Download Introduction to Social Marketing

MODULE – I
Introduction To Social Marketing
Introduction
Social marketing is the systematic application of marketing along with other concepts and
techniques to achieve specific behavioral goals for a social welfare. Social marketing can be
applied to promote the merit goods, make the society avoid demerit goods and thus to promote
that considers society's well being as a whole. This may include asking people not to smoke in
public areas, ask them to use seat belts, prompting to make them follow speed limits.
Social marketing is the use of marketing principles to influence human behavior in order to
improve health or benefit society.
In social marketing, the return on investment of sources is important but the part of investment
returns are used for social welfare. Criteria like extent of social problem, readiness to change and
approachability become important.
Relevant social issues are identified and the marketing strategy tailored accordingly. E.g. for
issues like using environmental friendly carry bags, the product, price, place (availability) and
the promotion constitute the marketing strategy for inducing the people to use biodegradable
carry bags.
Social marketers are interested in human behavior. They seek to understand why we live our
lives as we do, sometimes healthily as when we eat a good diet or take regular exercise, and at
other times unhealthily as when we smoke or drink. More than fifty percent of premature deaths
are attributable to such individual lifestyle decisions, there is enormous potential for any
discipline that can progress thinking in this area. Social marketing brings a unique perspective to
the issue.
Social marketing is concerned with the application of marketing knowledge, concepts, and
techniques to enhance social as well as economic ends. It is also concerned with the analysis of
the social consequences of marketing policies, decisions and activities.
People don’t change behaviors easily. In fact, people are more likely to adopt a new idea quickly
if it exhibits these characteristics:
It has a relative advantage over what exists It’s compatible with social norms It’s not too
complex It can be “tried out” You can see someone either doing or using it.
So, if we can figure out how to make behavior change EASY, FUN, and POPULAR it becomes
easier for us to encourage it. We need to understand a few basic marketing principles:
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1) Know your AUDIENCE and put them at the center of every decision you make. Social
marketing begins and ends with your target audience. In order to understand why your audience
isn’t doing what you want them to do, you must understand what barriers are getting in their
way. Understand also that you are not the target audience!
2) ACTION: The process of heightening awareness, shifting attitudes, and strengthening
knowledge is valuable if, and only if, it leads to action. Be clear in what you want your audience
to do.
3) There must be an EXCHANGE: If you want someone to give up or modify an old behavior or
accept a new one, you must offer that person something very appealing in return. In commercial
marketing, there are tangible exchanges (give me a $1 and I’ll give you a Pepsi) and intangible
exchanges (by drinking Pepsi, you’re also receiving everything that goes with the image of the
brand).
Keep “THE FOUR P’s of Marketing,” and policy, in mind.
1. PRODUCT represents the desired behavior you are asking your audience to do, and the
associated benefits, tangible objects, and/or services that support behavior change.
2. PRICE is the cost (financial, emotional, psychological, or time-related) or barriers the
audience faces in making the desired behavior change.
3. PLACE is where the audience will perform the desired behavior, where they will access the
program products and services, or where they are thinking about your issue.
4. PROMOTION stands for communication messages, materials, channels, and activities that
will effectively reach your audience.
Definitions of social marketing:
“Social marketing is the use of marketing principles and techniques to influence a target
audience to voluntarily accept, reject, modify or abandon a behavior for the benefit of
individuals, groups or society as a whole. “
…Philip Kotler
“A process for influencing human behavior using marketing principles for the purpose of
societal benefit sacrificing commercial profit.”
…William Smith
“The application of marketing technologies where the bottom line is behavior change of
society.”
…Alan Andreasen.
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What is social marketing?
Instead of selling products, social marketing campaigns focus on behavior change for social good
– environment, health, anti-drugs, wearing seat belts are some examples.
Example:
1) Tata Tea’s “Jago re…”
In October 2007, Tata Tea rolled out a high-voltage advertising campaign with the tag line Har
subah sirf utho math... Jago re.
“We had taken the route of `social awakening' to drive home the benefits of our brands--for the
first time. And it had worked well for us,” said Talwar.
TATA Tea Jaago re Campaign, which is a pretty interesting ad campaign. Tea-company
manages to sell some tea while getting a ton of Indians to register to vote.
2) Lifebuoy's “Swasthya Chetna”
Lifebuoy's “Swasthya Chetna” (LSC) was a five-year health and hygiene education program
initiated by Hindustan Lever Limited (HLL), the Indian arm of the fast moving consumer goods
(FMCG) major, Unilever. The program was formally launched in 2002, in eight states across
India.
The objective of this program was to educate around 200 million people in rural and urban areas
about the importance of adopting good ‘health and hygiene’ practices. The program spread
awareness about germs and their adverse effects on health, and how proper ‘health and hygiene’
practices, such as bathing and washing hands with soap could prevent diseases.
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According to HLL, LSC was not a philanthropic activity, but a marketing program with a social
benefit. HLL sought to grow the Lifebuoy brand in India by attracting those consumers who
never used soap. In the process, the company sought to bring about a behavioral change by
convincing people to use soaps more frequently, thus creating more users for its brand. This
program was also seen as a successful case for public-private partnership.
3)
P&G’s– Project Shiksha:
An attempt by P&G to make available free, quality education. To help educate underprivileged
children by simply buying any of P&G’s large packs of Gillette Mach 3 Turbo, Gillette Series,
Oral B, Tide, Ariel, Pantene, Olay, Rejoice, Vicks, Whisper, Duracell etc in the months of April,
May & June ‘08.
Purpose of Social Marketing is to:
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Influence social behaviors
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Benefits to community
•
Links values with product / service
Social marketing is:
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The application of commercial marketing techniques +
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To influence a key target audience +
•
To voluntarily change a behavior =
•
For the good of society
How is it different from CSR?
CSR
Objective
Goodwill
Application HR
Flow
One way
Purpose
fulfill responsibility
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Social marketing
To sell product with cause
Marketing
Two way
Return on investment
Advantages of Social Marketing?
The benefits of social marketing are many. Joining a series of social networking websites may
seem like a tedious task, especially if you aren't a very social person, but results you gain are
going to prove themselves to be well worth the effort. I was never a huge fan of social marketing,
but I quickly found that social networking sites gave me the opportunity to have a little bit of fun
while working on my marketing campaigns. Social marketing may just be the break you need
from your regular daily routine!
If you're still questioning whether or not social marketing is worth your time, take a few minutes
to check out some of the main benefits.
Better Targeting
If carried out properly, social marketing can draw a highly targeted segment of Internet users to
visit your business or Website. This can be done by using the various parameters elements and
tools on social media websites, enabling you to increase visibility of your content on both a local
and global level. Many small businesses can not only benefit from this global audience, but
increase their brand by bringing in a more select local audience.
High Return on Investment
ROI (Return on Investment) is one of the most important criteria of most marketing campaigns.
For small businesses with low budgets, the marketing ROI needs to be good for it to work. Social
marketing is one of the cheapest ways of marketing currently available. And practically all the
social media you can use to market your business either costs nothing or costs a very small
amount. This low investment means low risk to even the smallest business. Considering that
most businesses gain a big pop in visibility after using social networking tools, the advantage is
ultimately getting good publicity for free.
Does not require specialization or vast technical skills
One of the best advantages of social marketing is that anyone can take advantage of it, even from
their own home. Also, it does not require you to learn a coded language or anything of that sort.
Most social networking sites are visually oriented and pretty straightforward, which means that
practically anyone who understands how to use the Internet can use social networking tools.
Works better than online ad campaigns
Because most Internet users are bombarded with ads every day, as a whole society has become
so used to them people generally do not click on them. Banners and even link ads are losing their
charm because many people do not trust an online advertising campaign backed by money. With
social marketing, you can provide a more human touch to attract potential customers.
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Increased visibility
Social marketing, like blogging, can help to spread information. This information can then be
correlated to your site, increasing your site's popularity. Create new content that people really
need and you'll have no problem drawing people to your site.
Social networking sites allow you to target niche groups. Most social networking sites have
groups or filters that allow you to separate your contacts or make new ones based on their
interests. This is great because you are guaranteeing that your messages will be seen by an
audience that is already somewhat interested in what you have to say. I found one of the hardest
parts of marketing was finding people who were really interested in my niche. Social marketing
saves me the trouble of filtering those who aren't really interested.
Social marketing costs less than traditional advertising methods. Social marketing may take
a little more time and effort, but it costs much less than a pay per click (PPC) advertising
campaign and can often be more effective. If you pay for a pay per click advertising campaign,
you have to worry about paying for clicks regardless of whether or not they result in a sale. The
links you post on social networking sites won't cost you anything more than time.
Social marketing doesn't require a ton of skill. While it helps to have a little bit of marketing
background, you do not have to be a lifetime student of marketing or SEO in order to launch an
effective social marketing campaign. As long as you can communicate in clear, grammatically
correct English, you'll find yourself more than half way home. You can focus more on the
knowledge you need to have regarding your niche and less on difficult technical skills.
Social marketing helps with SEO. Even though you don't have to know a lot about SEO to
launch a social marketing campaign, a little bit of knowledge will be helpful. Every single time
you place a link to your website on another website you are creating an inbound link. Inbound
links are critical to SEO, as they prove to the search engines that your website is useful and
popular, thus increasing your page rank.
Case Study
Coca-Cola reaffirms its commitment to the community and environment – sets up the Coca-Cola
India Foundation.
a-Cola India Foundation to start with a corpus of USD 10 million
Commission will be the Chairman of the Coca-Cola India Foundation
board members of the Foundation include noted social activists, doctors Educationists and
members of various NGOs
Bunker Roy of Barefoot College, Mr. Roshan Seth, Dr. (Mrs.) Shyama Chona, Dr. Mithu Alur to
lead the advisory Board of the Coca-Cola India Foundation
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The key focus of the Coca-Cola India Foundation will be on issues relating to water,
Environment, healthy living and social advancement.
