Rural Marketing by ITC

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Subject: Rural Marketing

Topic: Rural Marketing by ITC

Presented By:

Pratik Bubna 03

Bhushan Mehta 21

Dhiren Nagareya 28

Ninad Save 39

Sahil Shah 47

INDEX

1) Introduction to Rural Marketing

2) ITC Company Profile

3) ITC Products

N a r s ee M o n j ee C o l l eg e O f C ommer c e A n d E c on omic s

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4) Product, Price, Promotion and

Distribution

5) ITC E-Choupal

6) ITC Rural Hubs and Spokes

7) Conclusion

Introduction to Rural MarketingRural markets represent a distinct dynamic in how they come intobeing and make unique demands on how the product is designed andhow the brand is positioned and promoted. Greater the strategicattention to these unique demands, assure greater the chances ofproduct's success in the rural market. Fringe acceptance of consumerproducts or brands is no indication of market potential. It actuallywould only result in higher incidence of brand and product mortality asmore firms try to choke those segments with competing brands.

The effort has to be directed towards reaching out to more and moreof rural population offering them the products which they find value for

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Another major plague of rural marketing has been widespreadavailability of fakes. Shopkeeper plays a very important role here, asconsumer asks for things, not brands like Laal wala sabun dena, LalDant Manjan Dena. To counter this nuisance agency would certifyspecific village Kirana Wala as Genuine Products Store. Failure tocomply at surprise checks would result in immediate termination ofcontract.In return, Agency would provide special incentives to these stores withbetter margins, up gradation of store and longer credit period. In thisway more and more stores can be brought in the preference bracket,mitigating the danger of stores selling cheap fakes. Storeadvertisement campaigns could be funded by the agency like reachingevery village household through free sample sachets using local schoolchildren. Special incentives could be given to all genuine productstores on reaching sales target. Genuine Product Stores could be

collectively advertised at the end of every participating company'sadvertisement, educating people about them.The Indian rural market is a complex mosaic of mind-sets, cultures,and lifestyles. While education, employment, income, agricultural landownership may still be the major deciding factors accounting for socialdifferentiation, they do not yield reciprocal cohort behavioral patterns,with respect to consumption patterns, purchasing decisions andpriorities of product ownership. At 125.2 million (1999-00), India hasmore rural households than all households in Western Hemispherecombined. Half of Indias GDP comes from rural and semi-urban areas.

The per capita annual income in rural India is Rs: 9,481, against urbanIndias Rs 19,407. But, lower education and housing expenses makesthe disposable income almost equable.

There is huge potential and definitely there is lot of money in ruralIndia but the smart thing would be to weigh in the roadblocks ascarefully as possible. The companies entering rural market must do sofor strategic reasons and not for tactical gains as rural consumer is stilla closed book. It is only through unwavering commitment that thecompanies can make a dent in the market.

ITC Company Profile

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ITC is one of India's foremost private sector companies with a marketcapitalisation of nearly US $ 18 billion and a turnover of over US $ 5.1Billion. ITC is rated among the World's Best Big Companies, Asia's 'Fab50' and the World's Most Reputable Companies by Forbes magazine,among India's Most Respected Companies by BusinessWorld andamong India's Most Valuable Companies by Business Today. ITC alsoranks among India's top 10 `Most Valuable (Company) Brands', in astudy conducted by Brand Finance and published by the EconomicTimes.

ITC has a diversified presence in Cigarettes, Hotels, Paperboards &Specialty Papers, Packaging, Agri-Business, Packaged Foods &Confectionery, Information Technology, Branded Apparel, PersonalCare, Stationery, Safety Matches and other FMCG products. While ITCis an outstanding market leader in its traditional businesses ofCigarettes, Hotels, Paperboards, Packaging and Agri-Exports, it is

rapidly gaining market share even in its nascent businesses ofPackaged Foods & Confectionery, Branded Apparel, Personal Care andStationery.

