rm - compiled notes

7/24/2019 RM - Compiled Notes

1/23

Land

Land Lease

Labour

Credit

Input purchase

Output sale

Market Structure

Governments Decisions

Financial Institutions

Agriculture Industr! etc

Session 1 & 2

1. How do we understand rural / subsistence markets

- Markets are seen as a whole and individuals

- Both sociological and psychological factors influence functioning of markets

- Visible characteristics of subsistence marketplaces are:

Severe constraints on traditional economic resources, leading to

uncertainty & lack of control for consumers over day-to-day life

1-to-1 relationshipsbetween buyers and sellers & among individuals in

general

Interdependence in marketplace interactions are forced by resource hconstraints

Empathetic Marketplace ealin!s: In cases where buyers and sellers

come from same economic background

"##erin!s are customised price, !uantity & !uality": B#$ opportunistic

sellers may e%ploit using high interest rate or deceiving !uantities

Buyers also use their $oMto spread Ve word about opportunistic sellers

Social relationships are a community owned resource that might be

harnessed to add value for that community through market e%changes'

2. Interlockin! o# markets


2/23

%. In#luence o# individual characteristics in subsistence marketplace

- oncrete thinkin!' (ifficulty e%perienced by functionally illiterateconsumers when faced with abstractions)

- (ictorial thinkin!' $he tendency to view i" brand names and prices asimages in a scene rather than symbols and i" picturing product !uantitiesthan using symbolic information'

- Maintainin! sel#-esteem'*entral to their marketplace interactions is a needto maintain self-esteem in public settings that could e%pose their low literacy'

- )ear o# interactions'(ue to above reasons people fear interaction and +&

- opin! mechanism'

void unknown products and unfamiliar pricing schemes

%press futility of making in!uiries or demands

ccept product as is

.attern matching / (epend on a child to count

0hort term orientation: 1ow literacy, low income & other difficulties

1%. Market *esearch in Subsistence Marketplaces

- $ools used for researching resource rich, and literate conte%ts are unlikely to beas effective in subsistence conte%ts

- +ttributes based approach: Is relied upon to design products in conventionalmarket wisdom

- (roducts are seen holisticall,'0o low-literate consumers find it difficult toe%press their preference based on attributes

o *ustomer-ready prototypes help e%perience the product & develop

preference

- (roduct testin!: $ake into account i" 2concrete thinking3 & 2pictographicthinking3 and ii" their lack of e%perience as research participants'

- (ersonall, administered methodscard sorting etc'" may alleviate test takingan%iety

"#ualit! o$ dealing %ith ideas & Freedom $rom representational 'ualities


3/23

Session %

hallen!es in marketin! sociall, use#ul !oods to poor consumers

1ow income consumers represent a very large percentage of markets'

0aturating urban-higher income markets forcing marketers to look at low income consumers'

Bo. strategies are presented as way to tap into the low income consumer market'

1. o( strate!iessuggest that companies need to rethink their way of business by

(rice per#ormance / low cost

.roduct development

(istribution

.erformance

iews o# 0ualit,

*reation of robust products for harsh

conditions

Sustainabilit,

4eduction in resource intensity

4ecyclability

4enewable energy

(ro#itabilit,

Investment intensity

Margins

Volume

2. )our interconnected #actors #or commercial in#rastructure at o(

*reating buying power: $hrough credit & income generation

0haping aspirations: *onsumer education $ailoring local solutions: Innovation & product development

Improving access: (istribution & communication

%. $hat is common across all cases

- $he companies took huge challenge and are interested in capturing complete market

- ll companies focussed on need but not on demand

- ssilor5s estimated vans )666" to cover 7lakh villages

- ssilor priced its lenses at 4s'866 but still made less sales

- .&9 launched .u4 for )6 cents but could not sell more of it

- .&9 later decided to sell .u4 at cents to non-profit organisations

- 9(;1: and rural are only 86>, only ) more unit opened


4/23

- 4espondents should relate to tasks & understand purpose of research

- *esearch lan!ua!e & procedures'$o be comfortable to these respondents

- 0ee subsistence market respondents as collection rather than individuals

- nderstand conte3t' In which subsistence individuals survive, buy adconsumer products'