Mr. Muhtar Kent, COO, The Coca-Cola Company announced the Setting up of the Coca-Cola
India Foundation at a special ceremony attended by the Union Minister For Agriculture and
Consumers Affairs, Shri Sharad Pawar and the Chief Minister of Delhi, Smt. Sheila Dikshit. The
foundation has been set up with the objective- “The Coca-Cola Foundation is Committed to
sustainable development and inclusive growth by carefully focusing on issues relating to water,
the environment, healthy living and social advance so that it can contribute to a strong and
resolute India with a heightened awareness enabling the common man to better his or her life.”
Announcing the setting up of Coca-Cola India Foundation, Mr. Muhtar Kent, President and
COO, The Coca-Cola Company said, “The Coca-Cola system in India has been undertaking a
series of Activities for community development and inclusive growth. To further accelerate this
process of making a ‘difference’ in the local communities where we operate, we are happy to set
up the Coca-Cola India Foundation. This Foundation with an initial corpus of USD 10 million
would focus On a range of activities including water, the environment, healthy living and social
advancement.” The advisory board members of the Foundation include Mr. Justice J. S.
Verma, Former Chief Justice of India and Chairman National Human Rights Commission, Dr.
Mithu Alur,
Mr. Atul Singh, President & CEO, Coca-Cola India, said, “The Company has always placed
high value on good citizenship. At Coca-Cola we are committed to preserve, protect and enhance
the environment and this simple belief guides us in everything that we do. The launch of the
Coca-Cola Foundation is yet another step in that direction. I am sure that the Foundation will be
making a significant positive impact on the local communities in days to come.”
Over the past many years, Coca-Cola in India has been providing extensive support to various
community programs across the country, with a focus on education, health and water
conservation. The Company has been working closely with the communities wherever it operates
and considering the importance of water Coca-Cola India Ltd is partnering with communities
and NGOs in the area of ground water recharge and has already undertaken more than 320 Rain
Water Harvesting (RWH) structures in 17 states of the country.
Additional Details- Community Projects by Coca-Cola in India
The Company has also drawn extensive plans to partner with NGOs, local communities,
government and local communities to provide clean drinking water to children in 1000 schools
by 2010. It also plans to extend its ‘Elixir of Life’ project, in association with Rotary
International to provide access to potable water to the underprivileged children of the society,
nationally. The path breaking project Elixir for Life launched in March 2007, will benefit more
than 30,000 underprivileged children from 100 primary and Panchayat schools in and around
Chennai in the first phase. Coca-Cola India is already in partnership with the UN-HABITAT
to improve access to water and sanitation including providing drinking water to 150 schools in
West Bengal. Coca-Cola in India also plans to seek efficiencies in all areas of water use through
a 3R approach to water management, which involves reducing, reusing and replenishing water.
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The company will also be commissioning studies on 10 watersheds across India and implement
interventions to develop those watersheds in partnership with the Confederation of Indian
Industry (CII) and International Crops Research Institute for the Semi-Arid Tropics (ICRISAT).
Currently Coca-Cola India is working on two watershed plus projects in five villages in
Dungarpur, Rajasthan and two Villages in Tirunelveli District, Tamil Nadu. These projects are
contributing towards the improvement of rural livelihoods and poverty alleviation by using better
cropping methods, efficient water Management, improved varieties of seeds & therefore
enhanced yields and use of better farming Technology.
About Coca-Cola India:
The Coca-Cola Company has always placed high value on good citizenship. At the heart of
business is a mission statement called the Coca-Cola Promise. It says, quite simply, that” The
Coca-Cola Company exists to benefit and refresh everyone who is touched by our business".
This basic proposition means – that the company’s business should refresh the markets, protect,
preserve and enhance the environment and strengthen the community. Coca-Cola India provides
extensive support for community programs across the country, with a focus on education, health
and water conservation. Cola giant Coca-Cola India has announced that it has won Golden
Peacock Global Award for corporate social responsibility (CSR) .
The award was presented to Coca Cola India by the Deputy Minister of Economy & Innovation,
Government of Portugal, Antonio Castro Guerra recently.This award has been showered for
Coca Cola India's contribution towards its efforts in community development - for replenishment
of ground water and setting a target of year 2009 to reach a "net zero" balance with respect to
groundwater usage. Of the three Golden Peacock Global Awards for Corporate Social
Responsibility given at Vilamoura in Portugal, Coca-Cola India once again bagged a special
commendation for its contribution in India towards its efforts in community development - for
replenishment of ground water and setting a target of year 2009 to reach a "net zero" balance
with respect to groundwater usage. The other recipients of the awards were Brandesco Banco,
Brazil and Tata Steel, India.
The Deputy Minister of Economy & Innovation, Government of Portugal, Antonio Castro
Guerra, gave away the award to the Company in the presence of Dr Ola Ullsten former Prime
Minister of Sweden at the 4th Global Conference on Social Responsibility held in Portugal. This
award follows the India Today Pegasus Corporate Social Responsibility Gold Award 2008,
instituted by Readers Digest. The Company had won the Pegasus award for its partnership with
India’s leading NGO- BAIF for spreading awareness amongst school students, across India,
using an innovative medium like a specially commissioned animation film, “Our EnvironmentLet Us Protect It”. The film aims to reach over 20,000 schools and millions of students. For
greater impact, the film has also been translated in regional languages like Marathi and Hindi. As
a responsible corporate and a user of water, Coca-Cola India believes that it can be a part of the
solution on water issues.
It focuses on Water Conservation, Access to clean drinking water and Awareness of water
conservation and related issues as its strategy on water stewardship. Coca-Cola India in
partnership with several NGOs, central and state government agencies, schools and colleges and
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the local community has already installed 400 rainwater harvesting projects across the country. It
has also undertaken the construction of several check dams, rejuvenation of ponds and other
traditional water bodies like step wells (or Bawaris as they are locally referred to). Coca-Cola in
India in partnership with Rotary International has launched “Elixir of Life”- a project to provide
potable water to more than 30,000 underprivileged children in and around Chennai. In addition
to this, Coca-Cola India and UN-Habitat have signed an agreement which includes the provision
of providing clean drinking water to 100 schools in West Bengal. The Company also regularly
supports education and health initiatives in addition to Disaster Relief and Rehabilitation
programs as and when required.
Coca-Cola India, as part of its corporate social responsibility (CSR) strategy, is extending its
‘Elixir of Life’ project to 1,000 schools nationally by 2010. In the first phase, the project will
benefit more than 30,000 underprivileged children from 100 primary and panchayat schools in
and around Chennai, John Ustas, chief executive officer of Hindustan Coca-Cola Beverages, told
mediapersons here on Saturday. The project, launched in March this year in association with the
Rotary International to provide access to potable water to the underprivileged children, has so far
covered 20 schools in Chennai. Coca-cola has also partnered the UN-Habitat to improve access
to water and sanitation including providing drinking water to 150 schools in West Bengal.
Targeting to reach ‘zero water balance’ with respect to ground water usage by 2009 to seek
efficiencies in all areas of water use through a 4R (reducing, reusing, recycling and recharging)
approach, the company has instituted the Coca-Cola Citizenship Challenge Awards. This year,
the first prize was bagged by the company’s Visakhapatnam unit for its contribution towards
water conservation through construction of a check dam for diverting stream water to benefit
large community in Pamureli village of Paderu mandal. “The unit’s efforts helped facilitate
livelihood opportunities for community through agriculture, horticulture, animal husbandry and
seasonal crops converting 103 acres of forest land into agricultural land besides indirectly
enhancing the recharge of ground water level from 16 per cent to 60 per cent. Around 132 tribal
families benefited from this initiative,” Deepak Kaul, regional vice-president (south), Coca-Cola
India, said. The second prize went to the Silliguri unit in West Bengal for helping conserve the
environment through over 200 tonne of PET recycling, while the third prize was shared between
Paud unit at Pune and Varanasi unit of Uttar Pradesh for their contribution in rain water
harvesting.
END OF MODULE – I
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Module II
SOCIAL MARKETING PLAN
Introduction to Social Marketing
Social marketing is the systematic application of marketing along with other concepts and
techniques to achieve specific behavioral goals for a social good. Social marketing can be
applied to promote, for example, merit goods, make the society avoid demerit goods and thus to
promote that considers society's well being as a whole. This may include asking people not to
smoke in public areas, for example, ask them to use seat belts, prompting to make them follow
speed limits.
Although 'social marketing' is sometimes seen only as using standard commercial marketing
practices to achieve non-commercial goals, this is an over-simplification.
The primary aims of 'social marketing' is 'social good', while in 'commercial marketing' the aim
is primarily 'financial'. This does not mean that commercial marketers can not contribute to
achievement of social good.
Increasingly, social marketing is being described as having 'two parents' - a 'social parent' =
social sciences and social policy, and a 'marketing parent' = commercial and public sector
marketing approaches.Beginning in the 1970s, it has in the last decade matured into a much more
integrative and inclusive discipline that draws on the full range of social sciences and social
advertising
Social Marketing is :
A social or behavior change strategy
Most effective when it activates people
Targeted to those who have a reason to care
and who are ready for change
Strategic, and requires efficient use of
resources
Integrated, and works on the “installment
plan”
Social Marketing is Not :
Just Advertising
A clever slogan or messaging strategy
Reaching everyone through a media blitz
An image campaign
Done in a vacuum & A quick process
Ten Strategic Questions
There are ten strategic questions that you can use to help work toward an initial Social
Marketing Plan. These are:
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1. What is the social [or health] problem I want to address?
