chapter 10 rural market myths
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Chapter 10rural market mythsTRANSCRIPT
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Chapter 10 Rural Services Marketing
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Learning Objectives• Trace the growth of the services sector and its relevance for
rural markets.
• Understand the growth of telecommunication services and the role of M-VAS services in the marketing of products and services in rural areas.
• Identify the role of ICT (information, communication, technology) in rural India and its relevance to the marketing of products and services.
• Understand the marketing of financial services in rural India including banking and insurance.
• Describe the improvement of healthcare services and the emergence of new delivery models in rural India
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Services Sector in India• Largest and fastest growing sector at 11%.
• Contributes 57% of the GDP and employs 34% of the work-force
• 60% of the country’s 16.5 million enterprises are in rural India
• Rural services sector comprises mainly of retail trading, transportation and communication, financial services, healthcare, housing and construction, education and community and social services
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Telecommunications in Rural India
• 234 million subscribers as of September 2010• Grew over six times in five years
Rural Subscriber Growth
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Telecommunications in Rural India
• Catalysts for growth:
Relevant and attractive schemes like:
Free lifetime validity of SIM card
INR 5 recharge vouchers
Coupling of cheapest handsets with cheapest call rates
Infrastructure sharing
Content in vernacular language
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Telecommunications in Rural India
• 7.5 million Internet users in rural India contributing 16% of the total.
• Expected to grow to 300 million by 2014 as per CII–IMRB report
• Cellular companies tying up with various players to provide rural-specific, real-time, customized informational services on mandi prices, weather and other services
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Telecommunications in Rural India
• In mobile telephony, Bharti is the market leader with a 24% share
Rural Subscribers and Market Share
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VAS Providers in Rural India
•Started in Maharashtra in April 2007•Covers half a million farmers in Punjab, Himachal Pradesh, Haryana and Maharashtra•Partnered with Idea Cellular to increase reach
Reuters Market Light
•Joint venture between Airtel and IFFCO•Launched in 2007 in eastern U.P.•30 million farmers and 39,000 cooperatives as of December 2010
IFFCO Kisaan Sanchar Ltd.
•Launched in Maharashtra in 2008•Tie up with Reuters Market Light and Tata Docomo•Covers 18 states in 11 regional languages
Nokia life tools
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ICT in Rural India• Absence of reliable physical delivery systems have led to
growth of information and communication technology in rural India
• Rural ICT kiosks and rural BPOs initiated by both government and private players
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ICT in Rural India• More than 65,00 ICT kiosks led by government sponsored
common service centres (CSCs)
Major ICT initiatives in Rural India
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ITC’s e-Choupal• Initiated by ITC’s agribusiness division in 2000 aimed at
direct procurement channel
• Hub and spoke model with ITC procurement centre as the hub and e-Choupals as the spokes
• Covers four million farmers spread over 40,000 villages through 6,500 e-Choupals
• 4% to 7% reduction in true cost of contract
• Version 3.0 to be rolled out by 2012 in collaboration with Nokia Life Tools to provide additional reach of 16 million farmers
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Common Service Centres• A public–private partnership to integrate commercial and
social goals through combination of IT and non-IT services
• Follows a three-tier hierarchy:
Village Level Entrepreneurs covering five to six villages
Service Centre Agencies for training, managing and expanding the business of VLEs
State designed agencies for implementation of the scheme
• Plan for one CSC for six census villages catering to 6,000 citizens
• Presently covers 13 states through nearly 56,000 CSCs
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Financial Services in Rural India
• 78% households save in rural
• Average annual household saving INR 22,690 in 2010.
• 85% save in cash; 25% in gold
• Among formal channels, bank deposits, insurance and postal savings are most preferred
• Critical needs in rural are:Micro-savingsFrequent withdrawals
Branches
Commercial and regional banks 32,000
Micro-finance institutions 46,000
Cooperative institutions 96,000
Post offices 135,000
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Banking Services in Rural India• Moneylenders main providers of financial services
• 185 million “potentially bankable” households
• Only 7% villages have banks
• Non-branch initiatives include mobile ATMs, smart cards and mobile banking
• Use of SHGs, MFIs, post offices and business correspondent/facilitators model
• Focus on no-frills accounts, simple-to-use cash dispensing and collecting machines
• Credit plus services for rural training
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Microfinance and Credit Services
• Customer needs for consumption, healthcare, education and emergencies
• Dependence on informal sources down from 90% in 50s to 40% now
• Major credit instruments in rural are:
MFI loans
SHG–Bank linkage model
MFI–Bank linkage model
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Microfinance and Credit Services
Kisan credit cards introduced in 1998–9996 million cards as of August 2010Up to 20% of limit can be used for purchase of non-
agricultural productsChit funds, especially in South India
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Insurance in Rural India• Life insurance
One public sector and 22 private sector players
LIC market leader with 71% share
Private players have met objective of 25% policies for rural in 2009-10
73% of rural households aware and 19% policy owners (Max–NCAER survey 2005–06)
Penetration expected to cross 35% by 2012 (McKinsey Global Institute)
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Insurance in Rural India• Non-life insurance
Seven public sector and 18 private sector players
• Distribution of products in rural markets largely through agents, MFIs, banks and consumer goods companies
• Micro-insurance introduced in 2005 growing dramatically
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Rural Healthcare Services• Rural health spending expected to grow from INR 700
billion in 2005 to 3,494 billion in 2025
• Share of wallet expected to go up from 7% to 13% in same period
• Major challenges are inadequate physical infrastructure and an acute shortage of skilled manpower
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Rural Healthcare Infrastructure
• Staffed by doctors, paramedics and nurses
• Catchment area 120,000 population
Community health centres
(4,276)
• Staffed by doctors, paramedics and nurses
• Catchment area 30,000 populationPrimary health
centres (23,456)
• Staffed by health workers and nurses• Catchment area 5,000 population
Sub-centres (146,038)
• Accredited Social Health Activist (ASHA)• Jan Swasth Rakshak• Dais
Local actors
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Rural Healthcare Market• Estimated at INR 0.7 trillion in 2005; expected to grow to
INR 3.5 trillion by 2025
• Medical services and pharmaceuticals account for nearly 75% with medical equipment contributing the balance
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Rural Healthcare Market• Compounded Annual Growth Rate:
Medical services 15%Pharmaceuticals 4.7%Medical equipment 6.6%
The Healthcare Market
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Government Initiatives in Rural India
The National Rural Health Mission
Integrated Child Development Scheme
Janani Suraksha Yojna Rashtriya Swasthya Bima Yojna
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Growth Drivers of Rural Healthcare
Telemedicine
•Remote delivery of healthcare services through telecommunications technology•Size $ 3.4 million in 2007. CAGR of 21.6% to 2014•Major players Apollo Telemedicine Network , Aravind Eye Hospital, Narayan Hrudayalaya, The Asian Heart Institue and ISRO
Growth of health insurance
•Covering 20 million families across 27states•Some initiatives – Yeshasvini in Karnataka and Aryogya Raksha in Andhra Pradesh
Public Private Partnerships
•Address inefficiency and inequity in health system•Accelerated delivery with customer focus
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Rural Marketing Case Arogya Parivar
Discussion questions:
1. What problems of the rural community were addressed through this mode?
2. List the key reasons for the sustainability of this model.
3. Do you think this model can be replicated in other countries? If yes, how and in which countries?
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Highest growth sector
Rural Services Sector