RURAL MARKETING & NGOsUMANG 2010 – DOMS, IIT ROORKEE

03 October 2010

SWABHIMAN GRAM NIRMAN YOJANAPATANJALI BAZAAR

Roadmap

• What is Rural?

• Rural Marketing – Common Perceptions & Approaches

• Redirecting the Thought Vector

• Rural India – Myths & Reality

• Potential Solutions

• Integrated Approach to Rural Marketing

• Swabhiman Gram Nirman Yojana

• Patanjali Bazaar

• Patanjali Gram Udyog - Uttarkashi

What is Rural?

As per The Census of India, 2001 Rural means :

Places which do not have a municipality, corporation, cantonment board or

notified town area committee, etc.

Population less than 5,000 habitants

At least 75 per cent of male working population engaged in agricultural

pursuits

Density of population of is less than 400 per sq. km. (1,000 per sq. mile).

Common Perceptions & Approaches

Vast green fields or arid stretches

Low population densityScattered villages

• Alternate distribution network• Shaktimaan (HUL)• India Post (P&G)

Small Kirana shops/Mobile vendors

Multi-purpose paan shopsBottom of Pyramid

• Alternate SKUs/product sizes• Cavincare• HUL

Agriculture dependentIntensive Farmlife

Movements to mandis

• Two way channel with reverse haul• E-chaupal (ITC)• Hariyali Kisan Bazaar

(DSCL)

Though each perception is right in its own way, its somehow not the complete picture

The efforts, thereby, are incremental – small steps – to reap benefits in immediate & medium term

Perhaps we need a giant leap?! And a rethink…

Redirecting the Thought Vector

What would be a sustainable way to market to the rural populace? Address existing market with existing products or Create a new one?

Is this a homogenous market? Can we look at it as one big chunk? Or do we explore the various socio-economic segmentations that even this market contains?

Can we really isolate marketing as a function when we talk about rural “marketing”?

Rural Indian Market – Myths & Reality

Agriculture’s share in India’s GDP going down but 70% of the population still lives in rural and semi-urban areas*

Majority of rural India engaged in agricultural & related labor activities (75.90% of population and 63% of income earned)

Average income of Indian farmers is 1/4th of the average income of the rest of India

All-India average monthly per capita expenditure (MPCE) is Rs. 565 (rural) and Rs. 1,060 (urban).

*The Max-NCAER India Financial Protection Survey

MYTH REALITY

Rural India is poor ½ of top 40% per capita in India lives in rural areas

Reaching all villages is essential Distribution/Common point for 25-30 villages reaches 70% of the rural population

Rural consumer/customer is unwilling to pay for premium products & services

Customers/Consumers many times “tip” Rs. 50/Rs. 100 for a service worth Rs. 15 (land records/certificates etc.)

Creating awareness drives sales Product usefulness and availability is important/influence of peers/“herd mentality”

Rural Indian Market – MPCE Break-up

*The National Sample Survey Organization, 2005

Rural Indian Market – FMCG Potential

*Shukla & Shrivastava, 2006

Significant potential for FMCG goods (and increasing) from the rural market – on at least 5 products, they are the majority destination

Potential Solutions Some part of immediate and medium term growth may be captured through

extension of: Presence – by augmenting and deepening network Price – adjusting price points and pack sizes to address BOP level majority of rural populace

But with time, this would stagnate – as for demand to increase, prosperity and resulting disposable income have to increase

What kind of prosperity are we talking about? Not the prosperity which comes from migration of rural youth/population to

urban and semi-urban centers Not only the limited prosperity which comes through developmental activities

of schemes, charities, funds etc. Not only the prosperity which comes from better retention of value at farmer

level

From better VALUE RETENTION to better VALUE ADDITION!

Integrated Approach to Rural Marketing

The ONLY long term, sustainable fashion to think of Rural Marketing is to look at it in an integrated manner coupling it with Rural Development – so you go on creating your market as you sell to it.