As one of India's most valuable and respected corporations, ITC iswidely perceived to be dedicatedly nation-oriented. Chairman Y CDeveshwar calls this source of inspiration "a commitment beyond themarket". In his own words: "ITC believes that its aspiration to createenduring value for the nation provides the motive force to sustaingrowing shareholder value. ITC practices this philosophy by not onlydriving each of its businesses towards international competitiveness

but by also consciously contributing to enhancing the competitivenessof the larger value chain of which it is a part."

ITC's diversified status originates from its corporate strategy aimed atcreating multiple drivers of growth anchored on its time-tested corecompetencies: unmatched distribution reach, superior brand-buildingcapabilities, effective supply chain management and acknowledgedservice skills in hoteliering. Over time, the strategic forays into newbusinesses are expected to garner a significant share of theseemerging high-growth markets in India.

ITC's Agri-Business is one of India's largest exporters of agriculturalproducts. ITC is one of the country's biggest foreign exchange earners(US $ 3.2 billion in the last decade). The Company's 'e-Choupal'initiative is enabling Indian agriculture significantly enhance itscompetitiveness by empowering Indian farmers through the power ofthe Internet. This transformational strategy, which has already becomethe subject matter of a case study at Harvard Business School, isexpected to progressively create for ITC a huge rural distribution

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infrastructure, significantly enhancing the Company's marketing reach.

ITC's wholly owned Information Technology subsidiary, ITC InfotechIndia Limited, is aggressively pursuing emerging opportunities inproviding end-to-end IT solutions, including e-enabled services andbusiness process outsourcing. ITC's production facilities and hotelshave won numerous national and international awards for quality,productivity, safety and environment management systems. ITC wasthe first company in India to voluntarily seek a corporate governancerating.

ITC employs over 24,000 people at more than 60 locations acrossIndia. The Company continuously endeavors to enhance its wealthgenerating capabilities in a globalising environment to consistentlyreward more than 3,81,000 shareholders, fulfill the aspirations of itsstakeholders and meet societal expectations. This over-arching vision

of the company is expressively captured in its corporate positioningstatement: "Enduring Value. For the nation. For the Shareholder."

ITC Products

Cigarettes:

ITC is the market leader in cigarettes in India. With its widerange of invaluable brands, it has a leadership position in everysegment of the market. Its brands include Insignia, India Kings,Gold Flake, Navy Cut, Scissors, Capstan, Berkeley, Bristoland Flake.

Foods:

ITC made its entry into the branded & packaged Foods businessin August 2001 with the launch of the Kitchens of India brand withbrand launches in the Confectionery, Staples and Snack Foodssegments. ITC's world famous restaurants like the Bukhara and theDum Pukht and other products like Aashirvaad, Sunfeast, Mint-O.

Lifestyle Retailing:

ITC's Lifestyle Retailing Business Division has established anationwide retailing presence through its Wills Lifestyle chain ofexclusive specialty stores. Beginning with its initial offering ofWillsSport relaxed wear from the first store at South Extension, it has

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expanded with Wills Classic work wear, Wills Clublife eveningwear.

Greeting, Gifting, and Stationary:

ITC's stationery brands Paper Kraft & Classmate are the mostwidely distributed brands across India. Paperkraft is targeted atworking executives and college goers. The Classmate rangeconsists of notebooks, long books, drawing, etc. ITC's Greeting &Gifting products include Expressions greeting cards and giftingproducts.

Agarbattis:

ITC has launched Mangaldeep Agarbattis across a wide range offragrances like Rose, Jasmine, Bouquet, Sandalwood, Madhur,

Durbar, Tarangini, Anushri..

Hotels:

The 484-room ITC Hotel Maurya Sheraton & Towers at NewDelhi is not only amongst the leading business hotel in the countryand the 386-room ITC Hotel Grand Maratha Sheraton &Towers. Fabulous Indian meal at the Bukhara.

Safety matches:

These matches are available in unique designs and with innovativevalue added features. ITC's brands like iKno, Mangal Deep,VaxLit and Delite.

