Volume 18, Number 1 Article by G Shainesh March, 2006
Marketing and Sustainability – Emerging Opportunities for Profitable Growth: Discussion :
The high economic growth rate in the last decade, post liberalisation, has led to an interest in marketing to the bottom of the pyramid (BoP), hitherto seen as marginal to marketing concerns. The poor are now seen as a potential and under-served market, and this has led to new ways of thinking about the business.
The IIMB Management Review (IMR) Round Table on Marketing and Sustainability – Emerging Opportunities for Profitable Growth brings together a panel of representatives from conventional profit-making and not-for-profit organisations, as well as academics, to share their experiences in marketing to the poor and discuss the issues concerned.
Mr Shailendra Tyagi, Head – Rural marketing, ITC-IBD, shared the dynamics of ITC’s highly successful eChoupal model, an efficient supply chain that reaches out to 3.5 million farmers in 31,000 villages across six states. eChoupal leverages IT to virtually cluster all the value chain participants and makes use of the physical transmission capabilities of intermediaries while disintermediating them from the chain of information flow and market signals. This overcomes the disadvantages of the traditional ‘mandi’ scenario where the information and the transaction are linked, often to the disadvantage of the farmer. The village Internet kiosks managed by the farmers themselves allow the agricultural community to access information in their local language on the weather and market prices, and facilitate the sale of farm inputs and purchase of farm produce at the farmers’ doorsteps. The resultant lower transaction costs have yielded substantial savings and superior bargaining power to the farmer, and leadership in consumer brands and increase in commodity volume for ITC. Private business can build profitable business models out of streamlining such ‘broken value chains’ and bringing the poor to the markets.
The problem with Indian healthcare is not the lack of infrastructure but of paying capacity. Bangalore’s Narayana Hrudayalaya attempts to tackle this problem through a mass insurance scheme. Ms Priti Jacob, CEO, Micro Health Programme, details Yeshasvini, a co-operative farmers’ health scheme. Offering a package consisting of free out-patient department consultations, discounted diagnostics, cashless facility for listed surgeries, and treatment at 150 private hospitals, all at a monthly premium of Rs 5/-, Yeshasvini is an example of successful public-private partnership promoting the practice of pre paying for health. Enabling the maximum utilisation of unutilised infrastructure, such initiatives also tone up the public health system.
Ms B Raghini of Madurai’s Dhan Foundation describes its core business as attracting, nurturing, mentoring and dedicating development professionals to work with the poor. Dhan’s approach includes scaling down the technology to make it accessible to people. Other than microfinance, Dhan is active in healthcare, being part of the DISHA – Distance Healthcare Advancement – venture, a partnership with Philips, ISRO and Apollo Hospitals, to deliver affordable healthcare at the doorstep of the poor and promote health seeking behaviour while building a sustainable business model. While there were many learnings from the project, the challenges were in retaining the learning orientation, mutual trust and respect among partners, freedom and autonomy of experimentation, community involvement in the decision making processes, enabling institutional mechanisms for sharing, and interacting with the government and other institutions.
Based on a study of ten BoP initiatives from diverse geographies and sectors, Prof S S Gaur of IIT Bombay developed a framework for doing business with the BoP market. The three broad kinds of interaction envisaged include BoP market as supplier, as end user and as sales agents/partners. In the course of the pre-operations, operations and sustainability phases, companies can decide to choose multiple interactions or even create more complex interactions. However, only those initiatives that benefit both the corporate and the community on a long term basis will survive.
Marketing literature of the 1950s saw two roles for marketing in economic development – raising the aspiration levels of the people and meeting those aspirations through targetting, positioning, product design, pricing and other mechanisms. But given the gap between marketing theory and practice, have marketers actually contributed to the dipping of the aspirations of the poor from income generating options to those that are more expenditure oriented? What kind of value systems and lifestyle products are being projected through marketing communications? Are marketers taking into consideration the changing social scenario and the different categories of the poor, each with its own problems and aspirations? Prescribing the 2i + 3p approach to the BoP, Prof M Jha of IIMB stresses the right kinds of investment and innovation in building infrastructure – more polytechnics than institutes of technology, the all-purpose, economical ‘maruta’ rather than the expensive Maruti. Marketers must have perseverance and patience, and rid themselves of the scaling- returns-viability mindset and build the right kinds of partnerships.
The post-globalisation enthusiasm for BoP must be seen in context, and must not be hyped up, cautions Prof NCB Nath of the Foundation to Aid Industrial Recovery, Bangalore. Markets for the poor have long existed but Indian industry did not pay attention to them as production capacities were restricted and premium marketing was the best way of optimising what was available. Post liberalisation, when capacity limitations were removed, the policy shifted towards creating competitive advantage. However, when market share battles became bloody, marketers thought of expanding thin markets. But cultivating edge markets requires a shift from the transaction mindset to relationship, which extends over time, often a lifetime. The three models of BoP marketing — businesses, NGOs and the state – must re-examine their motives and be clear about their purposes.
Reprint No 06106a
