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“Each of us should make Rediscovering Rural India our life’s mission” said Mr. D.K. Bose referring to the central theme of Horizons’07, IIM Kozhikode’s Annual Management Conclave. Mr. Bose, an expert in rural media planning and communications debunked some of the commonly held myths that urbanites harbor about rural India and gave interesting insights into the rural consumer and the nitty-gritty of rural marketing.

There are many interpretations of the word rural, but the one that matters to someone who’s marketing to the rural consumer is that, Rural is a mindset. People in rural India are influenced differently and form different opinions than people in urban India. Designing and communicating messages for the rural market is challenging but rural demographics go a long way in making marketing easier. For example, how many of us know that 60% of the rural population lives in just a quarter of the 600,000 plus villages in India? Or that rural women are more literate than urban women? Or that rural literacy is growing faster than urban literacy? Mr. Bose described rural India through the “3D effect” – diverse, dispersed and distanced. The rich diversity of our country, its dispersal in terms of its vast geographical landscape and the distance between the urban jungle and the rural hinterland are the touchstones that any rural marketer should bear in mind when designing media communications for the rural market.

Debunking myths about the rural Indian

Mr. Bose threw light on come of the commonly held myths about the rural consumer in the mind of the urban marketer.

  • Rural is not a mass: It is common for us to think of rural India as one aggregate mass of people that behaves in the same way. But this notion needs to be done away with particularly for a rural marketer. Rural India should be understood from the different economic and socio-cultural segments that thrive in it.
  • Rural is not individualistic: Unlike the urban consumer who is individualistic, rural consumers tend to make decisions as a community. Communities of youth, women and professions are important influencers of particular buying decisions.
  • Rural is not illiterate: The rural consumer is not illiterate when it comes to his needs and buying decisions. He exhibits a strong visual literacy and associates with brands through their “visual touch”. Mr. Bose gave the example of “LifeBuoy” soap which is much better known as “Laal Saabun” in the villages.
  • Rural women are not confined to their homes: Women in India enjoy increasing economic power and are a major influencer in the purchase of household articles, particularly FMCG brands. They are perceived as the custodian of the family’s health and hygiene.

Fundamentals of Rural Marketing

With these insights, Mr. Bose went on to spell out the hierarchy of needs for the rural consumer. The rural consumer first looks to satisfy his basic needs and then seeks to satisfy his self-esteem in terms of his possessions. He doesn’t attach much value to personal gratification and luxury. To the rural consumer, money is not something to be consumed but is just a means of providing the essentials.

How do you communicate with the rural consumer? The message should be simple, direct and benefit-oriented. The time between communicating, selling and experiencing the product has to be compressed and the best way to do this is by directly demonstrating the benefits to the consumer in a language that the consumer understands. “If you want to sell your shampoo to the village woman, you’d better go down to the village and help a couple of women wash their hair using your shampoo”.

After spellbinding his audience with his insightful address, Mr. Bose concluded with the inspiring words “Rediscovering Rural India…Go ahead and do it!!!”

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Management Guru, Michael Porter, states that for a competitive advantage to be sustainable, it should be inimitable and unsubstitutable. While this theory has gained wide acceptance, a peek into what it means for today’s rapidly changing competitive landscape is in order.

We are past the stage where a firm could compete on the strength of propriety technology alone. At one point of time, people thought that the strength and wide acceptance of Microsoft’s propriety software would allow it to reign unchallenged. However the emergence of competitors in the space of web-browsing tools, email and even office automation show that the propriety software is not a sustainable advantage after all.

Southwest Airlines has been the best low-cost American carrier for donkey’s years. Despite competitors trying to ape its success, they’ve never quite succeeded. Why? Because the strength of Southwest doesn’t lie in just its operational excellence but in its people.

These two examples bring us to this article’s central theme – in a world where every technology has a substitute and every strategy is liable to be imitated, it is only the people of a firm that could provide a firm with a truly sustainable competitive advantage. With the services industry contributing to 54% of India’s GDP, the importance of human resources cannot be stressed too much. Gone are the days when human resource management was just an administrative or clerical job. Management has wised up to the fact that the success of a firm’s strategic objectives is possible only by partnering with its people.

There are, however, truths that would sober attempts at quickly tapping this resource. The developed economies of Western Europe and Japan face an enormous challenge in the form of a shrinking population. Other developed economies, including USA and China, face the prospect of a rapidly ageing population. Countries not facing either of these problems, like India, still have a shortage of talent. Yet all these countries also suffer from significant unemployment.

