Alternative marketplace strategies

  

This post is to further explore the alternative marketplace offered by international development opportunities.

 

In the aftermath of C.K Prahlad’s article, I am living its actualization. In my view, the bottom of the pyramid is getting truly energized now. My context is India largely (as is Prahlad’s in this article) and I wish to share my understanding and support for his rhetoric with a few current examples.

 

My sense and observation in my country is witness to the fact of the bottom of the pyramid being empowered albeit by large Indian corporations (equivalent in size to an MNC, but more local in context). These corporations are building their products and services for the bottom of the pyramid and it is reaping them dividends. India lives in her villages still and corporations are recognizing the power of rural India.

 

CASE : e-choupal – The details of the groundbreaking intervention can be read here

 

http://www.itcportal.com/sets/echoupal_frameset.htm

 

ITC an Indian tobacco giant brought technology to the doorstep of the farmers and empowered them in their own playing field by setting up computer kiosks called e-choupals (meeting place). The computer kiosks were set up to monitor market prices so the farmer no longer bowed to extractions from “middlemen” (and age-old ill in the Indian village system) and sold their produce directly to the wholesale market therefore getting a better price. Technology at their doorstep enabled them to understand how to produce a better crop – about the whole science and engg of farming etc. What does ITC get in return? ITC has diversified into Packaged Foods (in addition to Tobacco) and they buy good quality produce directly from the farmers which is then packaged and sold in the open market. ITC leverages its existing channels to get to the end consumer.

 

This link holds some more details of e-choupal. I want to draw your attention to the line “Let’s put India first” – that came from a home corporation having the vision to revolutionise!

 

http://www.itcportal.com/rural-development/home.htm

 

CASE: Cellular technology. Rural India has for decades languished with no telephone connectivity – the cell phones have now done the trick. Price and market share wars continue to rage, but a local corporation (Reliance) has beaten the price to an unbelievable low – it now becomes affordable for the bottom of the pyramid. What is more, in their current advertising campaign for its services, another Indian cellular corporation showcases podcasts (without mentioning jargon) on cell phones to educate the rural children (a quiet transformation!)

 

Case BPOs move to Rural India: http://www.icmrindia.org/Business%20Updates/BPO%20Tap%20into%20Rural%20India’s%20Potential.htm

 

http://www.rediff.com/money/2005/jun/29bpo.htm

 

Case – Elections: last elections were lost by the ruling party despite the GDP growth and their election slogan “India Shining” because rural India felt shortchanged (and that is where the votes are) – they only had a small slice of the “India Shining” cake!

 

Case Microcredit – As we all know, Prof Mohd Yunus of Bangladesh went on to get the Nobel Prize!

 

Role of MNCs – Following rather than leading.

 

Role of Development agencies and NGOs – A lot of good work being done – tie-ups with local corporations (as is happening) will provide required direction and impact.

 

This has become longer than I had expected. Guess précis writing isn’t my forte!

 

Inviting thoughts, views, other experiences…

 

Deepika

6 comments


1 David Vogt { 09.24.08 at 6:01 am }

Thanks for these case studies, Deepika. It might be argued that India is a special case of this phenomenon because of its size, history and politics. Can you see similar cases emerging in China (for example) that extend India’s example?


2 Carolann Fraenkel { 09.24.08 at 9:15 am }

Hi Deepika,

Thanks for the case studies. It is really interesting to read about what is happening in other parts of the world. I am going to go read some more about the e-choupals, I am wondering how a similar technology could be used to help rural farmers in say Kenya, or other sub-saharan african countries.


3 Cheryl Milner { 09.25.08 at 2:48 pm }

Hi Deepika,

You have brought some fascinating cases to the group, now if only we could get our cell phones charges as low. The e-choupal really serves to give confidence to the farmer that they aren’t being taken advantage of, another helpful model for the entire developing world to adopt.


4 Deepika Sharma { 09.26.08 at 9:49 am }

Thanks all – Am glad you enjoyed the case studies!

In response to DavidV’s question

“Can you see similar cases emerging in China (for example) that extend India’s example?”

My immediate and very broad response would be “yes, why not!”

But if you ask me do I know of similar cases , the answer is “not really” – I have not had the chanec to work in China yet!

However, I do know that there are many operational differences between China and India and the business climate in any country is a curious mix of consumer base, political climate and culture. Although the two countries have huge population, the pyramid tiers may not necessarily be the same – Tier 4 (bottom of the pyramid in particular). Obviously that will mean the business focus, within the pyramid paradigm, shifts to the middle segment leading to the design of slightly different products and instruments.

However, the principle remains the same – develop products in response to the local consumer base of a country. MNCs have for long, been prone to thinking of and in, developed economies and reducing their product, to keep prices low, for the developing economies. In my view, times have changed and for growing economies the bottom tier (whatever that be) must now be considered as a valuable part of the busines process!

If I were to turn the question back to you David, what would you say?

Deepika


5 Bruce Spencer { 09.26.08 at 2:30 pm }

I remember hearing about microcredit and how cheap mobile phone services had become. You would expect the lessons learned from the e-Choupal case would be transferable to other countries suffering from a similar fate.

I would think it would be easier to do case studies on the mobile phone industry between these two countries to see if there are any similarities. Perhaps some of the other participants can shed some light on the China situation?

Incidentally, I’ve been to both India and China. The political, social and economic structures are very different – as are the people.


6 Drew Murphy { 09.27.08 at 9:10 am }

This is all extremely interesting, Deepika. For us North Americans, your inside view of India’s adoption of technology and maturing capitalism is very compelling. There are, I imagine, huge efficiencies yet to be gained in the Indian economy through the implementation of technology as the e-Choupal case shows. And the cell phone case is an example of how India is rapidly expanding the flow of its intellectual capital. These types of developments, in my view, have global implications and are another sign that a different kind of climate change is underway.

As the US grinds to a halt and its systemic weaknesses as a capitalistic power are exposed, global resources will flow to where dynamic markets and growth potential are present. Your examples all confirm that India is becoming such a place. In particular, your examples show that India’s shrewd use of technology will likely keep this process of global shift in motion.

Its been predicted for years that India would rise as an economic power, and your post is poignant confirmation that this process is well under way. It might take a decade or three, but the shift in global economic power is happening.

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