2. What actions do I believe will best address that problem?
3. Who is being asked to take that action? (Audience)
4. What does the audience want in exchange for adopting this new behavior?
5. Why will the audience believe that anything we offer is real and true?
6. What is the competition offering? Are we offering something the audience wants more?
7. What is the best time and place to reach members of our audience so that they are the most
disposed to receiving the intervention?
8. How often, and from whom, does the intervention need to be received if it is to work?
9. How can I integrate a variety of interventions to act, over time, in a coordinated manner, to
influence the behavior?
10. Do I have the resources to carry out this strategy alone; and if not, where can I find useful
partners?
Introduction to Procter & Gamble
William Procter, a candlemaker, and James Gamble, a soapmaker, formed the company known
as Procter & Gamble in 1837. The two men, immigrants from England and Ireland respectively,
who had settled earlier in Cincinnati might never have met had they not married sisters, Olivia
and Elizabeth Norris, whose father convinced his new sons-in-law to become business partners.
William Procter and James Gamble formed a humble but bold new enterprise. What began as a
small, family-operated soap and candle company grew and thrived, inspired by P&G's purpose of
providing products and services of superior quality and value.
The power of P&G's Purpose is the one factor above all others that has contributed to the
Company's long heritage of growth. It is an essential part of who we are, who we have been and
who we will be for generations to come.
As of 2008, P&G is the 8th largest corporation in the world by market capitalization and 14th
largest US company by profit. It is 10th in Fortune’s Most Admired Companies list (as of 2007).
P&G is credited with many business innovations including brand mnagement, the soap opera,
and the Control + Develop Initiative.
According to the Nielsen Company, in 2007 P&G spent more on U.S. advertising than any other
company; the $2.62 billion it spent is almost twice as much as General Motors, the next company
on the Nielsen list. P&G was named 2008 Advertiser of the Year by Cannes International
Advertising Festival.
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Procter & Gamble in India – Case Study
In India PROCTER & Gamble has two subsidiaries: P&G Hygiene and Health Care Ltd. and
P&G Home Products Ltd. P&G Hygiene and Health Care Limited is one of India's fastest
growing Fast Moving Consumer Goods Companies with a turnover of more than Rs. 500 crores.
It has in its portfolio famous brands like Vicks & Whisper. P&G Home Products Limited deals
in Fabric Care segment and Hair Care segment. It has in its kitty global brands such as Ariel and
Tide in the Fabric Care segment, and Head & Shoulders, Pantene, and Rejoice in the Hair Care
segment.
Procter & Gamble's relationship with India started in 1951 when Vicks Product Inc. India, a
branch of Vicks Product Inc. USA entered Indian market. In 1964, a public limited company,
Richardson Hindustan Limited (RHL) was formed which obtained an Industrial License to
undertake manufacture of Menthol and de mentholised peppermint oil and VICKS range of
products such as Vicks VapoRub, Vicks Cough Drops and Vicks Inhaler. In May 1967, RHL
introduced Clearsil, then America's number one pimple cream in Indian market. In 1979, RHL
launched Vicks Action 500 and in 1984 it set up an Ayurvedic Research Laboratory to address
the common ailments of the people such as cough and cold.
In October 1985, RHL became an affiliate of The Procter & Gamble Company, USA and its
name was changed to Procter & Gamble India. In 1989, Procter & Gamble India launched
Whisper - the breakthrough technology sanitary napkin. In 1991, P&G India launched Ariel
detergent. In 1992, The Procter & Gamble Company, US increased its stake in Procter & Gamble
India to 51% and then to 65%. In 1993, Procter & Gamble India divested the Detergents business
to Procter & Gamble Home Products and started marketing Old Spice Brand of products. In 1999
Procter & Gamble India Limited changed the name of the Company to Procter & Gamble
Hygiene and Health Care Limited.
P&G Home Products Limited was incorporated as 100% subsidiary of The Procter & Gamble
Company, USA in 1993 and it launched launches Ariel Super Soaker. In the same year Procter &
Gamble India divested the Detergents business to Procter & Gamble Home Products. In 1995,
Procter & Gamble Home Products entered the Haircare Category with the launch of Pantene ProV shampoo. In 1997 Procter & Gamble Home Products launches Head & Shoulders shampoo. In
2000, Procter & Gamble Home Products introduced Tide Detergent Powder - the largest selling
detergent in the world. In 2003, Procter & Gamble Home Products Limited launched Pampers world's number one selling diaper brand.
Today, PROCTER & Gamble is the second largest FMCG Company in India after Hindustan
Lever Limited.
History
India has the world’s largest number of children out of school. Every child in India has the right
to free, quality education, but still approximately one out of every two children, (close to 200
million) do not go to school. Even as the economy continues to grow at a fast pace, statistics
indicate that there are many challenges like poverty that will need to be taken in stride if this
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growth is to be sustained. In an attempt to make a difference Procter & Gamble in partnership
with Child Rights and You, launched Shiksha, a National Consumer Movement now running in
its 4th year.
Procter and Gamble (P&G) and Child Rights and You (CRY) had joined hands for launching
to launch a program called Shiksha. This program was launched in April 2006 to lead children
in 450 villages across India. Shiksha Ambassador Mandira Bedi and Shantanu Khosla, managing
director, P&G India, presented the cheque on behalf of consumers and P&G, to Ingrid Srinath,
chief executive, CRY. The funds will be allocated to nine projects across India with a focus on
children’s rights to holistic development like taking care of their health and education, among
other things.
Implementation
Shiksha, P&G’s Corporate Social Responsibility Program makes it easy for all consumers to help
educate underprivileged children by simply buying any of P&G’s large packs of Tide, Ariel,
Pantene, Olay, H&S, Rejoice, Vicks VapoRub, Whisper, Gillette Mach 3 Turbo, Gillette Series,
Oral B, Duracell or Pampers in the months of April, May & June ‘08. With a motto of ‘Padhega
India, Badhega India’ Shiksha believes that the secret to a Brighter India lies in the quality
education of our children. In this endeavour with us to bring Shiksha to life is key NGO partner
CRY.
Project Shiksha is a national consumer program that allows consumers to participate in a national
effort to support the education of underprivileged children in India via simple brand choices.
However, Irrespective of sales, P&G has committed a minimum of Rs. 1 cr. to its partner CRY,
which will be allocated to projects focused on enabling the child’s right to educationProject
Shiksha is part of P&G’s global philanthropy program P&G Live, Learn and Thrive that focuses
on the development of children in need across the globe, with Education of Children via Shiksha
being the priority in India. Till Date, Shiksha has set 67,000 children across 435 communities on
the path to the right to education with a donation of over Rs.4 crore.
With the help of CRY, the Shiksha projects include ones that work with the State Education
Departments to re-look at existing education policies; create awareness to build more schools
with better infrastructure and basic amenities like water, electricity, health; enroll more children
into formal schools and promotion of retention in schools; and build all-round development of
children.
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Shiksha supported projects in 2006 – 2007.
JAAG (Mumbai, Ratnagiri, and Raigad, Maharashtra),
Lokhit Samajik Vikas Sanstha (Osmanabad, Maharashta),
The Association of People with Disability (Kolar, Karnataka),
Adhar (Bolangir, Orissa)
Mandra LC (Purulia, WB)
Paridhi (Bihar),
Judav (Madhupur, Jharkhand),
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Jan Shikshan Kendra (UP),
Jan Mitra Nyas (Varanasi, UP),
Hanuman Van Vikas (Udaipur, Rajasthan)
Doaba Vikas Evam Utthan Samiti (Kaushambi, U.P.)
After helping lead over 67,000 children on the path of education over the last 4 years, Procter &
Gamble in partnership with Child Rights and You is back again with Shiksha 2008.Continuing
its focus to support the right to education of marginalised children in India, P&G India closed
Shiksha ’08 with the largest-ever contribution of Rs. 3.2 crores to CRY and other initiatives
reaching out to over 87,000+ children in the coming year.
P&G Future Plan
As the economy grows at 8-10% levels, P&G wants to ensure that they lay down a strong
foundation for this growth to continue by investing in the future generation. P&G globally is
committed to the cause of development of children in need via its corporate cause P&G Live,
Learn, Thrive and Shiksha is their response to the situation in India. Shiksha is unique because it
empowers the consumer to make a difference simply by choosing to buy quality products from
P&G. Shiksha is not just an initiative of one corporate and an NGO but a passion P&G as an
organization strongly believe in. ‘Padhega India’ Tabhi tho ‘Badhega India’."
Conclusion
Social marketing plan has become a key aspect for any organization that intends to continue its
business in the ever-growing industry. It helps the organization to continue its relationship for a
longer duration with the consumers and at the same time helps the society in meeting the basic
needs.
END OF MODULE – II
14
Module III
STRATEGIC FRAMEWORK FOR SOCIAL MARKETING IMPLEMENTATION
INTRODUCTION
Many businesses think an effective social marketing strategy is simply about having special
offers, end of year sales, and discounts for members. However, according to a leading business
expert, there is a new approach to social marketing which is far more effective
Social marketing is not a charity , it is a business , addressing social cause while doing a business
and contributing the some % of profit to address social cause. This involves lot of creative
thinking and careful execution . In order to carry out this entire business model the well defined
strategy plays major role.
Businesses can survive off traditional marketing to some extent, but businesses that want to
succeed need to look at new ways to improve their social marketing.
David Meerman Scott, social marketing guru and author of the recently released book, World
Wide Rave, says the best way to improve your social marketing is by including something in
your strategy that is unique, interesting, fun, or useful.
According to Scott, if you include the right kind of content , customers will begin to spread the
word about you. This is great news for your business, as the power of social marketing means
that your audience does the hard work for you.
However, people will always listen to and trust those they know, so therefore the best way to
improve your social marketing strategy is to encourage customers and clients to share their
satisfaction with each other.
