <ul><li>Myth </li></ul><ul><ul><li>The Rural Delivery Chain is not Sophisticated </li></ul></ul><ul><li>Reality </li></ul><ul><ul><li>The Delivery Chain and Citizens are actually Sophisticated and Enjoy in Exploiting Opportunities </li></ul></ul><ul><ul><li>A special pre-paid mobile package was released by a Telco for a mass campaign run from RBCs </li></ul></ul><ul><ul><ul><li>Packaged with Ration Card Issue and Cheaper to the retail package by 50% </li></ul></ul></ul><ul><ul><ul><li>Great Sales - Distribution channel hoarded the packages and resold it for profit </li></ul></ul></ul>06/10/09 Ravi Rangan, Comat
  15. 15. They will buy – awareness is all that is required <ul><li>Myth </li></ul><ul><ul><li>Creating awareness drives product sales </li></ul></ul><ul><ul><li>Brand ambassadors are very effective </li></ul></ul><ul><li>Reality </li></ul><ul><ul><li>Product usefulness and availability is important and serviceability is critical </li></ul></ul><ul><ul><li>Huge Influence of Peer Groups and Herd Mentality </li></ul></ul><ul><ul><li>Less Impulsive buying </li></ul></ul>06/10/09 Ravi Rangan, Comat
  16. 16. Packaging in small size is the only customization required <ul><li>Myth </li></ul><ul><ul><li>Smaller size packaging is only product customization required </li></ul></ul><ul><li>Reality </li></ul><ul><ul><li>Products have to address one or more areas below to succeed </li></ul></ul><ul><ul><ul><li>Cater to an “Immediate need” </li></ul></ul></ul><ul><ul><ul><li>Address an unmet demand for “quality of life improvement” </li></ul></ul></ul><ul><ul><ul><li>Transparency and Honesty in product information </li></ul></ul></ul><ul><ul><ul><li>Financing in case of capital investments </li></ul></ul></ul>06/10/09 Ravi Rangan, Comat
  17. 17. Business Opportunities are Limited <ul><li>Myth </li></ul><ul><ul><li>Business opportunities including cross-selling are limited </li></ul></ul><ul><li>Reality </li></ul><ul><ul><li>Several business opportunities exist, one has to look </li></ul></ul><ul><ul><li>A Rural BPO employing 100 local graduates processing US Cheque is operating effectively </li></ul></ul><ul><ul><li>Lower costs by using fixed infrastructure at night and appreciation of the community </li></ul></ul>06/10/09 Ravi Rangan, Comat
  18. 18. Thank You <ul><li>Rural communities will support quality products and services </li></ul><ul><li>Understanding the rural consumer and making relevant products/services available will improve rural lives </li></ul>06/10/09 Ravi Rangan, Comat

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