Product

Product Levels:

(1) Core BenefitIt is the fundamental service or benefit that the customer isbuying the product for. With respect to ITC, if we take the product lineof foods, the core benefit is to satisfy hunger.

(2) Basic Product

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It is conversion of core benefit into basic product which can besold. With respect to ITCs food segment, the products areconfectionary, snacks etc.

(3) Expected ProductIt is a set of attributes a buyer wishes to see in a product. Here,

consumers expect healthy food and harmless ingredients.

(4) Augmented ProductThey are products whose features exceed the expectation of

consumers. For food products like Bingo and Kitchens of India, theirattractive packaging and some freebies can be a good augmentation.

(5) Potential ProductIt emphasizes the importance of customization like P & G, Barbie

Dolls, etc. However this level is absent in food segment of ITC.

1. Product:

Product Width:It refers to the different product category a company has. For ITC, it is

9.

Product Length:It refers to number of items in each category. If we take case of

stationary it comes to 3.

ITCs Product Assortment

Cigarettes FoodsLifestyle

RetailStationary Incense

sticksHotels Paper

Agri

BusinessI.T.

India KingsClassic

Gold FlakeNavy Cut

Bristol

Flake

Kitchenof IndiaAshirwad

SunfeastMint-O

CandymanBingo

JohnPlayers

MissPlayers

WillsLifestyle

PaperkraftClassmateRegalia

MangaldeepSpriha

PaperboardsSpeciality

PapersPackaging

FoodgrainsEdible Nuts

Marine ProductsProcessed Foods

Coffee

Spices

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Product depth:It refers to number of sizes and variants offered in each product. If wetake example of their classmate books there are 8 various sizesavailable in it.

Consistency:It refers to the degree of how much the products lines are related in

terms of end use, production requirements, distribution channels orsome other way. We find that ITCs product lines can no way be calledconsistent in any of these terms.

Maturity:Sales increase as the product is accepted by most potential

buyers. ITCs agri business can be classified as a mature business as it

is at its peak and ITC's Agri-Business is one of India's largest exportersof agricultural products. ITC is one of the country's biggest foreignexchange earners (US $ 2.8 billion in the last decade).

Price

Time

Inception Growth Maturity Decline

Product Life Cycle

Profits

Sales

Re

ve

nu

e

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ITC believes that a significant portion of the rural population is paid indaily wages. Daily wage earners tend to have little stock of money,and therefore tend to make purchases only to meet their daily needs.The implication is that pack sizes and price points are critical to sales,and importantly, that rural consumers view the purchase-tradeoffdilemma across a much wider range of product categories. As a result,the nature of competition is much greater; a beverage manufacturer isnot only competing with other manufacturers in its category, 10 butalso other products that consumers may consider one-off luxurypurchases such as shampoo. So ITC examines method by which it canmake the product more affordable. In the case of consumer durableone way is to work through rural bank and offer higher purchase termsto consumer.In short, the Value for money is the most important concept thatdifferentiates ITC from the rest

Promotion

Promotion through Advertising:

For ITC advertising is the main the tool for promoting its food products.When it signed Shah Rukh khan, and Sania mirza it gave a tremendousboost to the confectionary products like biscuits and all othersproducts.

Surrogate advertising:

Here well known celebrities are promoting the products. In April 2005,

Sunfeast launched its major campaign fro promoting the product. Itsigned on Hindi film actor, Shah Rukh Khan as its brand ambassador.In the same year, as the official sponsor of the WTA tennischampionship -- titled the Sun feast Open -- the company had teenagesensations Sania Mirza and Mahesh Bhupathi campaigning for it. Butthat's not all. For promotions in southern states, Sun feast has signedTamil super star Surya as a brand ambassador.No product advertisement relating to tobacco is published by thebusiness. The business also maintains a website, 'itc-iltd.com', whichprovides the details of Tobaccos grown in different regions of India.