Strategy
Some Language Basics
Strategy is a term that comes from the Greek strategia, meaning "generalship." In the military,
strategy often refers to maneuvering troops into position before the enemy is actually engaged. In
this sense, strategy refers to the deployment of troops. Once the enemy has been engaged,
attention shifts to tactics. Here, the employment of troops is central. Substitute "resources" for
troops and the transfer of the concept to the business world begins to take form.
Strategy also refers to the means by which policy is effected, accounting for Clauswitz’ famous
statement that war is the continuation of political relations via other means. Given the centuriesold military origins of strategy, it seems sensible to begin our examination of strategy with the
military view. For that, there is no better source than B. H. Liddell Hart.
15
Strategy According to B. H. Liddell Hart
In his book, Strategy [1], Liddell Hart examines wars and battles from the time of the ancient
Greeks through World War II. He concludes that Clausewitz’ definition of strategy as "the art of
the employment of battles as a means to gain the object of war" is seriously flawed in that this
view of strategy intrudes upon policy and makes battle the only means of achieving strategic
ends. Liddell Hart observes that Clausewitz later acknowledged these flaws and then points to
what he views as a wiser definition of strategy set forth by Moltke: "the practical adaptation of
the means placed at a general’s disposal to the attainment of the object in view." In Moltke's
formulation, military strategy is clearly a means to political ends.
Concluding his review of wars, policy, strategy and tactics, Liddell Hart arrives at this short
definition of strategy: "the art of distributing and applying military means to fulfil the ends of
policy." Deleting the word "military" from Liddell Hart’s definition makes it easy to export the
concept of strategy to the business world. That brings us to one of the people considered by
many to be the father of strategic planning in the business world: George Steiner.
Strategy According to George Steiner
George Steiner, a professor of management and one of the founders of The California
Management Review, is generally considered a key figure in the origins and development of
strategic planning. His book, Strategic Planning [2], is close to being a bible on the subject. Yet,
Steiner does not bother to define strategy except in the notes at the end of his book. There, he
notes that strategy entered the management literature as a way of referring to what one did to
counter a competitor’s actual or predicted moves. Steiner also points out in his notes that there is
very little agreement as to the meaning of strategy in the business world. Some of the definitions
in use to which Steiner pointed include the following:





Strategy is that which top management does that is of great importance to the
organization.
Strategy refers to basic directional decisions, that is, to purposes and missions.
Strategy consists of the important actions necessary to realize these directions.
Strategy answers the question: What should the organization be doing?
Strategy answers the question: What are the ends we seek and how should we achieve
them?
Steiner was writing in 1979, at roughly the mid-point of the rise of strategic planning. Perhaps
the confusion surrounding strategy contributed to the demise of strategic planning in the late
1980s. The rise and subsequent fall of strategic planning brings us to Henry Mintzberg.
Strategy According to Henry Mintzberg
16
Henry Mintzberg, in his 1994 book, The Rise and Fall of Strategic Planning [3], points out that
people use "strategy" in several different ways, the most common being these four:
1. Strategy is a plan, a "how," a means of getting from here to there.
2. Strategy is a pattern in actions over time; for example, a company that regularly markets
very expensive products is using a "high end" strategy.
3. Strategy is position; that is, it reflects decisions to offer particular products or services in
particular markets.
4. Strategy is perspective, that is, vision and direction.
Mintzberg argues that strategy emerges over time as intentions collide with and accommodate a
changing reality. Thus, one might start with a perspective and conclude that it calls for a certain
position, which is to be achieved by way of a carefully crafted plan, with the eventual outcome
and strategy reflected in a pattern evident in decisions and actions over time. This pattern in
decisions and actions defines what Mintzberg called "realized" or emergent strategy.
Mintzberg’s typology has support in the earlier writings of others concerned with strategy in the
business world, most notably, Kenneth Andrews, a Harvard Business School professor and for
many years editor of the Harvard Business Review.
Strategy According to Michael Porter
In a 1996 Harvard Business Review article [5] and in an earlier book [6], Porter argues that
competitive strategy is "about being different." He adds, "It means deliberately choosing a
different set of activities to deliver a unique mix of value." In short, Porter argues that strategy is
about competitive position, about differentiating yourself in the eyes of the customer, about
adding value through a mix of activities different from those used by competitors. In his earlier
book, Porter defines competitive strategy as "a combination of the ends (goals) for which the
firm is striving and the means (policies) by which it is seeking to get there." Thus, Porter seems
to embrace strategy as both plan and position. (It should be noted that Porter writes about
competitive strategy, not about strategy in general.)
Strategy According to Treacy and Wiersema
The notion of restricting the basis on which strategy might be formulated has been carried one
step farther by Michael Treacy and Fred Wiersema, authors of The Discipline of Market Leaders
[9]. In the Harvard Business Review article that presaged their book [10], Treacy and Wiersema
assert that companies achieve leadership positions by narrowing, not broadening their business
focus. Treacy and Wiersema identify three "value-disciplines" that can serve as the basis for
strategy: operational excellence, customer intimacy, and product leadership. As with driving
forces, only one of these value disciplines can serve as the basis for strategy. Treacy and
Wiersema’s three value disciplines are briefly defined below:
17
1. Operational
Excellence
Strategy is predicated on the production and delivery of
products and services. The objective is to lead the
industry in terms of price and convenience.
2. Customer Intimacy
Strategy is predicated on tailoring and shaping products
and services to fit an increasingly fine definition of the
customer. The objective is long-term customer loyalty
and long-term customer profitability.
3. Product Leadership
Strategy is predicated on producing a continuous
stream of state-of-the-art products and services. The
objective is the quick commercialization of new ideas.
Each of the three value disciplines suggests different requirements. Operational Excellence
implies world-class marketing, manufacturing, and distribution processes. Customer Intimacy
suggests staying close to the customer and entails long-term relationships. Product Leadership
clearly hinges on market-focused R&D as well as organizational nimbleness and agility.
What Is Strategy?
What, then, is strategy? Is it a plan? Does it refer to how we will obtain the ends we seek? Is it a
position taken? Just as military forces might take the high ground prior to engaging the enemy,
might a business take the position of low-cost provider? Or does strategy refer to perspective, to
the view one takes of matters, and to the purposes, directions, decisions and actions stemming
from this view? Lastly, does strategy refer to a pattern in our decisions and actions? For example,
does repeatedly copying a competitor’s new product offerings signal a "me too" strategy? Just
what is strategy?
Strategy is all these—it is perspective, position, plan, and pattern. Strategy is the bridge between
policy or high-order goals on the one hand and tactics or concrete actions on the other. Strategy
and tactics together straddle the gap between ends and means. In short, strategy is a term that
refers to a complex web of thoughts, ideas, insights, experiences, goals, expertise, memories,
perceptions, and expectations that provides general guidance for specific actions in pursuit of
particular ends. Strategy is at once the course we chart, the journey we imagine and, at the same
time, it is the course we steer, the trip we actually make. Even when we are embarking on a
voyage of discovery, with no particular destination in mind, the voyage has a purpose, an
outcome, an end to be kept in view.
Strategy, then, has no existence apart from the ends sought. It is a general framework that
provides guidance for actions to be taken and, at the same time, is shaped by the actions taken.
This means that the necessary precondition for formulating strategy is a clear and widespread
understanding of the ends to be obtained. Without these ends in view, action is purely tactical
and can quickly degenerate into nothing more than a flailing about.
18
When there are no "ends in view" for the organization writ large, strategies still exist and they
are still operational, even highly effective, but for an individual or unit, not for the organization
as a whole. The risks of not having a set of company-wide ends clearly in view include missed
opportunities, fragmented and wasted effort, working at cross purposes, and internecine warfare.
A comment from Lionel Urwick's classic Harvard Business Review article regarding the span of
control is applicable here [11]:
"There is nothing which rots morale more quickly and more completely than . . . the feeling that
those in authority do not know their own minds."
For the leadership of an organization to remain unclear or to vacillate regarding ends, strategy,
tactics and means is to not know their own minds. The accompanying loss of morale is
enormous.
One possible outcome of such a state of affairs is the emergence of a new dominant coalition
within the existing authority structure of the enterprise, one that will augment established
authority in articulating the ends toward which the company will strive. Also possible is the
weakening of authority and the eventual collapse of the formal organization. No amount of
strategizing or strategic planning will compensate for the absence of a clear and widespread
understanding of the ends sought.
The Practical Question: How?
How does one determine, articulate and communicate company-wide ends? How does one
ensure understanding and obtain commitment to these ends? The quick answers are as follows:
The ends to be obtained are determined through discussions and debates regarding the company's
future in light of its current situation. Even a SWOT analysis (an assessment of Strengths,
Weaknesses, Opportunities and Threats) is conducted based on current perceptions.
The ends settled on are articulated in plain language, free from flowery words and political
"spin." The risk of misdirection is too great to tolerate unfettered wordsmithing. Moreover, the
ends are communicated regularly, repeatedly, through a variety of channels and avenues. There
is no end to their communication.
Understanding is ensured via discussion, dialog and even debate, in a word, through
conversations. These conversations are liberally sprinkled with examples, for instances, and what
ifs. Initially, the CEO bears the burden of these conversations with staff. As more people come to
understand and commit to the ends being sought, this communications burden can be shared with
others. However, the CEO can never completely relinquish it. The CEO is the keeper of the
vision and, periodically, must be seen reaffirming it.
19
Ultimately, the ends sought can be expressed via a scorecard or some other device for measuring
and publicly reporting on company performance. Individual effort can then be assessed in light
of these same ends. Suppose, for instance, that a company has these ends in mind: improved
customer service and satisfaction, reduced costs, increased productivity, and increasing revenues
from new products and services. It is a simple and undeniably relevant matter for managers to
periodically ask the following questions of the employees reporting to them:





What have you done to improve customer service?
