Easy access: a case study on rural

marketing
Rashmi Ranjan Parida and Sangeeta Sahney

Rashmi Ranjan Parida is Introduction

a research scholar and
Sangeeta Sahney is an Despite having an Engineering Degree from the Indian Institute of Technology and
associate professor and Post-Graduate Diploma in Management (PGDM) from Indian Institute of Management, Dr
both based at Indian Venkat Iswar Prasad, popularly known as Dr Prasad, preferred to work in the development
Institute of Technology, sector and did so for nearly five years before shifting into academia. He has always been
Kharagpur, India. keenly interested in rural development, rural marketing and entrepreneurship issues. After
working for two decades, Dr Prasad realised that his dreams could not be fulfilled within the
boundaries of a premier educational institute, and he decided to leave his job to live his
dream of becoming an entrepreneur and to practically get involved in the areas of his
interest.
When Dr Prasad decided to become an entrepreneur, many former colleagues from the
development sector, well-wishers and contacts he made over the years from corporate
institutions assured him they were willing to extend a helping hand, and a few joined him
in his endeavour as well. In 2005, Dr Prasad established his organisation “Easy Access”
and registered it as Easy Access Self-Help Cooperative Society in Odisha near a place
close to the Andhra Pradesh and Odisha border.
Being a member of an academic faculty in marketing, Dr Prasad believed in the 4A’s
(acceptability, availability, affordability and awareness) concept proposed by Kashyap and
Raut (2006), and he had a strong belief that the key to success in the rural market is a
cost-effective last mile distribution channel.

Rural market
Research conducted by National Council of Applied Economic Research (NCAER, 2003) in
2003 proves that the rural is a bigger market than the urban in fast-moving consumer goods
(FMCG) (53 per cent) and durables (59 per cent) sectors. The rural consuming class in
India is increasing at the rate of 3-4 per cent annually which translates to 1.2 million
consumers every year (Sridhar et al., 2008). As per a recent study:
In 20 years the rural Indian market will be larger than the total consumer markets in countries
Disclaimer. This case is written such as South Korea or Canada today, and almost four times the size of today’s urban Indian
solely for educational
market. The estimated size of the rural market will be USD 577 billion (McKinsey, 2007).
purposes and is not intended
to represent successful or
unsuccessful managerial The famous management guru, Professor C.K. Prahalad, who popularised the concept of
decision making. The author/s
may have disguised names, “Bottom of Pyramid” in marketing, has always highlighted the fact that serving billions of
financial and other people is an absolutely noble endeavour, but at the same time, it can also be appealing
recognisable information to
protect confidentiality. from a business perspective (Prahalad, 2004).

DOI 10.1108/EEMCS-10-2013-0201 VOL. 4 NO. 3 2014, p. 000, © Emerald Group Publishing Limited, ISSN 2045-0621 EMERALD EMERGING MARKETS CASE STUDIES PAGE 1
 Rural market distribution channel
Distribution systems are one of the most crucial components in gaining access to and
catering to the needs of the rural market (Krishnamoorty, 2000).Though proven traditional
distribution mechanisms are in place, marketers have not been able to reach even
one-sixth of Indian rural space (Mahajan and Banga, 2006). There are a number of reasons
that could be attributed to that, including inaccessibility, high transportation cost, low
population density in many rural villages and improper demand estimation of rural markets.
Distribution channels definitely make a key contribution to the development (mostly
economic) of any country, particularly in emerging markets (Stern and Weitz, 1997). While
working on creating methods of socially responsible distribution, Vachani and Smith have
suggested that creating new and innovative distribution channels is the best market-based
alternative to tap hitherto untapped rural markets (Vachani and Smith, 2008).
As per Kashyap and Raut (2006), the rural distribution of all major FMCG companies can
be divided into two universal models, with minor variations from one company to another.
Both models are given in Figures 1 and 2, respectively.
Model 1 focuses more on distributors and sub-distributors rather than on the wholesale
channel. The wholesale channel continues to play a role, but its importance is considerably
reduced. This model ensures smooth monitoring and better control over the price and
distribution of products.
As per Model 2, the same channel is used for both urban and rural market distribution. As
costs involved in distribution are minimised, better margins are offered to channel
members, who usually push the product for sale. Wholesalers act as feeders to the market
that caters to the requirements of nearby villages.
Though, according to the above model of distribution being practiced, there are many
obstacles – issues of proper connectivity, storage/warehousing, reach and cost – it can, by
no means, be termed as very effective.
Apart from logistics and operational issues, the buying behaviour of customers plays a very
important role in decisions related to marketing activities such as product development,
pricing, sales and distribution and marketing communication. It is a well-established fact
that customer/consumer behaviour is affected by many factors including psychographic
factors (more related to individual), social composition, family influence and cultural values.
The buying behaviour of rural customers is very different from their urban counterparts in
terms of frequency, volume and worth because of different socio-cultural and economic
reasons. Socially, rural areas are not usually densely populated, and often habitations are
far from each other. There are villages with populations ranging from ⬎ 5,000 to ⬍ 100
inhabitants, and reaching each of these potential markets poses a great challenge. As

