MUMBAI

Rural Marketing PLAN SUBMITTED TO PREPARED BY

Prof. PRAKASH PANDIT Mr. AKSHIT JAIN

MARKETING PROFESSOR Enroll. No. 15BSP0140

Student of Section G

SUBMITTED ON 5TH JANUARY 2015

EXECUTIVE SUMMARY

This topic has been chosen to study the Rural Marketing strategy of ITC Ltd. There are certain prospective on which a company sells their products in to the rural market and diversifies their business. This project has been a great learning experience for me; at the same time it gave me enough scope to implement my analytical ability. Full project gives an insight about the strategies and its various aspects. All the topics have been covered in a very systematic way. Rural marketing is now a two-way marketing process. There is inflow of products into rural markets for production or consumption and there is also outflow of products to urban areas ITC’s e-choupal initiative is proving the farmers with real time updated information on weather. It is providing them customized knowledge in the form of farm management and risk management. It is also providing them lower transaction cost. It is also providing them financial services in the form of life, general, health and crop insurance. It focuses on making people aware of the product. It is providing active servicing up to rural outlets. It is providing them with wide range of product categories. Moreover it has made entrepreneurs out of farmers as they are managing most of the work, it instills in them the sense of ownership

INTRODUCTION

ITC'sAgri-Business is one of India's largest exporters of agricultural products. ITC is one of the country's biggest foreign exchange earners (US $ 2.8 billion in the last decade). The Company's 'e-Choupal' initiative is enabling Indian agriculture significantly enhance its competitiveness by empowering Indian farmers through the power of the Internet. This transformational strategy, which has already become the subject matter of a case study at Harvard Business School, is expected to progressively create for ITC a huge rural distribution infrastructure, significantly enhancing the Company's marketing reach.

ITC's pre-eminent position as one of India's leading corporates in the agricultural sector is based on strong and enduring farmer partnerships that has revolutionized and transformed the rural agricultural sector. A unique rural digital infrastructure network, coupled with deep understanding of agricultural practices and intensive research, has built a competitive and efficient supply chain that creates and delivers immense value across the agricultural value chain. One of the largest exporters of agri products from the country.

PLANS & OBJECTIVES OF ITC

IN RURAL MARKETING

ITC plans to up rural market penetrationBETTING big on the farm sector, ITC is planning to increase its penetration in the rural areas. As part of this plan, the company will introduce a small hypermarket format in select states with an investment of around Rs 80 crore. It will also open more e-choupal kiosks.

The company believes that these initiatives will help farmers in less developed markets like Uttar Pradesh, Madhya Pradesh, Rajasthan and Maharashtra to get a better return for their produce.

“We are planning to increase our farmer service centers in rural areas (e-choupal kiosks) from the present 6,450 to 20,000 by 2012. We are looking at setting up 40 small hypermarkets in the first phase on the similar lines of our existing hypermarket model — Choupal Sagar next year at an investment of Rs 2 crore each. In the second phase we will add 30 new small hypermarkets,” said, S Siva kumar, chief executive (agri business division), ITC.

While the big format Choupal Sagar occupies an area of about 6 acres to 10 acres, the small centers will be spread about 2 acres. This is expected to help marginal farmers as it will provide them a smaller catchment area to market their produce. The model will also help bring down operational cost, said Siva kumar.

Talking to reporters on the sidelines of customer an industry event focusing on customer management, he said, the new initiatives will be targeting states, where the back-end operations and farm marketing are yet to evolve.

“For states such as Andhra Pradesh, Punjab and Karnataka, we have a different strategy. In these states, our focus will be on horticulture and Choupal Sagars and kiosks will help us improving the farm to market lineage. Besides, in coastal districts of AP, we are also helping farmers to take up aquaculture,” he said.

These initiatives, he said, would also help the company achieve higher export returns. “These kiosks are mainly information centres, where farmers can access information on foreign market requirements, traceability norms and other quality criteria. Also, we sell financial products including crop insurance to farmers. This will trigger them to adopt slightly risky but high return crops and farming practices like organic cultivation methods,” he said.

The company had earmarked to spend Rs 5,000 crore on its e choupal division since its inception in 2,000. It is still ploughing

ITC E-CHOUPAL

back money into the system though some of these centres have become self sustainable. The plan is to continue to invest till 2012.

E-Choupal is an initiative of ITC Limited, a conglomerate in India, to link directly with rural farmers via the Internet for procurement of agricultural and aquaculture products like soybeans, wheat, coffee, and prawns. E-Choupal tackles the challenges posed by Indian agriculture, characterized by fragmented farms, weak infrastructure and the involvement of intermediaries. The programme installs computers with Internet access in rural areas of India to offer farmers up-to-date marketing and agricultural information. Today the initiative of ITC has empowered the lives of people living in 10 states where 40000 villages have 6500 e choupals and around 4 million farmers have been empowered. ITC E-Choupal

ITC’s Agri Commodity Exports Farm linkages in 14 states covering Soya, Wheat, Rice, Marine products, Edible nuts, Coffee Unique CRM programme in commodity exports Leveraging IT for the transformational ‘e- Choupal’ initiative Rural India’s largest Internet-based intervention Over 30000 villages linked through 5200 e-Choupals servicing over 3 million

farmers First rural mall christened ‘Choupal Sagar’ opened at Sehore,M.P Distinctive sourcing capability for ITC’s Foods business -

4 A’S IN ITC E-CHOUPALITC also employs 4As in e-Choupal

AVAILABILITY: It emphasizes on the availability of the goods and services to the end consumers. In the case of e-choupal the products are available continuously because sanchalaks maintains continuous inventory and maintains aggregate demand.

