Rural Indian Customer - Ten Myths

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The Rural Indian CustomerA Presentation to the Chief Consumer Officers Forum5 June 2009 Ten Myths Ravi Rangan, Comat

+Rural India

• 70% Indians by population live in 638,387 villages

• 87% of villages have a population of < 2,000

• 35% of villages lie beyond standard access

• Number of “middle income and above” in rural areas favorably compares with urban India

• Markets exist in every cluster of villages– 3.6 Million retail outlets– Served by traditional Kirana shops and Mandis– Products supplied from nearby semi-urban

areas

04/11/23Ravi Rangan, Comat

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+The Rural Business Center (RBC)• Initiative by Comat to deliver

services in Rural India

• 1,000 Operational Centers located in Large Villages

• Consists of– Two Computers and

Peripherals– VSAT Connectivity– 3-4 Hours Power Backup

• Over 50 Services delivered:• Government Certificates• Education• Insurance• Railway Tickets…


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+Evolution of the RBC

• Comat has delivered e-governance solutions to several governments

• Successful implementation resulted in centralization of services– Citizen received better and transparent services, but had to

travel to the Taluk– Cost of Infrastructure and Connectivity prevented service

delivery points closer to citizen– Government service delivery alone did not create financial

viability

• Comat decided to setup a “super market” for services that would deliver government and other services


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+RBC Achievements

• 100,000 footfalls and 50,000 customer served daily– 200,000 transactions sustained across 15 days– Over 15 Million paid transactions since Oct 06

• 30%* of covered families visit their RBCs annually

• Recognition and Awards– Microsoft e-Governance Award 2007– National Silver Award for e-Governance 2007– NASSCOM Innovation Award 2007– Legatum FORTUNE Technology Prize in 2008 (Shared the

$1Mn prize)


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The Ten Myths

Anecdotal Experience during RBC Implementation

+The Ten Myths

1. Poor Infrastructure Prevents Quality Product Delivery

2. Addressing Market Requires Reaching All Villages

3. Franchising is Only Option

4. Cannot Manage Rural Employees

5. Rural customer unwilling to pay for premium services

6. Rural Customers are Demanding

7. Rural customer is not sophisticated

8. They will buy – awareness is all that is required

9. Packaging in small size is the only customization that is required

10. Business Opportunities are Limited


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+Poor Infrastructure Prevents Quality Product Delivery

• The Myth– Uneconomical Last Mile Logistics creates barriers for

coventional distribution models– Infrastructure and Power makes technology

enablement difficult

• Reality– Comat uses inexpensive off the shelf infrastructure to

create delivery channel– Community is willing to offset costs in many

situations– VSAT bridges digital divide and enable high-quality

services delivery


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+Addressing Market Requires Reaching All Villages

• Myth– Reaching all villages is essential

• Reality– Citizens prefer visiting larger villages for their

multiple needs and their Masala Dosa– Their purchase is driven by Habit and not by Choice– Creating a distribution point for 5-10 villages at

carefully chosen locations will cover 90% of population*

– Distribution point for 25-30 villages will reach 70% of population*


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+Franchising in the Only OptionMyth

Franchising is only option that works Cannot align remote staff with corporate

culture

Reality Owned and Employee Operated Models can

also be successful Careful selection and training of remote staff

creates a loyal and efficient workforce Allows flexibility to experiment and innovate


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+Cannot Manage Rural EmployeesMyth

Cannot manage employees across thousands of remote locations

Reality Biometrics Fingerprint ensures attendance and

transaction security Technology enabled controls and inherent

loyalty, dearth of choices makes it easier to manage rural employees


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+Rural customer unwilling to pay for premium services

• Myth– Rural customer is unwilling to pay for premium

products and services

• Reality– Rural customers will choose premium services if they

are available and deliver value– Citizens many times “TIP” Rs. 50 & Rs. 100 (keep the

change) for a service worth Rs. 15– These are land records, income and other certificates

that are served across the counter


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+Rural Customers are Demanding

Myth Rural customers are demanding and Impatient They are quality conscious and unforgiving

Reality Absence of Choice, Sub-standard products and Cheap

clones have reduced quality expectations Citizens are patient and do not mind waiting their

turn (do not value their time as much) Much more forgiving product and delivery errors


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+Rural Delivery Chain is not Sophisticated

• Myth• The Rural Delivery Chain is not Sophisticated

• Reality• The Delivery Chain and Citizens are actually

Sophisticated and Enjoy in Exploiting Opportunities• A special pre-paid mobile package was released by a

Telco for a mass campaign run from RBCs• Packaged with Ration Card Issue and Cheaper to

the retail package by 50%• Great Sales - Distribution channel hoarded the

packages and resold it for profit


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+They will buy – awareness is all that is required

Myth Creating awareness drives product sales Brand ambassadors are very effective

Reality Product usefulness and availability is important and

serviceability is critical Huge Influence of Peer Groups and Herd Mentality Less Impulsive buying


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+Packaging in small size is the only customization required

• Myth– Smaller size packaging is only product customization

required

• Reality– Products have to address one or more areas below to

succeed• Cater to an “Immediate need”• Address an unmet demand for “quality of life

improvement”• Transparency and Honesty in product information• Financing in case of capital investments


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+Business Opportunities are Limited

• Myth– Business opportunities including cross-selling are

limited

• Reality– Several business opportunities exist, one has to look– A Rural BPO employing 100 local graduates

processing US Cheque is operating effectively– Lower costs by using fixed infrastructure at night and

appreciation of the community


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Thank You

Rural communities will support quality

products and services

Understanding the rural consumer and making

relevant products/services

available will improve rural lives


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