What have you done to improve customer satisfaction?
What have you done to reduce costs?
What have you done to increase productivity?
What have you done to increase revenues from new products and services?
The Decisions Are the Same
No matter which definition of strategy one uses, the decisions called for are the same. These
decisions pertain to choices between and among products and services, customers and markets,
distribution channels, technologies, pricing, and geographic operations, to name a few. What is
required is a structured, disciplined, systematic way of making these decisions. Using the
"driving forces" approach is one option. Choosing on the basis of "value disciplines" is another.
Committing on the basis of "value-chain analysis" is yet a third. Using all three as a system of
cross-checks is also a possibility.
Some Fundamental Questions
Regardless of the definition of strategy, or the many factors affecting the choice of corporate or
competitive strategy, there are some fundamental questions to be asked and answered. These
include the following:
20

Related to Mission & Vision
1.
2.
3.
4.
5.

Related to Corporate Strategy
1. What is the current strategy, implicit or
explicit?
2. What assumptions have to hold for the
current strategy to be viable?
3. What is happening in the larger, social and
educational environments?
Who are we?
What do we do?
Why are we here?
What kind of company are we?
What kind of company do we want to
become?
6. What kind of company must we become?
4. What are our growth, size, and profitability
goals?
5. In which markets will we compete?
6. In which businesses?
7. In which geographic areas?

Related
Strategy
to
Competitive
1. What is the current strategy, implicit or
explicit?
2. What assumptions have to hold for the
current strategy to be viable?
3. What is happening in the industry, with our
competitors, and in general?
4. What are our growth, size, and profitability
goals?
5. What products and services will we offer?
6. To what customers or users?
7. How will the selling/buying decisions be
made?
8. How will we distribute our products and
services?
9. What technologies will we employ?
10. What capabilities and capacities will we
require?
11. Which ones are core?
12. What will we make, what will we buy, and
what will we acquire through alliance?
13. What are our options?
14. On what basis will we compete?
Some Concluding Remarks
1. Strategy has been borrowed from the military and adapted for business use. In truth, very
little adaptation is required.
2. Strategy is about means. It is about the attainment of ends, not their specification. The
specification of ends is a matter of stating those future conditions and circumstances
toward which effort is to be devoted until such time as those ends are obtained.
3. Strategy is concerned with how you will achieve your aims, not with what those aims are
or ought to be, or how they are established. If strategy has any meaning at all, it is only in
relation to some aim or end in view.
4. Strategy is one element in a four-part structure. First are the ends to be obtained. Second
are the strategies for obtaining them, the ways in which resources will be deployed. Third
are tactics, the ways in which resources that have been deployed are actually used or
21
5.
6.
7.
8.
employed. Fourth and last are the resources themselves, the means at our disposal. Thus
it is that strategy and tactics bridge the gap between ends and means.
Establishing the aims or ends of an enterprise is a matter of policy and the root words
there are both Greek: politeia and polites—the state and the people. Determining the ends
of an enterprise is mainly a matter of governance not management and, conversely,
achieving them is mostly a matter of management not governance.
Those who govern are responsible for seeing to it that the ends of the enterprise are clear
to the people who people that enterprise and that these ends are legitimate, ethical and
that they benefit the enterprise and its members.
Strategy is the joint province of those who govern and those who manage. Tactics belong
to those who manage. Means or resources are jointly controlled. Those who govern and
manage are jointly responsible for the deployment of resources. Those who manage are
responsible for the employment of those resources—but always in the context of the ends
sought and the strategy for their achievement.
Over time, the employment of resources yields actual results and these, in light of
intended results, shape the future deployment of resources. Thus it is that "realized"
strategy emerges from the pattern of actions and decisions. And thus it is that strategy is
an adaptive, evolving view of what is required to obtain the ends in view.
Porter's Generic Strategies
Choosing Your Route to Competitive Advantage
Which do you prefer when you fly: a cheap, no-frills airline, or a more expensive operator with
fantastic service levels and maximum comfort? And would you ever consider going with a small
company which focuses on just a few routes?
The choice is up to you, of course. But the point we're making here is that when you come to
book a flight, there are some very different options available.
Why is this so? The answer is that each of these airlines has chosen a different way of achieving
competitive advantage in a crowded marketplace.
The no-frills operators have opted to cut costs to a minimum and pass their savings on to
customers in lower prices. This helps them grab market share and ensure their planes are as full
as possible, further driving down cost. The luxury airlines, on the other hand, focus their efforts
on making their service as wonderful as possible, and the higher prices they can command as a
result more than make up for their higher costs.
Meanwhile, smaller airlines try to make the most of their detailed knowledge of just a few routes
to provide better or cheaper services than their larger, international rivals.
These three approaches are examples of "generic strategies", because they can be applied to
products or services in all industries, and to organizations of all sizes. They were first set out by
Michael Porter in 1985 in his book Competitive Advantage: Creating and Sustaining Superior
Performance. Porter called the generic strategies "Cost Leadership" (no frills), "Differentiation"
22
(creating uniquely desirable products and services) and "Focus" (offering a specialized service in
a niche market). He then subdivided the Focus strategy into two parts: "Cost Focus" and
"Differentiation Focus". These are shown in Figure 1 below.
The terms "Cost Focus" and "Differentiation Focus" can be a little
confusing, as they could be interpreted as meaning "A focus on
cost" or "A focus on differentiation". Remember that Cost Focus
means emphasizing cost-minimization within a focused market,
and Differentiation Focus means pursuing strategic differentiation
within a focused market.
The Cost Leadership Strategy
Porter's generic strategies are ways of gaining competitive advantage - in other words,
developing the "edge" that gets you the sale and takes it away from your competitors. There are
two main ways of achieving this within a Cost Leadership strategy:
•
Increasing profits by reducing costs, while charging industry-average prices.
•
Increasing market share through charging lower prices, while still making a reasonable
profit on each sale because you've reduced costs.
Remember that Cost Leadership is about minimizing the cost to the organization of delivering
products and services. The cost or price paid by the customer is a separate issue!
The Cost Leadership strategy is exactly that - it involves being the leader in terms of cost in your
industry or market. Simply being amongst the lowest-cost producers is not good enough, as you
leave yourself wide open to attack by other low cost producers who may undercut your prices
and therefore block your attempts to increase market share.
23
You therefore need to be confident that you can achieve and maintain the number one position
before choosing the Cost Leadership route. Companies that are successful in achieving Cost
Leadership usually have:
•
Access to the capital needed to invest in technology that will bring costs down.
•
Very efficient logistics.
•
A low cost base (labor, materials, facilities), and a way of sustainably cutting costs below
those of other competitors.
The greatest risk in pursuing a Cost Leadership strategy is that these sources of cost reduction are
not unique to you, and that other competitors copy your cost reduction strategies. This is why it's
important to continuously find ways of reducing every cost. One successful way of doing this is
by adopting the Japanese Kaizen philosophy of "continuous improvement".
The Differentiation Strategy
Differentiation involves making your products or services different from and more attractive
those of your competitors. How you do this depends on the exact nature of your industry and of
the products and services themselves, but will typically involve features, functionality,
durability, support and also brand image that your customers value.
To make a success of a generic Differentiation strategy, organizations need:
•
Good research, development and innovation.
•
The ability to deliver high-quality products or services.
•
Effective sales and marketing, so that the market understands the benefits offered by the
differentiated offerings.
Large organizations pursuing a differentiation strategy need to stay agile with their new product
development processes. Otherwise, they risk attack on several fronts by competitors pursuing
Focus Differentiation strategies in different market segments.
The Focus Strategy
Companies that use Focus strategies well concentrate on particular niche markets and, by
understanding the dynamics of that market and the unique needs of customers in it, develop
uniquely low cost or well-specified products for the market. Because they serve customers in
their market uniquely well, they tend to build strong brand loyalty amongst their customers. This
makes their particular market segment less attractive to competitors.
As with broad market strategies, it is still essential to decide whether you will pursue Cost
Leadership or Differentiation once you have selected a Focus strategy as your main approach:
Focus is not normally enough on its own.
But whether you use Cost Focus or Differentiation Focus, the key to making a success of a
generic Focus strategy is to ensure that you are adding something extra as a result of serving only
24
that market niche. It's simply not enough to focus on only one market segment because your
organization is too small to serve a broader market (if you do, you risk competing against betterresourced broad market companies' offerings.)
The "something extra" that you add can contribute to reducing costs (perhaps through your
knowledge of specialist suppliers) or to increasing differentiation (though your deep
understanding of customers' needs).
Generic strategies apply to not-for-profit organizations too. A not-for-profit can use a Cost
Leadership strategy to minimize the cost of getting donations and achieving more for their
income, while one with pursing a Differentiation strategy will be committed to the very best
outcomes, even if the volume of work they do as a result is lower. Local charities are great
examples of organizations using Focus strategies to get donations and contribute to their
communities.
Choosing the Right Generic Strategy
Your choice of which generic strategy to pursue underpins every other strategic decision you
make, so it's worth spending time to get it right.
But you do need to make a decision: Porter specifically warns against trying to "hedge your bets"
by following more than one strategy. One of the most important reasons why this is wise advice
is that the things you need to do to make each type of strategy work appeal to different types of
people. Cost Leadership requires a very detailed internal focus on processes. Differentiation, on
the other hand, demands an outward-facing, highly creative approach.
So, when you come to choose which of the three generic strategies is for you, it's vital that you
take your organization's competencies and strengths into account.
Use the following steps to help you choose.
Step 1: For each generic strategy, carry out a SWOT analysis of your strengths and weaknesses,
and the opportunities and threats you would face, if you adopted that strategy.