AFFORDABILITY: It focuses on product pricing. ITC buys from farmers directly in the last days closing price and even pays them for transportation. Goods are weighted electronically and hence farmers are no more cheated as they used to be previously. Hence it is a win- win situation both for farmers and the company.

ACCEPTABILITY: It focuses on convincing the customer to buy the product. ITC’s e-choupal initiative is proving the farmers with real time updated information on weather. It is providing them customized knowledge in the form of farm management and risk management. It is also providing them lower transaction cost. It is also providing them financial services in the form of life, general, health and crop insurance.

MARKETING STRATEGIES

AWARENESS: It focuses on making people aware of the product. It is providing active servicing up to rural outlets. It is providing them with wide range of product categories. Moreover it has made entrepreneurs out of farmers as they are managing most of the work, it instills in them the sense of ownership

Key Rural Marketing Strategies employed by ITC are:

• By communicating and changing quality perception

• By proper communication in Indian Language

• By understanding cultural and social values

• By promoting Indian Sports Teams

• By developing rural specific products

• By adopting localized way of distribution.

• By giving Indian words for brands.

ITC RURAL MARKETING

SWOT ANALYSIS

Strengths:- Strong Procurement Network: - E-CHOUPALS Largest Rural Market Share For Atta : - AASHIRVAAD ATTA Quality Is High Strong Distribution Network Strong Cash Flows Generated

Weaknesses: PROMOTION NOT CONVINCING: - It was not convincing to

overcome reluctance to try out new variants

NOT YET REACHED THE BREAK EVEN POINT: -Rely on the revenues generated by Cigarette business

Opportunities: ECONOMICS OF SCALE: - It has not yet reached. Increasing

the production will lead to decrease in cost and competitive pricing or higher margins to retailers

SWOT ANALYSIS MATRIX

OF

ITC RURAL MARKETING

GROWING WORKING POPULATION: - Thereby opportunity to tap market

OPPORTUNITY OF PROMOTING PREMIUM VARIANTS: -As there is an increase in family income of rural areas especially for zamidars and other rich people

Threats: Higher margin offered by local brands Slow in economy Low price points offered by local brands

ITC RURAL MARKETING

OTHER ITC INITATIVES

ITC is committed to a national agenda of raising agricultural productivity and making the rural economy more socially inclusive. ITC believes that the urgency and scale of the set tasks make market linked solutions and innovations more effective and sustainable than capital intensive approaches.

1. Social & farm ForestryITC has helped to bring nearly 13,000 hectares of wasteland under social forestry benefiting more than 16,000 poor households in 466 villages. ITC’s social forestry programme simultaneously addresses the livelihood problems of marginal farmers and the ecological imperative of regenerating biomass and nurturing depleted soils.

2. Watershed Development ITC’s watershed initiatives have led to an improvement in soil and moisture regimes – there is more land under irrigation, water tables have risen and farmers can harvest more than one crop, making it possible to live off the land round the year.

3. Agricultural Development ITC offers facilitation to farmers to form agri-business societies, pool knowledge and resources, improve productivity and quality, and reach out beyond local markets to sell at better margins.

4. Women Empowerment The confidence and skills generated among women by forming credit groups and managing businesses become assets to their communities

5. Livestock Development

ITC E-CHOUPAL

ITC E-CHOUPAL

The milk marketing co-operatives represent exemplary change in rural enterprise, away from dependence on agriculture and local markets.

6. Primary EducationSchool going becomes an empowering process for the child and the community. The awareness of entitlements like education and health grows, along with a sense of the community’s responsibility.

SOME FIGURES ANALYSIS

The main driver in attracting the consumers is Quality of the product itself with nearly65% of the people surveyed citing it as the main criterion for choosing the product, followed by past experience of the consumer with the brand (17.6%). Price was third criterion with a percentage of 11.7% of the people surveyed gave importance during buying. (FIGURE 1)

An effective advertisement will attract more and more customer to buy, helps in the brand and image formation, and informative in telling the USP of the product. (FIGURE 2)

Figure 1 AND Figure 2

FIG

1

FIG

2

FIG.3

FI

G4

The FIGURE 3 shows the experience of the customer after using the product i.e. whether they were satisfied with the product as a whole. The higher the satisfaction level higher will be the chances that the customer will buy the same brand again and again that leads to the building of the Brand loyalty. The

In FIGURE 4 Availability of the Product itself determine the effectiveness and the penetration of the distribution channel of that particular brand among the people.

CONCLUSION

ITC e-Choupal an innovative strategy which is elaborative & extensive in rural markets so far

RURAL WEALTH CREATION in Agriculture through securing empowerment, collaborations & competitions

A transformational initiative for substantial development of society

Commitment to transparency & the respect & fairness with which both farmers & local partners are treated

RURAL FACTS

AN ITC GROUP INITIATIVE LET’S PUT INDIA’S FIRST

ENDURING VALUE