Sales promotions

ITC indulged in sales promotion basically only for its small products.ITC Ltds agarbathi business division concentrates to promote itsSpriha, Ashageet and Nivedan brands as national brands. Salespromotions is basically providing discounts, samples etc. ITC promotesits agarbathi by giving free small samples of agarbathi packets. ITCuses sales promotion because it is facing tough competition from

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others competitors like cycle brands agarbathi. Also in case of brandapparel like john players there are various cash discounts. Also, thecompany tied up with Bey Blades, the popular television series thatwas a rage among children, to promote its confectionary products.

Public Relations - Public welfare activities

ITC is involved in social welfare activities. ITC Limited plans to provideinfrastructure facilities at select rural Government schools in theCoimbatore district under its Project Classmate. ITC has undertakenthis project as part of its corporate social responsibility. A survey ofnearly 50 schools conducted by ITC in Coimbatore revealed that mostof them were in need of facilities such as girls toilets, benches anddesks, black board and blocks. The project had already started inabout five schools. The company had tied play materials. Fifty-two

schools had been identified in Mettupalayam and Karamadai up with aChennai based non-governmental organization (NGO), V-Excel, to carryout its activities in the district. Also through the confectionary productslike Sunfeast it is contributing to the rural education like if you buy aSunfeast pack your one rupee will go in rural education development.This advertisement of contributing one rupee is done by the brandambassador Shah Rukh Khan.

Distribution

For most companies wanting to enter the rural markets, distributionposes a serious problem. Distribution costs and non availability ofretail outlets are major problems faced by the marketers.

a.) Rural Marketing Vehicle (RMV) Marketers need to make moreon- ground contact with their target audience as well as makedemonstration of products as consumers in rural markets rely on the'touch and feel' experience. One of the ways could be using companydelivery vans which can serve both the purposes.

b.) Melas and Haats:- According to the Indian Market ResearchBureau, around 8000 melas are held in rural India every year andannual sales at melas amount to Rs.3,500 crore. Besides these melas,rural markets have the practice of fixing specific days in a week asMarket Days when exchange of goods and services are carried out.Also, every region consisting of several villages is generally served byone satellite town where people prefer to go to buy their durable

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commodities. Marketing managers can use these feeder towns theywill easily be able to cover a large section of the rural population.

Case Study - Agarbattis in Rural Market

As part of ITC's business strategy of creating multiple drivers of growthin the FMCG sector, the Company has commenced marketingagarbattis (incense sticks) sourced from small-scale and cottage units. This business leverages the core strengths of ITC in nation-widedistribution and marketing, brand building, supply chain management,manufacture of high quality paperboards and the creation ofinnovative packaging solutions to offer Indian consumers high qualityagarbattis.

ITC has launched Mangaldeep Agarbattis across a wide range offragrances like Rose, Jasmine, Bouquet, Sandalwood, Madhur,Durbar, Tarangini, Anushri and Mogra. To offer better valueproposition to the consumer, Mangaldeep is also available in 3in1 and5in1 varieties giving the consumer three and five fragrances in onepack respectively. Attractively packaged, these brands have been

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appropriately priced to appeal to a cross-section of consumers atvarious price segments. These agarbattis are available in innovative'Fragrance-Locked' packaging.

ITC has also entered into an MOU with the Khadi & Village IndustriesCommission (KVIC) to source agarbattis from KVIC approved units, andto distribute agarbattis through the Khadi Bhavan / Khadi Bhandaroutlets across the country. This collaborative venture is expected toresult in employment generation, particularly in the semi-urban andrural areas.

ITC is also supporting an 'Agarbatti Community ParticipationProgramme' run by the Vyakti Vikas Kendra, a non-profit organisationfounded by the renowned spiritual guru Sri Sri Ravishankar and locatednear Bangalore. Over 100 village women are gaining from the trainingthat this organisation imparts in rolling agarbattis. ITC is also

beginning to extend similar support to other NGOs in other states likeBihar, Tripura and Andhra Pradesh, who are also setting up agarbattiunits, training village women in rolling agarbattis and employing thesewomen in these units.