4. $hat are market based solutions

.rivate for-profit solutions to public problems, usually intend to avoid governmentintervention or regulation'

e'g' voluntary emission standards

5. Is there compatibilit, between social business and market based solutions #or

povert,

0ocial businesses do not contribute to economic profits ?@hereasA

Market based solutions are supposed to generate economic profit

conomic profit ccounting profit opportunity cost of capital

+ccountin! pro#it is the monetary costs a firm pays out and the revenue a firmreceives' It is the bookkeeping profit, and it is higher than economic profit'+ccountin! pro#it total monetary revenue- total costs'

Economic pro#it is the monetary costs and opportunity costs a firm pays and therevenue a firm receives'

MIS6+7ES 8 M9s I96E*ES6E 6" SE*E o( M+*7E6S

:. nmet needs trap

- If we focus on the needs 20iCe & opportunity3 is huge

- (ifference between 2Deeds (emands3 (emand is imp"

- *ompany will sell products only if revenues e%ceed total costs

- .roblems with poor

o 1ack affordability


5/23

o 1ack product awareness ducating them is e%pensive

o (emand estimations are a problem as poor can5t comprehend survey +s

o 4eaching the poor is a problem

o 1ack of willingness to use even if given free

o Basic needs: *harity works than market based solutions

o *harity also has limits 9ovt' needs to function well

;. +##ordabilit, trap

- ggregate buying power of poor is higher though individual income is low

- *ompanies sell %isting or dapted products to poor without sacrificing !uality

- ommon mistake1: ffordability

o Income is estimated using ... e%change rate

o .roduct prices are calculated using financial e%change rates

o ;inancial e%change rates are E-F times higher than ... e%change rates

o (ue to this products appear cheaper

- ommon mistake 2: Benchmark for affordabilityo ) week of base salary in developed world imposed on developing world

o Most money goes into necessities poor can5t afford even cheap products

- ost-0ualit, trade-o##

o 4educe !uality of products to make them affordable poor should accept

o Is it unethical to sell low-!uality productsG

- onceptualisation problems' How each o. did it

o #nderstand the problem and come up with solution

o *ompany5s point of view Vs' .oor5s point of view of poverty

o @hat I can doG 4ather than @hat I need to doG $o address the problem


6/23

o $his is costly and companies don5t have such strength

o If they reach directly with low cost products they become their own competition

o

(istributing proprietary product e%clusively may not be viable

o *ompanies may not let channel partners to add any other products as such

products don5t match the obHective of Bo. intervention'

o 'g' ssilor not allowing sales of non-competing items by opticians

o ssilor ventured into distributing glasses which was not its competency

o #sing 0hokti ladies for distribution: $hey have other works to do

o #sing Don-profits for scale-up may be a problem

=. Multiple ob>ectives trap' 6he, usuall, are in con#lict

o .rofitability

o 9enerating employment

o nvironment sustainability

o .ublic


7/23

1?.6he 4@s o# Marketin! to the (oor

ell (hones

(ro#itable to o. ene#icial to

ustomer@-@"

Dirma (etergentMarkets at their best

Do need for intervention

i!arettes

(ro#itable to o. 9ot ene#icial to

ustomer@-1"

$obacco, lcohol,;&1 *ream,


8/23

Session 4

(roduct)' Idea Aeneration

1istening to subsistence consumers

0uggestions from employees and partners

8' Idea Screenin!

Meeting customer needs, 4I, (emand fulfilment, and Market potential

E' oncept evelopment & 6estin!

(oes the subsistence consumer understand the conceptG

(o they want or need itG

0tart thinking about what your marketing message will be'

' usiness +nal,sis

@ill the new product / service be profitableG

Marketing strategy with 0$. & marketing mi%

(emand, costs, competition, break-even analysis

F' (roduct evelopment

.roduct design must be driven by

- deep understanding of consumer needs

- #nderstanding environment in which product will be used lacking usually"

- .roduct functionality, aesthetics, and visual aspects are important

$eam usually consist of highly specialised, relatively resource-rich individuals'

- Immersion in the filed

- Blur boundaries between engineering and marketing tests

- *heck e%isting patents for similar product & review their claims

7' 6est Marketin!