It is therefore clear that the problem isn’t one of human resource shortage – it is the failure to tap into the existing human potential. The HR Summit, part of Horizons’07 – the annual management conclave of the Indian Institute of Management Kozhikode – would initiate a dialogue that would seek to find out ways to unlock the human potential.


–Hitesh Sharma, 2nd year PGDM, IIMK

Unleashing India Inc

Two years ago, there were hardly any Indian entities merging with or acquiring American or European companies. In the last 2 years however, there has been a big change in the Indian corporate scenario. The number of mergers and acquisitions (M&A) taking place have suddenly shot up to a point where we now often find Indian companies negotiating M&A deals worth billions of US dollars. The big Indian companies are now aggressively looking at North American and European markets to spread their wings and become global players.

Growing economy, surplus cash with Indian companies, favorable government policies, attractive valuations and the availability of lucrative investment opportunities abroad have contributed to this phenomenon. European and American entrepreneurs are keener on selling businesses as they face a lot of competition from their counterparts in high growth Asian economies like India and China. The outsourcing phenomenon exposed Indian managers to Western work standards contributing to India’s image as a reliable, low-cost yet high-quality service provider. This has made Indian companies highly profitable and the net result is that Indian companies are now eyeing domestic as well as global markets to move up the value chain.

According to a report, India has recorded a 126% jump in the amount spent on M&A deals outside the Asia Pacific region last year. The report expects the second half of 2007 to be better than the first, which should bring the total investment in India to more than 100 billion USD by the year end, a five fold increase over last year.

With this acquisition spree forecasted to continue, many Indian companies are sitting pretty and are all set to become global players in the coming years. Horizons 2007 will bring together people from the industry to discuss the Indian growth story, trends in M&As and what else needs to be done to Unleash India Inc.

— Gopalakrishnan Hariharan ,2nd yr PGDM IIMK

“India lives in her villages” – M K Gandhi

“Self sufficient villages” were envisioned to be the pillars of the Indian growth story; a story which never really followed the original script! The ubiquitous money lenders, exorbitant interest rates and eternal bondage through ever mounting debts formed a sad tale for monsoon-dependent Indian villages.  Mass suicides and migration to the cities are just symptoms of the underlying syndrome. The ever increasing rural-urban divide is made sharper by the vicious bi-directional flow – that of human resources moving from villages to suburbs, towns to cities, while that of services and occupational opportunities trickling down the reverse direction.

Liberalization was supposed to change things. The floodgates to Indian markets were opened. However, private players mainly concentrated on capturing the relatively rich upper and middle classes. But now competition coupled with stagnant growth in the current markets have forced them to look beyond the fringes of the Tier 2 cities to the untapped potential of 70% of the population – the villages.

Two such rural forays of note are ITC’s e-choupal (2000) and HUL’s Project Shakti (2001). ITC’s initiative enabled farmers to market their products and readily access crop-specific, customised and comprehensive information on best farming practices. Project Shakti was an alternative distribution system and a bottom-of-the-pyramid initiative for tapping the rural market through women entrepreneurs.

Meanwhile, in Bangladesh, Prof Muhammad Yunus, pioneered a revolutionary model to disburse credit to the lesser affluent – what is now known as the Grameen Model of Microfinance.  Small loans (micro-credit) were made available to women to start their own ventures (e.g. vegetable stalls). Once their micro-enterprises were stable, the clients availed of a host of financial services like housing, sanitation loans, savings account & insurance. The success of this model brought about the Microfinance wave in Indian banking. Many national (ICICI Bank) and international banks (Deutsche Bank) as well as venture capital funds adopted various models to capture this new market. Simultaneously the high operating costs were reduced by automating the transactions with the use of technology like mobile phones, interactive voice response technology, biometric cards, MIS systems and newer microfinance delivery models like online lending platforms.

Increased access to capital as well as creating markets for consumer goods & services in rural India is the key to realising our potential as a nation. As they say we still “have miles to go” before we sleep! Horizons 2007, the annual management conclave of IIM Kozhikode will serve as a platform for eminent speakers to share their ideas on Rediscovering Rural India.

Beena Venugopalan, IIM Kozhikode.