Having done this, it may be clear that your organization is unlikely to be able to make a success
of some of the generic strategies.
Step 2: Use Five Forces Analysis to understand the nature of the industry you are in.
Step 3: Compare the SWOT analyses of the viable strategic options with the results of your Five
Forces analysis. For each strategic option, ask yourself how you could use that strategy to:
•
Reduce or manage supplier power.
•
Reduce or manage buyer/customer power.
•
Come out on top of the competitive rivalry.
•
Reduce or eliminate the threat of substitution.
•
Reduce or eliminate the threat of new entry.
Select the generic strategy that gives you the strongest set of options.
25
Porter's Generic Strategies offer a great starting point for strategic decision making. Once you've
made your basic choice, though, there are still many strategic options available. Bowman's
Strategy Clock helps you think at the next level of details, in that it splits Porter's options into
eight sub-strategies.
Key Points:
According to Porter's Generic Strategies model, there are three basic strategic options available
to organizations for gaining competitive advantage. These are: Cost Leadership, Differentiation
and Focus.
Organizations that achieve Cost Leadership can benefit either by gaining market share through
lowering prices (whilst maintaining profitability,) or by maintaining average prices and therefore
increasing profits. All of this is achieved by reducing costs to a level below those of the
organization's competitors.
Companies that pursue a Differentiation strategy win market share by offering unique features
that are valued by their customers. Focus strategies involve achieving Cost Leadership or
Differentiation within niche markets in ways that are not available to more broadly-focused
players.
Apply This to Your Life
26

Ask yourself what your organization's generic strategy is.
How does this affect the choices your make in your job?

If you're in an organization omitted to achieving Cost
Leadership, can you reduce costs by hiring less expensive
staff and training them up, or reducing turnover? Can you
reduce training costs by devising in-house schemes for
sharing skills and knowledge amongst team members? Can
you reduce expenses by using technology such as video
conferencing over the Internet?

If your organization is pursuing to Differentiation, can you
improve customer service? Customer Experience Mapping
may help here. Can you help to foster a culture of continuous
improvement and innovation in your team?

And if you're working for a company that has a chosen a
Focus strategy, what knowledge or expertise can you use or
develop to add value for your customers that isn't available
to broad market competitors?
STRATEGIC FRAMEWORK FOR SOCIAL MARKETING
COMMUNITY
DEVELOPMENT
SOCIAL ISSUES
NEED FOR
SOCIAL
MARKETING
PREPARE A
PLAN
PROMOTIONAL
STRATEGIES
NATURAL
DISASTERS
ENVIRONMENT
AL
ISSUES
27
SUCCESSFUL
IMPLEMENTA
TION
PROCESS OF SOCIAL MARKETING
The planning phase (Step 1) forms the foundation on which the rest of the process is built. To
create an effective social marketing program, you must understand the problem you are
addressing, the audiences you are targeting, and the environment in which the program will
operate. Research is used to analyze these factors and to develop a workable strategy for
effecting behavior change.
The message and materials development phase (Step 2) uses the information learned in the
planning phase to design the messages to be conveyed as well as the materials that will carry the
messages to the target audience.
The pre-testing phase (Step 3) involves using various methods to test messages, materials and
proposed tactics with the target audience members to determine what works best to accomplish
the program's objectives. It is not uncommon to go back and forth several times between
development and pretesting as you make necessary changes in the messages, materials or overall
strategy and explore whether the new approach works.
In the implementation phase (Step 4) the program is introduced to the target audience.
Preparation is essential for success and implementation must be monitored to ensure that every
element proceeds as planned.
Finally, the evaluation and feedback phase (Step 5) assesses the effects of the program as a
whole as well as the individual elements of the strategy. Evaluation occurs throughout the
process of program development, not just at the end, and feedback is used at each stage to
improve the program
Conclusion
Strategy is an integral part of social marketing, As mentioned earlier social marketing is not a
charity program it is a full fledge business plan where in the success of the entire organization
depends upon how well strategy been made to achieve the desired goal with the help of social
developmental programs.
Case Study-E-choupal
EXECUTIVE SUMMARY
Agriculture is vital to India. It produces 23% of GDP, feeds a billion people, and employs 66%
of theworkforce. Because of the Green Revolution, India’s agricultural productivity has
improved to the point that it is both self-sufficient and a net exporter of a variety of food grains.
Yet most Indian farmers have remained quite poor. The causes include remnants of scarcity-era
regulation and an agricultural system based on small, inefficient landholdings. The agricultural
system has traditionally been unfair to primary producers. Soybeans, for example, are an
important oilseed crop that has been exempted from India’s Small Scale Industries Act to allow
28
for processing in large, modern facilities. Yet 90% of the soybean crop is sold by farmers with
small holdings to traders, who act as purchasing agents for buyers at a local, governmentmandated marketplace, called a mandi. Farmers have only an approximate idea of price trends
and have to accept the price offered them at auctions on the day that they bring their grain to the
mandi. As a result, traders are well positioned to exploit both farmers and buyers through
practices thatsustain system-wide inefficiencies.
ITC is one of India’s leading private companies, with annual revenues of US$2 billion. Its
International Business Division was created in 1990 as an agricultural trading company; it now
generates US$150 million in revenues annually. The company has initiated an e-Choupal effort
that places computers with Internet access in rural farming villages; the e-Choupals serve as both
a social gathering place for exchange of information (choupal means gathering place in Hindi)
and an e-commerce hub. What began as an effort to re-engineer the procurement process for soy,
tobacco, wheat, shrimp, and other cropping systems in rural India has also created a highly
profitable distribution and product design channel for the company—an e-commerce platform
that is also a low-cost fulfillment system focused on the needs of rural India. The e-Choupal
system has also catalyzed rural transformation that is helping to alleviate rural isolation, create
more transparency for farmers, and improve their productivity and incomes. This case analyzes
the e-Choupal initiative for soy; efforts in other cropping systems (coffee, wheat, and shrimp
aquaculture), while different in detail, reflect the same general approach.
THE BUSINESS MODEL
A pure trading model does not require much capital investment. The e-Choupal model, in
contrast, has required that ITC make significant investments to create and maintain its own IT
network in rural India and to identify and train a local farmer to manage each e-Choupal. The
computer, typically housed in the farmer’s house, is linked to the Internet via phone lines or,
increasingly, by a VSAT connection, and serves an average of 600 farmers in 10 surrounding
villages within about a five kilometer radius. Each e-Choupal costs between US$3,000 and
US$6,000 to set up and about US$100 per year to maintain. Using the system costs farmers
nothing, but the host farmer, called a sanchalak, incurs some operating costs and is obligated by
a public oath to serve the entire community; the sanchalak benefits from increased prestige and
a commission paid him for all e-Choupal transactions. The farmers can use the computer to
access daily closing prices on local mandis, as well as to track global price trends or find
information about new farming techniques—either directly or, because many farmers are
illiterate, via the sanchalak.They also use the e-Choupal to order seed, fertilizer, and other
products such as consumer goods from ITC or its partners, at prices lower than those available
from village traders; the sanchalak typically aggregates the village demand for these products
and transmits the order to an ITC representative. At harvest time, ITC offers to buy the crop
directly from any farmer at the previous day’s closing price; the farmer then transports his crop
to an ITC processing center, where the crop is weighed electronically and assessed for quality.
The farmer is then paid for the crop and a transport fee. “Bonus points,” which are exchangeable
for products that ITC sells, are given for crops with quality above the norm. In this way, the eChoupal system bypasses the government-mandated trading mandis.
29
Farmers benefit from more accurate weighing, faster processing time, and prompt payment, and
from access to a wide range of information, including accurate market price knowledge, and
market trends, which help them decide when, where, and at what price to sell. Farmers selling
directly to ITC through an e-Choupal typically receive a higher price for their crops than they
would receive through the mandi system, on average about 2.5% higher (about US$6 per ton).
The total benefit to farmers includes lower prices for inputs and other goods, higher yields, and a
sense of empowerment.
The e-Choupal system has had a measurable impact on what farmers chose to do: in areas
covered by e-Choupals, the percentage of farmers planting soy has increased dramatically, from
50 to 90% in some regions, while the volume of soy marketed through mandis has dropped as
much as half. At the same time, ITC benefits from net procurement costs that are about 2.5%
lower (it saves the commission fee and part of the transport costs it would otherwise pay to
traders who serve as its buying agents at the mandi) and it has more direct control over the
quality of what it buys. The system also provides direct access to the farmer and to information
about conditions on the ground, improving planning and building relationships that increase its
security of supply. The company reports that it recovers its equipment costs from an e-Choupal
in the first year of operation and that the venture as a whole is profitable.
In mid-2003, e-Choupal services reached more than 1 million farmers in nearly 11,000 villages,
and the system is expanding rapidly. ITC gains additional benefits from using this network as a
distribution channel for its products (and those of its partners) and a source of innovation for new
products.
For example, farmers can buy seeds, fertilizer, and some consumer goods at the ITC processing
center, when they bring in their grain. Sanchalaks often aggregate village demand for some
products and place a single order, lowering ITC’s logistic costs. The system is also a channel for
soil testing services and for educational efforts to help farmers improve crop quality. ITC is also
exploring partnering with banks to offer farmers access to credit, insurance, and other services
that are not currently offered or are prohibitively expensive. Moreover, farmers are beginning to
suggest—and in some cases, demand—that ITC supply new products or services or expand into
additional crops, such as onions and potatoes. Thus farmers are becoming a source of product
innovation for ITC.