Marketing MixProduct:

1) ITC Limited has launched agarbattis in Indian Rural Market.2) ITC has sold these Agarbattis in the name of Spriha and

Mangaldeep.3) These agarbattis have got different fragrances like rose, jasmine,

bouquet, sandalwood, madhur, sambrani and nagchampa.4) These agarbattis are available in fragrance-locked packets.

Pricing:

1) ITC is selling these agarbattis at very low cost seeing theeconomy of the people staying in rural areas at Rs five for 10sticks for every pack.

2) ITC has also kept cost for each stick that is 75 paisa.

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Place:

1) ITC has promoted this product through the melas and Haats.2) Some agarbattis had been given to co-operative societies to

help in distributing the agarbattis to different consumers.

Promotion:

1) ITC had chosen to promote their agarbattis in rural marketshrough wall paintings in different languages so that it should beunderstood by everyone.

2) ITC had also chosen formal media to promote their product byTV and Radio.

ITC E-Choupal

The Big Picture:

ITCs International Business Division, one of Indias largest exporters ofagricultural commodities, has conceived e-Choupal as a more efficient

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supply chain aimed at delivering value to its customers around theworld on a sustainable basis.

The e-Choupal model has been specifically designed to tackle thechallenges posed by the unique features of Indian agriculture,characterized by fragmented farms, weak infrastructure and theinvolvement of numerous intermediaries, among others.

The Value Chain - Farm to Factory Gate:

e-Choupal also unshackles the potential of Indian farmer who hasbeen trapped in a vicious cycle of low risk taking ability > lowinvestment > low productivity > weak market orientation > low valueaddition > low margin > low risk taking ability. This made him andIndian agribusiness sector globally uncompetitive, despite rich &abundant natural resources.

Such a market-led business model can enhance the competitiveness of

Indian agriculture and trigger a virtuous cycle of higher productivity,higher incomes, and enlarged capacity for farmer risk management,larger investments and higher quality and productivity.

Further, a growth in rural incomes will also unleash the latent demandfor industrial goods so necessary for the continued growth of theIndian economy. This will create another virtuous cycle propelling theeconomy into a higher growth trajectory.

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The Model in Action:

Appreciating the imperative of intermediaries in the Indian context, e-Choupal leverages Information Technology to virtually cluster all the

value chain participants, delivering the same benefits as verticalintegration does in mature agricultural economies like the USA.

e-Choupal makes use of the physical transmission capabilities ofcurrent intermediaries aggregation, logistics, counter-party risk andbridge financing while disintermediating them from the chain ofinformation flow and market signals.

With a judicious blend of click & mortar capabilities, village internetkiosks managed by farmers called sanchalaks themselves, enablethe agricultural community access ready information in their local

language on the weather & market prices, disseminate knowledge onscientific farm practices & risk management, facilitate the sale of farminputs (now with embedded knowledge) and purchase farm producefrom the farmers doorsteps (decision making is now information-based).

Real-time information and customized knowledge provided by e-Choupal enhance the ability of farmers to take decisions and aligntheir farm output with market demand and secure quality &productivity. The aggregation of the demand for farm inputs fromindividual farmers gives them access to high quality inputs from

established and reputed manufacturers at fair prices. As a directmarketing channel, virtually linked to the mandi system for pricediscovery, e-Choupal eliminates wasteful intermediation and multiplehandling. Thereby it significantly reduces transaction costs.

e-Choupal ensures world-class quality in delivering all these goods &services through several product / service specific partnerships withthe leaders in the respective fields, in addition to ITCs own expertise.

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While the farmers benefit through enhanced farm productivity andhigher farm gate prices, ITC benefits from the lower net cost ofprocurement (despite offering better prices to the farmer) havingeliminated costs in the supply chain that do not add value.

The Status of Execution:

Launched in June 2000, 'e-Choupal', has already become the largestinitiative among all Internet-based interventions in rural India.'e-Choupal' services today reach out to more than 3.5 million farmersgrowing a range of crops - soyabean, coffee, wheat, rice, pulses,

shrimp - in over 36,000 villages through nearly 6000 kiosks across ninestates (Madhya Pradesh, Haryana, Uttaranchal, Karnataka, AndhraPradesh, Uttar Pradesh, Maharashtra, Rajasthan and Kerela).