J' ommercialisation

.ricing and marketing plans to be finalised

0ales and distribution teams to be briefed

=' Baunch
http://www.cambridgemr.com/Expertise/NewProductDevelopment/IdeaGeneration/https://www.boundless.com/marketing/products/new-product-development--2/screening--2/http://mnav.com/focus-group-center/concept-testing/http://www.strategyconsultinglimited.co.uk/marketing-and-advertising/new-product-development/http://hbr.org/2012/05/six-myths-of-product-development/http://smallbusiness.chron.com/three-major-disadvantages-test-marketing-20409.htmlhttps://www.innovateuk.org/documents/1524978/2138994/Concept+to+Commercialisation+-+A+Strategy+for+Business+Innovation+2011-2015/f9debf80-dd43-4284-be56-a11a3dda25a8http://businesscasestudies.co.uk/cadbury-schweppes/launching-a-new-product-into-a-developed-market/the-launch-strategy.htmlhttps://www.boundless.com/marketing/products/new-product-development--2/screening--2/http://mnav.com/focus-group-center/concept-testing/http://www.strategyconsultinglimited.co.uk/marketing-and-advertising/new-product-development/http://hbr.org/2012/05/six-myths-of-product-development/http://smallbusiness.chron.com/three-major-disadvantages-test-marketing-20409.htmlhttps://www.innovateuk.org/documents/1524978/2138994/Concept+to+Commercialisation+-+A+Strategy+for+Business+Innovation+2011-2015/f9debf80-dd43-4284-be56-a11a3dda25a8http://businesscasestudies.co.uk/cadbury-schweppes/launching-a-new-product-into-a-developed-market/the-launch-strategy.htmlhttp://www.cambridgemr.com/Expertise/NewProductDevelopment/IdeaGeneration/


9/23

@hen and where to launchG

4eview of market performance

Session 5

1. Marketin! challen!es #or services

- Most services cannot be inventoried'

o ravind screens and brings patients

- Intan!ible elements dominate value creation'

o mphasis on better e!uipment and not on buildings

- Services are o#ten di##icult to visualise and understand:

o )F6 *ounsellors and outpatient coordinators help here

- ustomers ma, be involved in co-production'

o $here is less willingness to come forwardK training them to undertake

post-operative care

- (eople ma, be part o# service e3perience'

o 4ecruiting and training locals to workK

o $argeting right customers from camps

- "perational inputs and outputs tend to var, more widel,'

o stablished !uality standardsK

o simplified processes handled by paramedicsK

o 9ood information sharing and complaint resolving mechanism

- 6ime #actor assumes importance'

o Most efficient doctors and system

- istribution ma, take place throu!h nonph,sical channels'

o *onsultation with phthalmologist via satellite connection

Session :

ll details are discussed in class and notes provided to you

Session ;

*avinkare case analysis as done in the class


10/23

Session of sales - 'J> came from rural outlets

6s'4ural accounts for 87> of sales '> came from rural outlets

- 4ural consumers prefer to buy durables in towns & cities

- $his for better prices & product variety

- $ouch, feel & trail


11/23

- (esire same merchandise as others in cities

Installation & 0ervice is a maHor constraint in this model: 01* 8F service centers

stablish rural hypermarts like I$* *houpal 0agar

H+BBE9AE 2' IS6*I6I"9 9E6$"*7 B"AIS6IS

*reating an effective distribution network on the ground

1ogistics capabilities it needs may not currently e%ist in the market

*o5s providing logistics capabilities may be highly disorganiCed andineffective

$hat to do

o I# demand is created then compan, can create custom distribution network

- veready procured )666 vans, ware houses to distribute in 7 lakh retail outlets

o uild distribution s,stem b, hirin! e3istin! distributors and lo!istics companies

- $hese can be highly unorganised and inefficient

- *ipla faced retaliation from trader5s lobby as it tried to approach customer directly

o

(i!!,back on success#ul alread, built or e3istin! in local societ,

- 0trong distribution and local knowledge

- $4I piggybacking on e%isting entrepreneur network to sell solar lights

o ompanies pi!!backin! should look #or the #ollowin! in their partner

- *arrier has proven deep distribution network

- *arrier has long-term interest

- *arrier5s network is effective for the type of product

orporate (artnerships

n entering company can partner with a corporation that has an e%isting distribution network'

0ara 1ee partnered with 9odreH to market and distribute its products

.&9 formed a distribution alliance with Marcio to capitalise on its distribution

network

Bocal 9on-(ro#it "r!anisations


12/23

nilever 0hakti initiative involving 0


13/23

Ba,awa,

*ustomer demands and pays product price in instalments'

.roduct is delivered once full price is paid'