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How do you become a winning manager? The secret to this was disclosed by Mr. Saugata Gupta, CEO – Consumer Products, Marico Ltd at Horizons 2007, the annual management conclave of IIM Kozhikode. Drawing on his experience over the last 15 years, Mr. Gupta distilled his learnings for the benefit of the students who hung onto his every word.

 

What do B-Schools not teach you?

Executional Excellence: Conceptualizing and strategizing is all well and good but unless these are translated into results you’re not adding any value to your company. To convert a plan into action needs discipline and this will go a long way in determining your success in an organization. You’ve got to start from the basics and get your hands dirty.

Managing Relationships at Work: Impression management plays a big part in your success at work. How do your senior, peers and reports perceive you? As a manager, you need to get the best out of your reports. A combination of empathy and respect will help you achieve this. Influencing your non reports ie., seniors and peers is another tricky matter. Practicing a one minute elevator pitch helps here. Always know exactly what you’re doing in the company.

Managing Ambiguity: 85% of Indian MBAs are engineers and have trouble dealing with solutions that are not black or white. You need to remember that all business decisions cannot be put into excel sheets. Sometimes you need to act on your gut feeling and take calculated risks with milestones for stop loss. Therefore have a team with diverse backgrounds and learn how to anticipate change.

 

What should you do in the first few years of your career?

Learn, Learn, Learn: Learn or you’re extinct. You need to know the business model of the organization you are working in completely. A good part of the learning you do comes from listening and asking the right questions. Your relationship with the organization is not a transactional one, instead focus on being an engaged member as this will help you extract the maximum out of your first few years.

Add Value: Do not be satisfied in remaining a cog in the wheel, instead concentrate on consciously adding value to the company. Support functions are important but the people who are most successful in their careers actively search for and take part in roles which create value for the company. Therefore when joining your first job after B-School, make sure that the role you take up is vital to the functioning of that organization.

Celebrate Mistakes: Do not be afraid to make mistakes. Unless you fail you will never know what you’re capable of. Ask yourself what you’re doing differently everyday. Innovation is a big driver of growth. Companies want you to experiment and take risks. So stop playing it safe. Always remember that your determination to succeed needs to be greater than your fear of failure.

 

What’s the recipe for long term Success?

  • Find out quickly what you are passionate about and set about doing that. You need to look forward to going to work everyday. Therefore don’t let peer pressure derail you. Placements aren’t everything. The real measure of success is not on Day Zero but 5 or 10 years down the line.
  • Set your personal goal. Goals are dreams with deadlines. Have a 3-5 year horizon while setting them. Your goals should be out of reach but not out of sight.

What are the traits of a Winning Manager?

Patience: Success doesn’t come overnight. Stick to your guns.

Resilience: Happens only when you face failure. So make mistakes!

Openness: Transparency and integrity will win you the respect of your peers.

Humility: A little humility goes a long way in creating lasting relationships.

Positive Attitude: Infectious Optimism will differentiate you from others.

Always remember: Your chances of winning increase depending on how badly you want to win!

 

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In 1820, China was the biggest economy in the world and accounted for 30% of the worlds GDP. India was second with 16%. Interestingly USA accounted for only 2% of global GDP. The predicted economic scenario for 2050 is uncannily similar to what it was almost 200 years ago. This was just the beginning of an hour of mind boggling insights into the past present and future of India Inc delivered with utmost flair by Mr. Abheek Singhi, Partner & Director, Boston Consulting Group at Horizons 2007, the annual management conclave of IIM Kozhikode. He set the context for the talk by talking about the general trends in the Indian economy. India presently is seeing the 3rd wave of growth. The first occurred during the De-licensing of the 90s, the second during the dotcom boom. The present wave of growth is unique in that, the unpredictability of the Indian economy seems to have given way to rapid acceleration of economic progress year on year, something that is unprecedented in recent history. The world now sees India as a strong, confident and dependable young nation which knows its strengths and isn’t afraid to claim its place. This recent surge of seemingly unstoppable growth has unleashed India Inc.

Foreign investments are not neo-colonialism

Mr. Singhi said that the performance of Indian stock markets, which is used as a yardstick to measure the growth of the economy, isn’t totally accurate. The rise in the SENSEX from 12000 to almost 18000 is mostly due to a few companies like Reliance, Bharti Telecom, ICICI etc… However we can’t take away the great achievement of such companies because of which the total shareholder returns in Indian Stock Market is at a 15 year high of 40% which is way above the global average of 2%. There are countries like Serbia where the returns are staggeringly high at over 100% but have very low market capitalization. It is the high market capitalization of the Indian Stock Markets coupled with 40% returns which make India a favourite destination of investors across the globe. Many people have the notion that this wave of foreign investments in India is sort of a neo-colonialism as the profits go abroad. Mr. Singhi mentioned how Indian private companies are growing at 42%, the Public Sector Units at 37% and the MNCs in India at 18%, showing that the growth is not entirely driven by MNCs but mostly by Indian private and public sector companies.

