Marketing Management Case Study

Rural Marketing in India: Retailing through Microfinance Institutions

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Abstract:
Rural India was once considered a mere painter’s muse and not a uberous ground for business. The reason being – around 42% Indians are below poverty line earning around $1.25 a day. Addressing poverty-based issues, NGOs, Microfinance Institutions (MFIs) and social entrepreneurial organisations have emerged in a big way to provide sustainable solutions to the poor through scalable business models and also created market opportunities for business transforming the rural markets’ landscape substantially.

In the 21st century, rural India has evolved in a big way. The growing literacy rates, rising income levels, increasing purchasing power and consumption levels of people have grabbed the attention of corporates, who have erstwhile wooed urban consumers to buy their products. As of 2009, rural regions are flocked by big companies like Coca-Cola, Nokia, HUL, LG, Bharti Airtel, ITC, Bajaj Allianz and Godrej. Over the years, these companies also realised the need to develop rural regions as a key for their growth as well as the nation's economic development. In the process of charting out ways for market-based development, they partnered with MFIs to expand their network. These MFIs, acting as distributors to the companies, are benefitting them by enhancing their brand visibility in rural areas, helping them in tapping more rural consumers, save distribution costs, etc. However, can the social mission of MFIs be aligned with profit objective of companies? Question also arises about the sustainability of corporate-MFI partnerships.

Pedagogical Objective:

• To examine how Indian rural markets have been transformed from market seekers to market providers and discuss the contributing factors
• To understand the significance of rural retailing in India and to critically analyse the opportunity that Indian rural markets offer to India Inc. and other multinationals
• To analyse the challenges for retailers and the possible ways of dealing with these problems effectively
• To discuss about the new form of rural retailing, corporate-MFI partnerships and debate on the sustainability of such relationships.

Keywords : Rural India, Microfinance Institutions (MFIs), rural retailing, Bajaj Allianz and Godrej, purchasing power, business models

Contents:

• The Changing Landscape of Rural Markets in India
• Distribution and Retailing in Rural India
• Microfinance Institutions: Corporates’ New Channel for Reaching Rural Customers
• Corporate-MFI Partnerships: The Opportunities and Challenges