PRODUCTION/PROCESSING/SALES MICROSYSTEMS DISTRIBUTION & SALES

Direct marketing schemes and armies of salesmen only incremental From “You produce, I buy & I sell” to perhaps “You produce, your neighbor buys” Typical purchase pattern of hinterland farmers, very similar to a Modern Trade format – hence a hybrid built on this platform might work very well

PRODUCTS Not only smaller SKUs of products designed for urban markets, but also products exclusively made for rural market segments (in terms of look, colors, taste, fragrance etc.) More horizontal supply chain – needs smaller machines, smaller labs etc. Mostly regional products – widely fungible products being traded across these micro-units at national level

Swabhiman Gram Nirman Yojana Majority of Indian population lives in 6,38,000 villages (Approx 70%

population accounts for rural and semi urban areas) Self-dependent villages: Developed India Objective: Samnvit Vikas - Initially, build up of model village at Haridwar,

then to be implemented simultaneously in 100 villages and finally selection of 600 villages for economical, social, educational and scientific development

A strong strategy for Breakthrough Business (BB) instead of Business As Usual (BAU) approach.

Commitment for Rural Business as profitable and sustainable Business Model

Strong committed Organization Structure Focus on People, Products and Process Passion for Innovations and Initiatives Dynamic comprehensive Approach for Synergy and Partnership Models Key Areas: 1. Welfare Plans 2. Patanjali Gram Udhyog (PGU) 3. Patanjali

Bazar (PB)

Swabhiman Gram Nirman Yojana

SGNY– Welfare Plans Patanjali Krishi (Organic farming without use of chemical fertilizers,

pesticides and hybrid seeds) Irrigation Facilities Housing Transportation Electricity Drinking Water Education IT Industrial Training Herbal Gardens and Plantation Yoga and Nashamukti Kendra Hospital and Arogya Kendra (AYUSH) Goraksha Kendra & Integrated Dairy Youth, Games and Competition Sanitation and Waste Management Waste Land Development

Rural India – FMCG Consumption

SGNY– Micro & SSIs - Examples Papad Manufacturing Unit Agarbatti Manufacturing Unit Flour Mill Dal Milling Spice Mill Bakery Candle Manufacturing Unit Rose Water Manufacturing Unit Processed Fruit and Vegetables

Unit Oilseed Based Units Paddy Milling/ By Product

Processing Other Food Processing Units Milk and Milk Products Processing

Units Canning and Bottling Units

Khadi, Clothing and Textile Units Hast-Shilp Units Detergent Powder and Soap Units Herbal Cosmetic Units Bio-Gas Plant Biomass Briquetting Units Bio-Fertilizers Unit Bio-Pesticides Unit Bio-Agents Manufacturing Units

Patanjali Gram Udyog - Structure1. Transport of Farm Inputs, Patanjali Ayurved Ltd. and associates' products, other Regional PGU products and Packaging Material from the Regional Patanjali Gram Udyog to the Village level PGU.

2. Farm Inputs, Organic Manure, Financing, Seeds, Implements, Irrigation Units etc. received from the Village level PGU to the connected farms in the programme.

3. Raw Materials in the form of food grains, pulses, spices, fruits, vegetables, herbs from the farms and products like milk and gomutra from the gaushala etc. to the various processing units within the Patanjali Gram Udyog facilities.

4. Finished Goods and/or prepared raw materials (in a ready for dispatch form) from these processing facilities and/or warehouses to the Patanjali Gram Udyog Central Warehouse and/or to the Patanjali Bazaar.

5. Products in surplus i.e. which cannot be sold within the village itself would be sent to the nearby towns for sale through outlets with tie-ups and/or through other Patanjali Bazaars.

6. From this Patanjali Gram Udyog to other PGUs within the region. 7. From other PGUs in the same region to this Patanjali Gram Udyog.

Patanjali Gram Udyog - Structure8. To the Regional PGU for all products that are in surplus, raw material destined for Patanjali Ayurved Ltd. under the Minimum Support Price scheme, other organic produce etc.

9. Patanjali Ayurved Ltd. and associated concerns' products to the Regional PGU along with the packaging material etc. from Divya Pakmaf Pvt. Ltd. and Patanjali Flexipak Pvt. Ltd.

10. Sale of PGU products through the Patanjali distribution network to all Sewa Kendras, Aarogya Kendras and into the open market.