Increasing Confidence

One thing commonly noticed about Indian MBAs is that they undersell themselves, Mr. Singhi said. Compared to their counterparts from B-Schools like Harvard and Stanford, Indians have always been way better at analytical skills but were lower on confidence. Mr. Singhi illustrated this with his encounter with a foreign investor who invested in India and China. Discussions with Indians centred on the possible problems which could prevent them from meeting their targets and discussions with the Chinese always centred on how things are going to get only better. This in spite of the fact that the Indians always delivered results and met their targets whereas the Chinese gentlemen this person was investing in had been making losses! This is now changing rapidly, Mr. Singhi said quoting the recent marketing pitch by the CII in New York “India Unleashed”. Even magazines like The Economist which used to see India on the lighter side of the balance with China now see us as equals in terms of growth even while quoting the same figures as before.

Growth driven by M&As

Talking about the recent trend of M&As, Mr. Singhi explored the various reasons why this trend has suddenly emerged and has become so pervasive that something like Tata’s acquisition of Corus doesn’t seem incredible anymore. Indian companies acquiring foreign companies much larger than they have almost become commonplace, giving examples of companies which have had multiple M&A successes he quoted examples like Vedanta, Wipro and Bharat Forge. Global consolidation is one of the factors which have influenced Indian M&As. More specific to India are reasons like better government regulations which facilitate M&As and liquidity due to the booming Indian economy with profits at a 15 year high. The demonstrated ability of Indian managers in creating value for the acquired company is also an important factor for the increased willingness of the acquired foreign companies to work with us. He explained how making one acquisition can improve the chances of the company to make several others. When an Indian company bids to acquire a foreign company with a very good reputation and healthy cash flows, its credit worthiness automatically increases manifold. Once the acquisition is made, the Indian company can leverage the equity of the foreign acquisition to get more credit from banks to finance another acquisition. This can continue as long as the company makes smart decisions about which company to acquire.

Comparing M&A to courting, Mr. Singhi pointed out how both companies are very optimistic before an M&A and tend to rush things. He stressed that similar backgrounds are very important for the companies to be able to work together after the Merger or Acquisition. Indian companies are at an advantage when it comes to this because we adapt easily and aren’t averse to allowing a foreign management to run a company. He extended the analogy of courting by saying that consultants are like marriage counsellors who help with the execution and details of an M&A.

Future of Indian Consulting

Answering the question as to how Indian consulting is going to evolve, Mr. Singhi compared it to that of the USA and said that it was more evolved in the USA where specific consulting firms dealt with specific segments like management, functional consulting etc… Another notable difference is the presence of in-house consulting arms. Indian consulting is going to take a similar path as it evolves, he said. Another difference between Indian and American consulting is that companies in India perceive consultants as advisors unlike in the USA where they are seen as vendors of solutions. Indians would like to see demonstrated value of a consulting assignment and are more oriented towards solution implementation. The session ended with Mr. Singhi mentioning how he drew inspiration from IIM K’s motto ‘Dream Innovate Achieve’ and saw that as the mantra which would take us to newer heights in the future.

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A big TV company once put together a huge campaign to advertise its newest model – A TV which emitted Biofresh rays. They launched 1,20,000 sets in urban India which quickly sold out. But out of the 1,20,000 sets that were earmarked for the rural market only 5 were sold. The worried company hired consultants to understand this situation. The consultants who believed in one on one contact with customers interviewed a hoity-toity urban lady who was shown an ad for the TV. The ad depicted a tired family sitting on a couch. As soon as they turned on the TV, waves of rose petals emanated from the TV set and entered their bodies thus rejuvenating them. The lady excitedly claimed after watching this ad that it made perfect sense and therefore she had bought the TV herself. When the same ad was played in front of a bunch of villagers in a village in Karnataka, one of them stood up, scratched his head and asked – do you think we are idiots? How can rose petals come out of a TV?