DEVELOPMENT BENEFIT
The e-Choupal system gives farmers more control over their choices, a higher profit margin on
their crops, and access to information that improves their productivity. By providing a more
transparent process and empowering local people as key nodes in the system, ITC increases trust
and fairness. The increased efficiencies and potential for improving crop quality contribute to
making Indian agriculture more competitive. Despite difficulties from undependable phone and
electric power infrastructure that sometimes limit hours of use, the system also links farmers and
their families to the world. Some sanchalaks track futures prices on the Chicago Board of Trade
as well as local mandi prices, and village children have used the computers for schoolwork,
games, and to obtain and print out their academic test results. The result is a significant step
toward rural development.
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KEY LESSONS
The e-Choupal model demonstrates that a large corporation can play a major role in recognizing
markets and increasing the efficiency of an agricultural system, while doing so in ways that
benefit farmers and rural communities as well as shareholders. The case also shows the key role
of information technology— in this case provided and maintained by a corporation, but used by
local farmers—in helping bring about transparency, increased access to information, and rural
transformation. Critical factors in the apparent success of the venture are ITC’s extensive
knowledge of agriculture, the effort ITC has made to retain many aspects of the existing
production system, including maintenance of local partners, the company’s commitment to
transparency, and the respect and fairness with which both farmers and local partners are treated.
WHAT WORKS: ITC’S E-CHOUPAL AND PROFITABLE RURAL TRANFORMATION
Rural India is a difficult business location. Transport, electric power, and information
infrastructure are inadequate. Business practices are underdeveloped or outdated. Lack of access
to modern resources has resulted in an under-trained workforce. Rural society is structured
around subsistence and is unprepared for modern products and services. These constraints, along
with many others, have dissuaded most companies from taking on the challenge of rural
commerce. Yet such an engagement can serve a dual agenda: bridging rural isolation and the
resulting disparities of education and economic opportunity, while at the same time creating a
potentially large profit opportunity for the organization willing to tackle the inefficiencies. The
key question is how modern resources and methods can be practically deployed to profitably
overcome rural constraints. Also important are the social impacts of such an engagement.ITC’s
e-Choupal initiative began by deploying technology to re-engineer procurement of soya and
other
crops from rural India. It has gone on to serve as a highly profitable distribution and product
design channel. The effort holds valuable lessons in rural engagement and demonstrates the
magnitude of the opportunity while illustrating the social and development impact of bringing
global resources, practices, and remuneration to the Indian farmer.
THE PARADOX OF INDIAN AGRICULTURE
Agriculture is economically and socially vital to India. It contributes 23% of the GDP, feeds a
billion people and employs 66% of the workforce. Agriculture’s share of GDP has shrunk
steadily but at 23% it remains a critical component of the economy Yet despite this economically
vital role, Indian agriculture has until recently been regulated in an archaic fashion that limits its
productivity. Non-optimal farming practices and capricious weather patterns left postIndependence India with an under-performing agricultural sector, acute food shortages, and
dependence on food imports. Legislation from this period brought heavy government
intervention in agriculture, including control of land ownership, input pricing, and regulated of
product marketing. Produce could only be sold in government-recognized locations to authorized
agents. Processing capacities, private storage, futures trading and transport were restricted. The
result was corrupt and inefficient systems, in which starvation existed alongside granaries
overflowing with food stocks of over 60 million metric tons. At the same time, the
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unprofessional business environment made the sector unattractive to modern companies and
blocked their influence in rationalizing the market.
High Production yet Impoverished Producers
The goal of being self-sufficient in food supply brought Indian agriculture into the mainstream of
political and social consciousness. The Green Revolution brought great strides in agricultural
productivity to some parts of India and made the country a net exporter of most food grains by
the mid-1970’s, thus resolving previous famine paradoxes. However, the Indian farmer did not
progress correspondingly. After independence, the government parceled and redistributed larger
land holdings to rectify historical inequities and entrust ownership to end cultivators, thus
encouraging productivity. In subsequent years, ownership ceilings were legislated and inherited
land was partitioned into smaller lots, such that by 2003,the typical Indian farm is a very smallscale operation with total landholdings often measured by fractions of an acre. Unable to realize
economies of scale, most Indian farmers are very poor as a result of land redistribution policies.
Figure 1 illustrates that in 1993, agricultural laborers in most states made barely enough to keep
a three-person family above the poverty level2.
ORIGINS OF E-CHOUPAL
The ITC group is one of India’s foremost private sector companies with a market capitalization
of around US$4 billion and annual revenues of US$2 billion. ITC has a diversified presence in
tobacco, hotels paperboards, specialty papers, packaging, agri-business, branded apparel,
packaged foods and other fast moving consumer goods Spurred by India’s need to generate
foreign exchange, ITC's International Business Division (IBD) was created in 1990 as an agritrading company aiming to “offer the world the best of India's produce.” Initially, the agricultural
commodity trading business was small compared to international players. By 1996, the opening
up of the Indian market had brought in international competition. Large international companies
had better margin-to-risk ratios because of wider options for risk management and arbitrage.
For an Indian company to replicate the operating model of such multinational corporations
would have required a massive horizontal and vertical expansion. In 1998, after competition
forced ITC to explore the options of sale, merger, and closure of IBD, ITC ultimately decided to
retain the business. The Chairman of ITC challenged IBD to use information technology to
change the rules of the game and create a competitive business that did not need a large asset
base. Today, IBD is a US$150 million company that trades in commodities such as feed
ingredients, food-grains, coffee, black pepper, edible nuts, marine products, and processed
fruits.Corporate and social responsibility is an integral part of ITC’s philosophy, and ITC is
widely recognized as dedicated to the cause of nation building. Chairman Y. C. Deveshwar calls
this source of inspiration “a commitment beyond the market.”
“ITC believes that its aspiration to create enduring value for the nation provides the motive force
to sustain growing shareholder value. ITC practices this philosophy by not only driving each of
its businesses towards international competitiveness but by also consciously contributing to
enhancing the competitiveness of the larger value chain of which it is a part.”
This view of social consciousness allowed ITC to recognize the unique opportunity of blending
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shareholder value creation with social development. The social impact of the e-Choupals as
envisioned by ITC ranges from the short-term provision of Internet access to the long-term
development of rural India as a competitive supplier and consumer of a range of goods and
services in the global economy. The sustainability of the engagement comes from the idea that
neither the corporate nor social agendas will be subordinated in favor of the other.
PRODUCTION CHANNELS PRIOR TO THE E-CHOUPAL
There are three commercial channels for soy: traders, government-mandated markets (mandis),
and producer-run cooperative societies for crushing in cooperative mills (see Figure 2). In
addition, farmers traditionally keep a small amount of their crops for their personal consumption
and get the produce processed in a small-scale crushing-plant called a ghani. The system varies
among states and districts, as does the percentage of produce going through each channel, but on
average, 90% of soy crops are processed through traders and mandis.
The Agricultural Products Marketing Act legislated the creation of mandis to enable a more
equitable distribution of the gains from agriculture among producers, consumers, and traders.
The mandi is central to the functioning of the marketing channel, and acts as delivery point
where farmers bring produce for sale to traders. In the soy growing areas of Madhya Pradesh, a
mandi typically serves around 700 square kilometers, although the area served by a mandi varies
by state. With traditional grains, large portions are used by the farmer or bartered for different
crops. But since soy is not native to the Indian palate, its major market is the crushing plant and
nearly the entire crop must be exported. This makes the mandi a vital part of the soya
chain.Mandi trading is conducted by commission agents called adatiyas (brokers who buy and
sell produce).
They are of two types: kachha adatiyas are purchasing agents that buy only on behalf of others
and pukka adatiyas who finance trade as representatives of distant buyers and sometimes procure
crops on their own account. All the adatiyas belong to the Agarwal and Jain community, an
economic class distinct from farmers. This community manages grain trade across the entire
country including south India, a remarkable feat considering the vast cultural and social diversity
across the nation. The lack of professional competition combined with the communal
stranglehold on rural trading has made commission agents extremely wealthy. Commission
agents from medium sized mandis can possess assets and incomes in the millions of dollars. The
adatiyas established and grew the soy industry on the basis of familial and community trust, with
buying and selling based upon oral agreements.
Their expansive personal networks within the industry and their financial influence make them a
formidable presence.The operation of the Mandi consists of a number of different stages, from
the logistics of transporting grain to the market to quality inspection, auction, bagging and
weighing, and payment. Based upon local information within the village, farmers decide in
which of the nearby mandis to sell. They transport their crops to the mandis in carts drawn by
animals or tractors. Very often, to avoid peak-time crowds, farmers will arrive at the mandi the
night before they intend to sell. When the mandi opens in the morning, farmers bring their carts
to display areas within the mandi.The inspection by buyers is by sight. There is no formal
method of grading the produce and the only
33
instrument used is the moisture meter; the crop is not tested for oil content. one at a time, on a
manual scale. After weighing, the full value of the grain is calculated. The farmer goes to the
agent’s office to collect a cash payment. The agent pays a mandi fee (1% of purchase value in
Madhya Pradesh) to the mandi. The bagged produce is then loaded on to the buyer’s trucks and
transported to the processing plant.
Limitations of the Mandi System
The mandi system does not serve the farmer well, and is burdened by inefficiency. Because the
farmer does not have the resources to analyze or exploit price trends, the timing of the sale may
not result in the optimal price for the crop. Moreover, since the actual sale price is determined at
the auction, by the time the farmer gets the price, it is too late to go to another mandi to make his
sale. Other expenses and inefficiencies exist: the overnight stay near the mandi costs the farmer
money; most crops are displayed in open air courtyards, and are therefore subject to being
negatively affected by the weather; the inspection process is unscientific and often arbitrary,
tending to favor the buyer, and generally does not provide an incentive to farmers to invest in
better seed or farming practices that lead to higher quality—even though quality, especially oil
content, matters to soy processors.In addition, farmers find the auction process demeaning.
