CGBThe Center for Global Branding BENTLEY COLLEGE

Rural Village Marketing and Microfinance:

Global Strategies in Emerging Markets

Jane Ives, Bentley CollageFrank Cutitta, Global Branding Institute

Martin Sours, ThunderbirdChris Fussner, TransTechnology Corp.

Orthodox View

Rich Get RicherNeed Equity to Get a LoanLarge-Scale Multinational Banks Do the LendingRural Poor Are Bad Credit Risks

From Microcredit to Microfinance

Microfinance Institutions (MFI) Are the KeyIncome, Credit, Investment Cycle Breaks Poverty Reduces the Need for High-Cost, Traditional CreditCreates the Smoothing of Consumption of Nutrition and Education Goods and Services

The Concept of “Social Energy”

Fosters Positive and Rational Risk-TakingAllows Leaders to Arise at the Local LevelCreates a Dynamic of the Diffusion of Ideas and Optimism throughout the Society

Innovation

Topical Term in Today’s Microfinance ActivitiesRepresents the Groundwork of Financial Institutional-BuildingRepresents an Understanding of the Livelihood of Target ClientsCaptures the Nuanced Context of the Local SettingLeads to Voluntary Savings Products Provided by the Association for Social Advancement (ASA)

Providing Choice: A Key Microfinance Activity

Offers Both Liquid and Illiquid Microfinance ProductsLife InsuranceContractual Savings ProductsFlexible Opportunity for Village/Rural Poor to Both Save and Borrow

Multiple Microfinance Forms: Traditional, Informal, and Modern

Moneylenders; The Traditional, Regressive, Potentially Exploitative Method of BorrowingInformal Groups, esp. Housewives GroupsModern Forms—NGOs, Grameen BankKey ElementsBased on Trust, not Law nor ContractBorrower Must Join a GroupHigh Priority Given to Social Capital

Grameen Bank and Women’s Empowerment

Grameen Bank, Established in 1983, Targeted Bangladesh’s Very PoorLoans of $12–15 Bought a Sewing Machine, Goats, Ducks, etc.Women Have Better Repayment Rate(s) than MenBreak the Cycle of Moneylenders Who Offered Long-Term Loans

Key Islamic Issues

Daden Financing of Crop Rotation (Forward Sales of Crops which Substitute for Interest)Profit Sharing among the Group Also Replaces InterestLoans Based upon Land WorkedTrade Credit Based on Product Worked, Like Jewelry

Rural Marketing

“Rural” Is, Above All, a MindsetRural Is Agricultural DependentRural Distribution Is Essential but Difficult and Uses Small-Scale TransportAffordability Means Small Unit Size to be Marketed/SoldProducts Must Compete with Long-Standing, Natural Products For Cleaning, etc.

Rural Marketing: The Four “A’s”

Availability of Product and/or Service; Attention Must be Paid to Distribution ChannelsAffordability; Product Has to be Priced RealisticallyAcceptability; The Product Has to be Relevant and DesirableAwareness; Brand Management Is the Key Here

Rural MarketingBuilding with BRICs

The BRIC’s markets (Brazil, Russia, India, and China) markets will be the world’s largest economies over the next 40 years.However, the bulk of their populations live outside the urban centers.700 million people in both India and China live in what is described as rural villages…roughly two-thirds of their populations!

Rural MarketingNeed for Distribution Networks

MNCs are spearheading microfinance programs which extend rural distribution.P&G, HP, and Unilever have sophisticated corporate programs encouraging entrepreneurship among impoverished.Hindustan Lever’s Projects Streamline, Shakti, and Bharat are considered showcases of corporate responsibility.All new Unilever employees spend 6–8 weeks living in rural villages where inhabitants earn about $2 per week.

Strange BedfellowsUnilever teams with Oxfam to measure hotly debated MNC links in reducing poverty in Indonesia.Results inconclusive but broke new ground on MNC and NGO joint initiatives.Did find that some 300,000 jobs created as a result of Unilever’s external distribution value chain.

Rural Marketing Consumer Education

Rural villagers need to know a products benefit(s) before the brand can be sold.Live demonstrations are critical.Van tours to the “hattas” (perodic markets) for a “dekko” (Hindi for a “see” or “demo”).Women’s self-help groups (SHGs) are a critical component of microfinance, entrepreneurship, and consumer education.

Rural MarketingEducation

Rural marketer must be both educator and student.Some products may be used in rural settings differently than urban or suburban areas.Example: Same soap may be used for laundry, dishes, and body.Buy three different products, or find one that works well with all?

Rural MarketingPackaging

Lack of storage space, appliances, and basic utilities.Shelf stable but attractive.Must be easily deliverable on unusual modes of transport (bicycle).Pouch packs and sachets popular.

Rural MarketingPricing

Agrarian economy provides inconsistent personal cash flow—buy after the crops are harvested.Despite extremely low income, little-to-no housing or utility costs provide disposable income.Price:performance ratio is much more important than just cheap goods.

Rural MarketingMarketing Technology Infrastructure

Blend of ancient tribal custom and latest technology.Trailblazing E-Choupal Network links 1,000 villages where it touches 3.5 million farmers. n-Logue’s village hubs and kiosk.Mobile phones are microcredit start-up staple.

Rural MarketingMarketing Technology Infrastructure

Internet connections increase marketing communications options through village center.Online product dekkos and Web-based competitions via streaming video.Printers provide ability to produce pass-along collateral.Databases of village “CMO” e-mails for ongoing communication.

Rural MarketingCreative and Messaging

Transliteration of urban messages very risky given diversity of rural languages and cultures.Literacy limits amount of copy.Village choupal (gathering place) is still prime delivery venue.Wall paintings, transport ads, and banners are very popular.“Star power” works but is not universal across villages.

Rural MarketingBuzz and Word of Mouth

Buzz and word-of-mouth marketing are already built into tribal culture.Heavy reliance on young villagers working or studying in neighboring villages/cities for “what’s cool” in outside world.

Bangladesh Specifics

1970s—Young activists want to rebuild the country with village-based groups1980s—“Target Groups” approach, minimizing paperwork and decentralizing decision-makingEarly 1990s—Greater emphasis on individual borrower accountabilityToday—Diversified financial services

Sri Lanka

Sarvodaya Economic Enterprise Development Services (SEEDS)Founded in 1958, incorporated in 1972Based on a vision of a new social orderSri Lanka’s largest NGO with global linkagesProvides training, introduces new technologies, and links producers and end-clients

Philippines

A vision of a viable, private, accessible microfinance marketCreate a greater role for the private sectorEstablish a market-oriented financial credit policy environmentCapacity-building in local deposit mobilization, project management, and use of information technology

Energy: A New Frontier

Links between energy and microfinance need to be strengthenedMicrofinance clients need access to reliable energy servicesSuccess can involve multiple clients; energy providers, poverty reduction, and economic development donorsCosts of energy must match consumers’ income flows

In Sum

Microfinance: A key element in fostering an ethical, market-driven economyKey institutions are in play• Microfinance Institute• ACCION in Latin America• Citigroup Microfinance Group• Grameen Foundation and Bank• The Kearny Alliance• World Council of Credit Unions