With this satirical anecdote depicting how truly intelligent the rural consumer is when compared to the urban mass which is desensitised to hyperbole, Mr. Harish Bijoor of Harish Bijoor Consults, started off what was to be a crackerjack of a session. Armed with a repertoire of hilarious anecdotes and incisive insights, Mr. Bijoor, a brand expert, captivated his audience for the better part of an hour. In keeping with the theme of Horizons 2007, the annual management conclave of IIM Kozhikode, his presentation was titled “Bharat – Ek Sach”. His aim during the presentation? To separate hype from truth and to distil what “Real India” was.

There are two Indias, he said – Real India ie., Rural India and Virtual India ie., living in bigger cities. Mr. Bijoor said that he didn’t subscribe to the notion that Rural India was the bottom of the pyramid, instead he drew 2 pyramids. One for urban and another much larger one for rural. The urban population is just 25% of the population, therefore the mass of the rural middle class population is double that of the urban middle class population. Marketers till now have concentrated on the lower hanging fruits. However with urban markets being saturated, its time now to tap the vast potential of the rural masses. Top 16 % of Indian towns contribute 80 % of market potential value. But how do you market to this India?

The values and attitudes of the average Indian is changing, Indian women are rising. Youngsters are spending more. Marketers need to take advantage of this. Did you know that 11% of rural women use lipsticks compared to just 22% of urban Indians? The Rural to Urban ratio? 3:1. Therefore more rural women uses lipsticks than urban. And the biggest selling lipstick brand in India? No, its not Lakme or Revlon. Its Raja Lipsticks. A temple in Rajkot offers ice cream and pizza as Prasad. The suave priest talks of footfalls, explaining that the change in Prasad has resulted in more children coming to temples, thereby making their parents happy which in turn results in better donations in the hundi. Everyone is happy, he says. This is serving the rural markets!

Its not just values, the definition of literacy itself is changing. A rural Indian does not need to know how to read and write to keep abreast of what’s happening in the world. All he needs is his eyes and his ears. The new literacy now is driven by media which is now all pervasive. And this media literacy is driving consumption.

But, we’re sitting on a powder keg of unarticulated discontent. India is happening but only to a minority. The only reason we haven’t faced a revolution yet, Mr. Bijoor humorously pointed out, is because of the average Indian’s belief in the Karma philosophy! There’s a fracture between two Indias he said. Unless inclusive growth happens, the current growth rate will not be sustainable after 10 years. The essential dichotomy between rural and urban India can be most glaringly seen in what gets them worked up. Rural India is all about Electoral enthusiasm whereas Urban India thrives on Economic enthusiasm. The people who decide on who will run the country are not the people who benefit from the governments economic policies.

The key question though is, where does urban stop and rural begin? To answer this, Mr. Bijoor paraphrased a quote by Jane Jacobs. “Great differ from towns and villages in basic ways, and one of them is that cities are, by definition, full of strangers.”

Mr. Bijoor elaborated on this dissatisfaction by saying that though India is happening there are 5 worry lines that he’s concerned about.

  1. Creeping urbanization and the pressure cooker economy where excellence is talked about but is only skin deep.
  2. Emergence of the new caste system – The caste of brands which knows no geographical boundaries and which propagate a social structure of exclusivity.
  3. Needless CSR. ISR or individual social responsibility, Harish opined is a much better way of giving back to the community. Get employees to go to the field and work with NGO’s. Time, not money is needed.
  4. Rural Brain drain. Nobody who leaves rural India wants to return, therefore villages are left with just the aged and farming has gone for a toss. Who will feed us?
  5. The need to change from exclusive branding to inclusive branding. Why? Because inclusive branding concentrates on the community instead of just the “I-me-myself” culture.

To sum up he said that a McKinsey report predicted that 2.2 million high value jobs will be created by 2008 of which 30% will go to Indians. By 2016, the US job market will fall short by 17mn people, China by 10 mn, Japan by 9mn and Russia by 6mn. Where will these jobs go? To India. Why? Because our population that was once our bane is now become the driving force of our prosperity. But most of these jobs will be in the knowledge industries which are not open to rural Indians. There are 2 drivers of growth in India – IT and Retail. In 3 years time, the IT exports will increase from USD 40Bn to 65Bn, but the Retail industry will increase from USD 33Bn to 360Bn. Both are largely urban and need to penetrate into the rural market to offer any hope of sustainable growth. Retail will be the biggest growth driver for rural India. But the rural market is not a cow to be milked. It needs to be understood – with humility.