Figure 1 Rural distribution of FMCG companies (distribution model 1)

Company

C&FA

Distributor Distributor
(Rural) (Urban)

Sub-Distributor Wholesaler Wholesaler

Retailer Retailer Retailer Retailer Retailer

(Rural) (Local) (satellite mkt) (Urban) (Urban)

Source: Kashyap and Raut (2006), The Rural Marketing Book, p. 207

PAGE 2 EMERALD EMERGING MARKETS CASE STUDIES VOL. 4 NO. 3 2014

 Figure 2 Rural distribution of FMCG companies (distribution model 2)

Company

C&FA/ Depot

Distributor

Wholesaler

Retailer
(Local) Retailer

Source: Kashyap and Raut (2006), The Rural

Marketing Book, p. 209

discussed in Models 1 and 2, FMCG companies try to overcome this but often with little
success. As a result, there is always scope for exploring new and innovative alternative
channels that would overcome obstacles sited above as well as synchronise well with the
socio-cultural aspect of the region.

Business objective of easy access

With Easy Access, Dr Prasad wanted to achieve multiple objectives including rural
marketing, female empowerment and livelihood generation with a single initiative. The
initiative took off with an objective to mitigate the existing gap between marketing efforts for
various products (both products and services) and customers in rural Odisha, with a strong
and an alternative distribution system. In rural India, socially and culturally, women are not
very involved in marketing activities, and Easy Access tried to modify the traditional societal
and cultural practices to some extent. The project began in early 2007 with few members
from local female self-help groups (SHGs), called “Sahayika”, who were considered as
partners in the distribution channel.
A SHG is usually formed with 10-20 members from similar socio-economic backgrounds.
The objective of this kind of group formation is to promote micro-savings and micro-lending
among the members. Usually, each member deposits an amount pre-decided by the group
with the group secretary/president, who deposits the money in the SHG’s bank account. If
any member needs a small loan, either in a time of need or for starting small business, then
the group lends money to the member with fixed interest and time allocated for repayments.
Banks also provide loans or financial assistance if the group, as a whole, wants to finance
a start-up of their own. SHGs have been formed by government institutions, banks,
micro-finance organisations and non-government organisations (NGOs) working in the
development field. In the last decade, a number of SHGs have been formed in the remotest
part of the state of Odisha. Many SHGs are very active and perform their roles effectively.
The Sahayikas were supposed to act as a connecting link between Easy Access and the
SHGs. The SHG works with end-consumers selling Easy Access products. An operative
area of 6 km or four gram panchayats was chosen for each Sahayika. The Sahayikas were
given initial training for eight to ten days which helped them to understand the product and
interact with potential customers in rural areas. Provisions were made for the periodic
training of Sahayikas as well.

VOL. 4 NO. 3 2014 EMERALD EMERGING MARKETS CASE STUDIES PAGE 3

 Business operation of easy access
The operation started by selling soaps (both bathing and detergent), washing powder,
toothpaste, fairness cream, coconut hair oil and talcum powders that were available in
three fragrances. These products were marketed under the brand name of Easy Access,
and procurement of products was done by partnering with small-scale industries
manufacturers on contract basis from areas such as Hyderabad and Cuttack. Within one
year, the project had been replicated in three other districts of Odisha, i.e. Rayagada,
Koraputand and Nabrangpur. Some social and demographic information about the state
Odisha and the four districts where Easy Access operated is highlighted in Tables I–IV.
There was a regional manager (RM) assisted by four area managers (AM) who monitored
the activities of 20-30 Sahayikas in each district. The Sahayikas operated in a cluster of
villages, and the AM was responsible for capacity building of Sahayikas. They were
responsible for estimating the demand for the products on a fortnightly basis and reporting
their findings to the RM. The products were then dispatched to the AM on a fortnightly
basis. The Sahayika in each cluster received the products and, in turn, sold them to their
respective SHGs. The SHGs needed to make 50 per cent payment of the price at the time
of delivery of the product and the remaining 50 per cent was needed to be paid within a
week after the sales to the end-consumers. The Sahayikas and SHGs members received
their commission based on the sales volume.