11. From Regional PGUs to PAL - movement of raw material and processed farm and dairy products collected from the Village level PGUs, aggregated at the Regional PGU; as well as other products manufactured at the PGUs under the ambit of teh Regional PGU.

12. From the concerned Regional PGU to other Regional PGUs - interchange of surplus products, as well as regional specialty products like handicrafts, artefacts etc.

13. From other Regional PGUs to this Regional PGU - receipt of surplus as well as regional/specialized products to be sold through the local Patanjali Bazaars within the region.

SGNY– Patanjali Gram UdyogSpecial Focus

Horticulture, Plantation, Vegetable Growing, Floriculture, Aromatic and Medicinal Plants, Waste Management Plants etc. for high Investment Opportunities

Post Harvest, Food Processing and Logistics Services Seed Multiplication and Processing Irrigation Projects and Wasteland Developments. Agro-Forestry Products Tie-Up Arrangements with Govt. Organizations, Like Minded NGOs, Business

Houses, Agri- Marketing Institutions, Industry Level Organizations with Supply Chain Management Module

Rural Tourism and Other emerging areas. Rural Marketing- Strong Backward and Forward Linkage Development (Own

Resources for own use) Every Patanjali Gram (PG) will have Standardized Warehouse and Store

Facility named Patanjali Bazaar (PB)

SGNY– Patanjali Bazaar Sale-Purchase Centre for locally produced raw materials, storage of packing

materials and sale of finished goods - all daily need products under one umbrella

Warehouse- 2,000 - 7,500 sq. ft depending upon the population of village Store and Outlets with standardized storefronts (with minor alterations) to

maximise transfer of best practices including motion study etc. Fair Price List with Stock position for essential commodities to prevent

hoarding etc. Standardized formats/processes for maintenance of records, cash/stock-

handling etc. Provision for cold storage facilities (where possible – traditional/modern)

PGU– Centralized/Decentralized Activities

PGU– Centralized Activities Product Formulation, Coding and Registration Quality Norms for RM/PM IPQA Quality Instrumentation and Processes QC/QA Staff Agricultural and Industrial Training Book-keeping, Ledgers/Accounts and Cash Handling Stock & Cash Insurance Provision of Banking Kiosks Minimum Support Price and Daily Prices Price and Climate Information Desk Branding, Logo Creation, packaging material design Packaging Material Provision MRP of PGU Products Regional PGU Services Feedback and Control Cycle Investment of Proceeds, Capital Expenditure etc.

PGU– Decentralized Activities PGU: Personnel and Administration Financial Surplus Inventory Levels & Production Planning Banking Operations Execution of Audits Transportation & Logistics Packing Material for Raw Material Preparation/Processing of Raw Materials Plant and Machinery and other Infrastructure

PGU– Collective Responsibilities Progress Review PGU Ranking/Rating Performance based Incentives/Investments Conflict resolution & Reengineering

PGU– Ujjali, Uttarkashi, HimalayaExisting Infrastructure

Agarbatti Nirman Unit Gomutra Arka Unit - Capacity 5,000 Litres/ Day Apple Processing Unit (Grading/Pulping/Chutney) 5 Small Computer Training Centres 2 Primary Schools 30 Sanskar Kendras Bee-Keeping through apiaries Power Project Plan in Darali

PGU– Ujjali, Uttarkashi, HimalayaSHG Based Approach: First Co-Operative Model of Go-mutra Collection

Patanjali Krishi Swyam Sahayata Samuh (PKSSS) Patanjali Mahila Swyam Sahayata Samuh (PMSSS) Approx 100 SHGs formed and successfully working in the Gomutra, Apple

collection, computer training and other welfare work like awareness of health and healthy /Swadeshi Products.

MSP - Go-mutra Rate: 5 Rs/Lt. All Infrastructure developed through “own resources” with out any financial

support from others Street Lights: EREDA/Rs. 5,000 by PGU on each Street Light Stipend of Rs. 500/ month to Poor/Economically Backward Students

Unique Go-mutra Collection Scheme:

All the students are ask to give one litre Go-mutra per day as fee. SHG helps to collect Go-mutra and sends to Patanjali Ayurved Ltd. For

further process

Jai Hind!