The problems encountered while setting up and managing these e-Choupals are primarily of infrastructural inadequacies, includingpower supply, telecom connectivity and bandwidth, apart from thechallenge of imparting skills to the first time internet users in remoteand inaccessible areas of rural India.

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Several alternative and innovative solutions some of them expensive are being deployed to overcome these challenges e.g. Power back-up

through batteries charged by Solar panels, upgrading BSNL exchangeswith RNS kits, installation of VSAT equipment, Mobile Choupals, localcaching of static content on website to stream in the dynamic contentmore efficiently, 24x7 helpdesk etc.

Going forward, the roadmap includes plans to integrate bulk storage,handling & transportation facilities to improve logistics efficiencies.

As Indias kissan Company, ITC has taken care to involve farmers inthe designing and management of the entire e-Choupal initiative. Theactive participation of farmers in this rural initiative has created a

sense of ownership in the project among the farmers. . They see thee-Choupal as the new age cooperative for all practical purposes.

This enthusiastic response from farmers has encouraged ITC to planfor the extension of the e-Choupal initiative to altogether 15 statesacross India over the next few years. On the anvil are plans tochannelise other services related to micro-credit, health and educationthrough the same 'e-Choupal' infrastructure.

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e-Choupal among the '10 biz ideas thatchanged India

The August 31 2008 issue of The Week magazine features e-Choupalamong the '10 biz ideas that changed India'.

The Article says:

Successfully building a farmer-centric ecosystem that is notgovernment-owned and run and creating virtual markets inrural India

Entrepreneur: S. Sivakumar

Its aim is to ultimately become a universal platform for any kind ofinformation-farming, social services, finance-that villagers would wantaccess to. But like all transforming ideas, it was initially dismissed as'unrealistic and impractical'. But S. Sivakumar, head, international

business and agricultural division, ITC, was unfazed. He was convincedthat as long as the process was simple and visibly useful andbeneficial, the Indian farmer would learn to use IT to his advantage.

Sivakamar was proved right. Within a short while of being rolled out,the concept caught on.

Operating out of village internet kiosks managed by the farmers, calledsanchalaks, the e-Choupal gave to the agricultural communityconvenient access in their local language to information on weather,market scenarios, scientific farm practices and risk management and

facilitating the sale and purchase of farm inputs (with embeddedknowledge on how to use optimally).

Appreciating the imperative of the much-abused middlemen in theIndian rural context, it makes use of their physical transmissioncapabilities like aggregation, logistics and bridge financing, whileeliminating them from the chain of information flow and marketsignals.

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But how did the idea germinate? It all started when Sivakumaremphasised to group chairman Y. C. Deveshwar that if the companywanted to grow in the agri business, it needed to pump in more moneyalong the value chain. Deveshwar had initially suggested using modelssimilar to that of Ebay and Amazon. But he finally fell in withSivakumar's concept and the first e-Choupal became operational inJune 2000.

Sivakumar admitted though that initially even he was not sure whetherthe project would be able to establish trust with the farmers.

But the problem was just in the mind. Having set aside two days fortraining six sanchalaks to begin with, they were taken by surprisewhen they completed the first phase of training in only three hours.

Said Sivakumar: "Unlike the typical urban methodology of starting with

the basics, we started with the benefits of e-Choupal and how farmerscould derive them." With input from the farmers, the choupal webportal became operational.

Since it was aimed at making markets more transparent andenhancing the bargaining power of farmers, it saw some resistancefrom traders. But by 2004, e-Choupal became firmly establishedthrough nearly 6,500 kiosks across nine states (MP, Haryana,Uttaranchal, Karnataka, Andhra Pradesh, UP, Maharashtra, Rajasthanand Kerala).