Problems/issues related to the easy access venture

Dr Prasad had an ambitious target to mobilise a minimum of 20,000 SHGs in 18 districts
within three years. Easy Access was considering the possibility of partnering with ICICI
Prudential and Reliance Life to provide insurance services as well. Meanwhile, Dr Prasad
ventured into other businesses as well, having gained a lot of confidence in his employees
at Easy Access. But, after a few months of review, Dr Pressed realised that Easy Access is
not on the path what he had tried to establish, and its sales volume was shrinking with many
receivables still pending.

Table I Demographic indicators of the state of Odisha and India

Serial number Demographic indicator Odisha India

1 Total population (in millions) 42 1,210

2 Per cent contribution to national population 3.47 100
3 Sex ratio (females per 1,000 males) 978 940
4 Under-six sex ratio (females per 1,000 males) 934 914
5 Literacy rate (per cent) 73.45 74.04
6 Male literacy rate (per cent) 82.40 82.14
7 Female literacy rate (per cent) 64.36 65.46
8 Tribal population (per cent) 22.80 8.20
Source: Census of India 2011, provisional population totals, Government of India

Table II Rural and urban comparative figures of Odisha

Serial number Indicators Rural Urban

1 Number of villages 51,313

2 Number of towns 223
3 Percentage of population 83.32 16.68
4 Sex ratio (per 100 males) 988 934
5 Over all literacy (per cent) 70.78 86.45
6 Male literacy rate (per cent) 80.41 91.83
7 Female literacy rate (per cent) 61.10 80.70
Source: Census of India 2011, provisional population totals, Government of India

PAGE 4 EMERALD EMERGING MARKETS CASE STUDIES VOL. 4 NO. 3 2014

Table III Demographic information about the four districts of Odisha, where Easy
Access is operating
Name of the district Indicators Data

Gajapati Percentage of rural population 87.75

Percentage of urban population 12.25
Scheduled caste (per cent) 7.50
Scheduled tribe (per cent) 50.78
Sex ratio (per 100 males) 1,042
Overall literacy (per cent) 54.29
Female literacy rate (per cent) 43.54
Rayagada Percentage of rural population 83.63
Percentage of urban population 16.37
Scheduled caste (per cent) 13.92
Scheduled tribe (per cent) 55.76
Sex ratio (per 100 males) 1,048
Overall literacy (per cent) 50.88
Female literacy rate (per cent) 39.87
Koraput Percentage of rural population 84.64
Percentage of urban population 15.36
Scheduled caste (per cent) 13.04
Scheduled tribe (per cent) 49.62
Sex ratio (per 100 male) 1,031
Overall literacy (per cent) 49.87
Female literacy rate (per cent) 38.29
Nabranagpur Percentage of rural population 92.80
Percentage of urban population 7.20
Scheduled caste (per cent) 14.10
Scheduled tribe (per cent) 55.03
Sex ratio (per 100 male) 1,018
Overall literacy (per cent) 48.20
Female literacy rate (per cent) 37.22
Source: Census of India 2011, provisional population totals, Government of India

Mr Ranjan, a former student of Dr Prasad, came to visit him and learnt of the scenario and,
wanting to help his former professor, visited the operational areas to interact with
employees, to see how the operation had gone wrong. When Ranjan reached a small
village in Rayagada district and enquired about the pending receivables, he was surprised
by the answer. Staff accused the government of giving out products for free, as their
distribution fell within the KBK jurisdiction (Koraput, Kalahandi and Bolangir districts).
Employees accused Easy Access of making a profit through corruption in the whole setup.
KBK stands for undivided Koraput, Kalahandi and Bolangir districts of Odisha which were
subsequently divided into smaller districts as part of administrative reforms. On any of the
development indicators, the KBK region is considered to be among the most
underdeveloped regions in the country. The index for this region can be compared to most
underprivileged places in the world. During 1992-1993, to make the KBK districts better in
terms of administration, the three big districts were divided into eight smaller districts:
Malkangiri, Koraput, Nabrangpur, Kalahandi, Rayagada, Nuapada, Balangir and Sonepur.
However, all these districts come under the KBK area. A very low percentage of the
population lives in towns, as the majority live in villages. KBK is considered a special

Table IV Literacy rates in KBK region of Odisha vs non-KBK region

Region Male Female Total

KBK 69.05 45.49 57.17

Non-KBK 85.69 69.19 77.54
Source: Annual Plan 2011-12 Odisha, Government of Odisha, India