Lick0tart intl': #sually it takes ) year, but due to this method farmer buys in 8'F

months

on@t tar!et o(

01* targeting better customers helped it earn better returns

void customers who may not be able to purchase even with low prices

H+BBE9AE 4' B+7 ") *+9 6*S6

4ural consumers are brand sticky

If entering markets with unknown brands to rural" then piggyback on e%isting

known and trusted brand

$here may not a suitable brand to piggyback

$hat brand may not solve the delivery & installation facets of brand trust

o $he piggybacking brand should have substitutable product

o *arrier brand is compatible with image of rider

o *arrier has long-term commercial and social interest in the partnership

o *oca-cola purchased local brands e'g' $hums#p, *itra, 1imca to build trust

o *an piggyback on trusted corporate retailers like I$*, *houpal 0agar

Bocal non-pro#it & individual brands

I$* introduced its e-choupal initiative by piggybacking on reputed farmers

$hese farmers are appointed as 0anchalak *oordinated"

Banks in India: #se 0


14/23

$4I first speaking about health benefits of improved stove, later emphasisingon saving in time

H+BBE9AE :' +)6E*-S+BES SE*IE

onsumers are concerned about

.roduct breaking down

$ime elapsed before restoration

$imeliness of service appointments

Dature of dealing with service personnel

;re!uency of service call or repair failure

hallen!es & Solutions

o


15/23


16/23

Session =

nlockin! the $ealth in *ural Markets

1. Identi#,in! prospective customers

Maruti 0uCuki: 4ural foray 866J $D $urmeric farmers &


17/23

Mahindra 0amriddhi upgraded dealer network to provide services & info on

weather, pets, crop prices, soil & irrigation water testing facilities, and farmproductivity'

9IBEE* +SE +nanl,sis as e3plained in class

Session 11M+*7E6I9A S6*6*E

Marketing activities should be mindful of )-to-) relations in subsistence markets'

(ecentralisation of marketing

0hift responsibility and power to boundary-spanning employees so that they can

attend to customer needs !uickly'

1ocal personnel have superior access to knowledge about customer needs,

preferences, and ability to pay'

%ternaliCed Marketing

Marketing system is highly fle%ible & adaptable to changing local market conditions

.artner with local people / entities that are e%ternal to the firm

mpower them to make marketing decisions independently on the firm5s behalf

(on5t co-opt these people / entities into company as they will lose credibility

ene#its o# dencetralisation / e3ternalised marketin!

0ystematically increases the firm5s access to detailed and nuanced knowledge about

the customers and communities

1ocal marketing partners benefit economically from engaging in design &

manufacture of products

;acilitates a symbiotic relationship between the firm and subsistence consumers

0ocial capital is contributed by both parties:

- *ommunities can provide access to uni!ue network of trusted relationships

- *ompanies can bring skills of coordination & communication to facilitaterelationships between disparate communities bridging social capital

- ;irms can facilitate sharing of info & tech across communities, enable the flow ofnew ideas for innovation & reduce conflicts between communities

M+*7E6I9A B6*E


18/23

#nwritten policies & guidelines that provide employees with behavioural norms for

e%ecution


19/23

- 0ome of elements of value can be:

o Dewness / .erformance

o *ustomisation / (esign

o Brand / .rice

o *ost & 4isk reduction

o ccessibility / *onvenience

o #sability


20/23

%. hannels'


21/23

5. *evenue streams' It represents cash a company generates from each

customer segment'

- business model can involve two different types of revenue streams:

o $ransaction revenues resulting from one-time customer payments

o 4ecurring revenues resulting from ongoing payments resulting from

either delivering a value proposition to customers or provide post-purchase customer support'

- @ays to generate revenue streams:

o sset sale / #sage fee

o 0ubscription fee / 1ending

o 4enting / 1easing

o 1icensing / Brokerage fee

- +uestions to ask:

o ;or what value are customers willing to payG

o ;or what do they currently payG

o


22/23

o 4evenue streams


23/23

Savings ()penditure

Investment Income

Goods * Services purchased $or household consumption

Markets

Goods * Services sold

Production System

+ Material

+ Labour

+ Capital

+ ('uipment

)i!ure 1 Marketin! )acilitation to Improve 0ualit, o# Bi#e / Bivelihoods

Institutional

+rran!ements

Market

Inter#ace

han!e in

Bivelihoods

Source'uthor5s own

Aovernment

4egulations9rants / 0ubsidy

9A" ompan,

;inanceK $echnologyMarket access

Supportin! Institutions

"

.hysical facilitiesInstitutional facilitiesBehavioural factors

Bivelihood +ssets

Datural ,

.hysical;inancial, 0ocial

rm - compiled notes

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