ITC aims to reach 15 states by 2010, covering 1,00,000 villages with20,000 choupals. It also plans to expand its horizon of services:including fruits and vegetables in its portfolio of agricommodities,besides adding information on health services, vocational educationand micro-financing.

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ITC'S RURAL HUBS AND SPOKES:

ITC is one of the most active companies in rural India. They have setup over 2,500 e-choupals in the villages and expect income from e-

choupals to be more than their tobacco business by 2010. "In the next5-7 years, ITC will have 20,000 choupals. Since each choupal coversaround five villages, the company will have access to 100,000 villages.Each choupal currently serves 500-600 farmers." To complete thepicture, India has about 600,000 villages with about 700 million peoplein all. "[ITC chairman Yogi] Deveshwar explained that the revenueestimated from choupals in the coming years was not unfounded,given the importance of the rural economy. He said at present thepropensity to spend was low among villagers because surplus incomewas low. However, the choupal network would boost farmers' incomeand increase their propensity to spend, he said, adding that this would

have a multiplier effect on the economy."

The e-choupals are spokes, and where there are spokes, there is aneed for a hub.The Economic Times writes about their plan to set uprural malls: ITC is setting up 45 shopping malls in the countryside,each the size of Delhis Khan Market, to retail everything from JohnPlayers clothes and ICICI life insurance to Eicher motorbikes. The firstfive malls, costing more than Rs 20 crore, will be ready for shoppers in16 weeks.

What ITC gets in return is a dedicated customer base, savings through

procurement of cheaper farm produce, and a cut ranging from 3%-40%of sales value from the brands which use its shelf space. The focus atpresent is Madhya Pradesh, where ITC has already managed to set upan exhaustive network of e-chaupals for procurement of soyabeansand sale of agri-inputs.

Built on 5 acres, each mall would cost ITC anything between Rs 3-5 cr[USD 650K - 1.1 million], depending on the price of real estate. To put

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that area in perspective, most malls in the large metros are built onjust 2-3 acres of land. Each mall will be a self-contained unit, withfacilities for storage of goods, warehousing of agricultural produceprocured by ITC, shelf display, and parking. Each store will be mannedby at least five full-time ITC sales staff, and the number could go up inbusy seasons of the year.

This interests us is the context of our RISC ideas. We are working toset up a pilot by mid-2004. RISC's goals are broader: "Fundamentally,the specific market failure that RISC addresses is that of coordinationfailure. RISC is designed to coordinate the activities of a host ofentities?commercial, governmental, NGOs. It synchronizes investmentdecisions so as to reduce risk. It essentially acts as a catalyst thatstarts off a virtuous cycle of introducing efficient modern technology toimprove productivity that increases incomes and thus the ability ofusers to pay for the services, and so on. It creates a mechanism that

reduces transaction costs and therefore improves the functions ofmarkets."

Future Positioning of ITC

a leading FMCG player in India

F

ARMERS

MARKET

SExpanded FMCG distribution capability

e-choupal rural two-way fulfillmentcapability

VPN providing SCM, ERP & CRM capability

Matches&

Agarbattis

Greeting

cards/stationery

Lifestyleretailing

Branded

Foods

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Conclusion

Thus looking at the challenges and the opportunities which ruralmarkets offer to the marketers it can be said that the future is verypromising for those who can understand the dynamics of rural marketsand exploit them to their best advantage. A radical change in attitudesof marketers towards the vibrant and burgeoning rural markets iscalled for, so they can successfully impress on the 230 million ruralconsumers spread over approximately six hundred thousand villages inrural India.

Acknowledgement

We would like to take this opportunity to thanks Prof. Natu for hisvaluable advice, suggestions and the help given to us incompletion of this project. Its been a pleasure working on thisproject. Its been an adventurous and learning experience. Onthe successful completion of this project, we feel worthwhile toconvey our acknowledgement to all those associated with it. Wealso take this opportunity to express our gratitude to all thosewho directly or indirectly helped us to successfully complete thisproject.

A basis for strategic partnerships with other FMCG brand owners