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 zone, and there are exclusive schemes and budget allocations for this region in both the
state and central governments. As this area suffers from malnutrition, chronic poverty, high
infant and maternal mortality rates, environmental hazards, spread of epidemics and lack
of adequate basic infrastructure and forced migration, hundreds of NGOs and donor
organisations are working in this area. They primarily support government schemes,
building awareness or distributing medicine/food at minimal price or free.
Sahayikas had a lot of complaints against the RM, the AM and product suppliers. There were
certain products for which demand was high and some products for which demand was low,
but suppliers forcibly insisted all categories of products were stocked by retailers. There were
issues regarding the size of packs as well. For some products, such as washing powder and
talcum powder, pack size was 500 grams, 1 kg or 2 kg, as the product supplier wanted to sell
larger volumes in bulk. Many people in the rural communities are unable to afford and unwilling
to try to buy monthly or yearly supplies of goods at once, and their buying behaviour is quite
repetitive with lesser time gaps. Those who did purchase the bigger packs of goods had to pay
for them on credit, as the price of the bigger packs is much higher than the smaller ones. Since
AMs were pressurized by the people at the top of hierarchy in Easy Access to increase sale,
AMs provided products to Sahayikas on credit without looking at their credit worthiness.
Sometimes Sahayikas consumed these FMCG products for their own household purposes free
of cost, thus they were never able to repay the credit and Easy Access incurred loss. There
were also significant losses due to environmental issues, including rats and improper storage.
Mr Ranjan was surprised to discover that many Sahayikas were unable to be found and many
had out-of-date addresses. Mr Ranjan also noticed that packaging and label of the products
appeared to be cheap imitations of popular brands. He also learnt about disputes in various
localities due to Sahayikas quoting different prices to different people, and mostly above MRP,
which angered consumers, as when Easy Access participated in fairs, including the mela,
products were sold below MRP.

Keywords: Mr Ranjan went back to Dr Prasad with several questions they had to disseminate: What
Distribution channel, had really gone wrong? Does the problem relate to the chosen target market or is it
KBK district, because of faulty distribution and supply chains? Is it due to a cultural aspect or is it from
Rural market, a lack of attention from Dr Prasad that has led to this situation? And most importantly, can
SHG (Self-help group) the business be revived once again?

References
Kashyap, P. and Raut, S. (2006), The Rural Marketing Book, Biztantra, New Delhi.

Krishnamoorty, R. (2000), “Indian rural market: problems and prospects”, Indian Management, Vol. 39
No. 10, pp. 52-55.

McKinsey (2007), The “Bird of Gold”: The Rise of Indian Consumer Market, McKinsey Global Institute,
available at: www.mckinsey.com/insights/asia-pacific/the_bird_of_gold

Mahajan, V. and Banga, K. (2006), The 86 per cent Solution, Pearson Education, New Delhi.

NCAER (2003), The India Market Demographics Report 2002, NCAER, New Delhi.

Prahalad, C.K. (2004), Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits,
Wharton School Publishing, UpperSaddle River, NJ.

Sridhar, G. (2008), “Executive representations of rural markets”, International Conference on Marketing

to Rural Consumers-Understanding and Tapping the Rural Market Potential, IIM Kozhikode, 3, 4, 5
April.

Stern, L. and Weitz, B.A. (1997), “The revolution in distribution: challenges and opportunities”, Long
Range Planning, Vol. 30 No. 6, pp. 823-829.

Vachani, S. and Smith, N.C. (2008), “Socially responsible distribution: distribution strategies for
reaching the bottom of the pyramid”, California Management Review, Vol. 50 No. 2, pp. 52-84.

PAGE 6 EMERALD EMERGING MARKETS CASE STUDIES VOL. 4 NO. 3 2014

About the authors
Rashmi Ranjan Parida is currently a Research Scholar/PhD Scholar at Vinod Gupta School
of Management, Indian Institute of Technology, Kharagpur, West Bengal, India. He is
pursuing his PhD in the area of marketing. His research interests are in the field of Rural
Marketing, Consumer Behaviour, Brand Loyalty and Sales and distribution.

Sangeeta Sahney is an Associate Professor at the Vinod Gupta School of Management,

Indian Institute of Technology, Kharagpur, West Bengal, India. Her areas of specialisation
are Consumer Behaviour, Services Marketing, Quality Management and Organisation
Behaviour. Sangeeta Sahney is the corresponding author and can be contacted at:
[email protected]

VOL. 4 NO. 3 2014 EMERALD EMERGING MARKETS CASE STUDIES PAGE 7