Agents belong to a close-knit community that is socially and economically distinct from the
farmers’ community. While they may not collude in pricing,they do collude in establishing the
practices of the trade that uniformly favor agents and exploit the farmers’ situation. The farmers
also bear the cost of bagging and weighing the crop, which is done by mandi laborers—part of
whose compensation is the sale of spilled produce. Needless to say, these laborers ensure that
some portion of each lot is spilled.
Farmers feel that the weighers consistently under-weigh their produce by applying practiced and
timely nudges to the scale. Historical intimidation and long queues waiting behind them dissuade
the farmers from protesting. To add to this exploitation, the farmer is never paid the full purchase
price up front but is paid a partial amount and asked to return to the mandi later for the
remainder. Farmers are not paid interest on the remaining sum—although crushers pay agents
usurious rates for the privilege of delayed payment—and repeating the trip to the mandi costs
farmers time and money. Since the crop has already been delivered, however, the farmers are at
the agents’ mercy Apart from the exploitation of the farmer, there are other inefficiencies in the
system.
The multiple points of handling in the supply-chain require the produce to be bagged, which
takes four to five times longer to be unloaded at the processing plant than unbagged produce.
Traders generally do not have the capacity to store and manage different qualities and grades of
produce, inhibiting efforts to produce better crop grades. Pricing is set locally at the mandis, and
is not reliably tracked or reported nationally, resulting in a lack of information that reduces the
opportunity for arbitrage and leads to market inefficiency. In addition, regulatory restrictions
tend to limit arbitrage to small geographic areas.The mandi system also does not serve trading
companies such as ITC well; its inefficiencies make the mandi far from an optimal procurement
channel. From the company’s point of view, the key problem is
34
the agent’s control of the market and the resulting distortions of price and quality. Agents
purchase grain on a trading company’s behalf. Some of the produce they buy is of good quality
and therefore commands a premium price, while other crops are of poor quality and therefore sell
at a discount. In any given day, an agent purchases produce with a range of crop quality at a
range of prices. The agent often mixes the different quality crops together and charges the
trading company a single price near the higher end of the price spectrum.Not only does the agent
inflate the price to trading companies, he also inflates the price at the mandi. As we have seen,
high-quality produce is used to make an entire lot of lower quality produce acceptable. Because
of its value to agents, agents pay an inflated premium for high-quality produce, which drives up
the high crop price at the mandi for the day.
Very few farmers actually get the price for top-quality produce, but this price acts as a
benchmark for the next day’s pricing, thereby inflating the mandi price over a period of time and
increasing costs for trading companies. Additionally, the trading company establishes a daily
price range for its agent to buy within. If the agent’s average buy price that day is lower than the
low end of the established price, the agent sells the grain to the trading company at the
established low price and pockets the difference. If, however, the average buy price is higher
than the trading company’s established high price, the agent will still buy the produce but will
report to the company that since its price was not high enough, no grain could be bought. The
agent will store the grain and sell it to the trading company the next day when the established
price has been raised to make-up for the previous day’s procurement shortfall.
Commission agents therefore capture the entire benefit of intra-day price shifts. The agents
therefore operate without risk of loss of profit. Officially, the agents’ commission is 1% of ITC’s
price. In reality, ITC estimates that the agents’operating margin is around 2.5-3%.As a result of
the commission agent structure in the traditional mandi system, ITC had no direct interaction
with the farmer. This gap created a range of supply-chain issues, including limiting ITC’s
knowledge of its crops, suppliers, and supply risks, as well as limiting the company’s ability to
improve crop quality and quantity by bringing modern agricultural practices to the farmers The
company developed its e-Choupal strategy as a way to communicate directly with the farmer and
to bypass the inefficiencies arising out of the agents’ intermediation, thereby achieving “virtual
vertical integration.”
VISION AND PLANNING BEHIND THE E-CHOUPALS
Implementing and managing e-Choupals is a significant departure from commodities trading.
Through its tobacco business, ITC has worked in Indian agriculture for decades, from research to
procurement to distribution. ITC’s translation of the tactical and strategic challenges it faced and
its social commitment into a business model demonstrates a deep understanding of both agrarian
systems and modern management. Some of the guiding management principles are:
Re-engineer, Not Reconstruct
The conventional view of transforming established business systems begins with the failures of
the current system and develops means to change it. ITC took a different approach by looking at
the successes of the current system and identifying what they could build on. ITC not only
retained the efficient providers within the mandi system but also created roles for some
35
inefficient providers. This philosophy has two benefits. First, it avoids “reinventing the wheel” in
areas where ITC would not be able to add value through its presence. Second, it recruits and
engages members of the rural landscape thereby making their expertise available to ITC while
preventing their expertise from being shared with ITC’s competition. A good example of this in
action is the role created for the commission agents as discussed later.
Address the Whole, Not Just One Part
The farmers’ various activities range from procuring inputs to selling produce. Currently, the
village trader services the spectrum of farmers’ needs. He is a centralized provider of cash, seed,
fertilizer,pesticides, and also the only marketing channel. As a result, the trader enjoys two
competitive benefits.First, his intimate knowledge of the farmer and village dynamics allow him
to accurately assess and manage risk. Second, he reduces overall transaction costs by aggregating
services. The linked transactions reduce the farmers’ overall cost in the short term, but create a
cycle of exploitative dependency in the long-term. Rural development efforts thus far have
focused only on individual pieces rather than what the entire community needs. Cooperatives
have tried to provide agricultural inputs, rural banks have tried to provide credit, and mandis
have tried to create a better marketing channel. These efforts cannot compete against the trader’s
bundled offer. Functioning as a viable procurement alternative, therefore, must eventually
address a range of needs, not just the marketing channel.
An IT-Driven Solution
From the conception of the model, an IT-based solution was recognized as fundamental to
optimizing effectiveness, scalability, and cost. Information technology is 20% of all the effort of
ITC’s e-Choupal business model, but is considered the most crucial 20%. The two goals
envisioned for IT are:
• Delivery of real-time information independent of the transaction. In the mandi system, delivery,
pricing, and sales happen simultaneously, thus binding the farmer to an agent. E-Choupal was
seen as a medium of delivering critical market information independent of the mandi, thus
allowing the farmer an empowered choice of where and when to sell his crop.• Facilitate
collaboration between the many parties required to fulfill the spectrum of farmer needs. As a
communication mechanism, this goal is related to the commitment to address the whole system,
not just a part of the system. It should be noted that ITC did not hesitate to install expensive IT
infrastructure in places where most people would be wary of visiting overnight. It is a
manifestation of the integrity of rural value systems that not a single case of theft,
misappropriation, or misuse has been reported among the almost 2,000 e-Choupals.
Modularity of Investments, in Size and Scope
ITC managed its investments modularly along the scope and scale axes in what it terms “rolloutfixitscale up” and “pilot-critical mass-saturation.” This incremental control of investment levels
along with the clarity of revenue streams and the social import were critical in getting board
approval for the initiative.
36
Risk Assessment and Mitigation
ITC identified the following risks as it designed the business model:
• Radical shifts in computing access will break community-based business models.
• The sanchalaks are ITC’s partners in the community, and as their power and numbers increase,
there is a threat of unionization and rent extraction.
• The scope of the operation: the diversity of activities required of every operative and the speed
of expansion create real threats to efficient management.
Managing Bureaucracy
When the e-Choupals were conceived, they faced a fundamental regulatory obstacle. The
Agricultural Produce Marketing Act, under whose aegis mandis were established, prohibits
procurements outside the mandi. ITC convinced the government that e-Choupals would operate
according to the spirit of the Act and thus e-Choupal procurement was in line with its goals.
Since ITC would not be using the mandiinfrastructure for its procurement, and would have to
incur its own costs with the e-Choupal infrastructure, the government offered to waive the mandi
tax on the produce procured through the e-Choupal. However, ITC recognized that the tax was a
major source of revenue for the government and local mandis and, as ITC’s competition was also
subject to the tax, the tax itself was not making ITC uncompetitive. ITC therefore chose to
continue paying the tax rather than risking the relationships with the government and the mandis.
THE BUSINESS MODEL
The model is centered on a network of e-Choupals, information centers equipped with a
computer
connected to the Internet, located in rural farming villages. E-Choupals serve both as a social
gathering place for exchange of information (choupal means traditional village gathering place in
Hindi) and an ecommerce hub. A local farmer acting as a sanchalak (coordinator) runs the
village e-Choupal, and the computer usually is located in the sanchalak’s home. ITC also
incorporate a local commission agent, known as the samyojak (collaborator), into the system as
the provider of logistical support.ITC has plans to saturate the sector in which it works with eChoupals, such that a farmer has to travel no more than five kilometers to reach one. The
company expects each e-Choupal to serve about 10 villages within a five kilometer radius.
Today its network reaches more than a million farmers in nearly 11,000 villages through 2,000 eChoupals in four states (Madhya Pradesh, Karnataka, Andhra Pradesh, and Uttar Pradesh), and
the network is expanding rapidly. Of the e-Choupals in Madhya Pradesh, the one in Khasrod
services about 500-700 farmers in 10 villages; another e-Choupal in Dahod services 5,000
farmers in 10 villages. The average usage is about 600 farmers per e-Choupal in the soy cropping
area, with fewer in wheat, coffee, and shrimp.The critical element of the e-Choupal system, and
the key to managing the geographical and cultural breadth of ITC’s network, is the sanchalak.
ITC channels virtually all its communication through the local sanchalak. Recruiting a local
farmer from the community for this role serves several purposes:
37
• For generations, the Indian farmer has been betrayed by individuals and institutions. Trust is
the most valuable commodity in rural India. No transaction will happen without trust,
irrespective of the strength of the contract. The sanchalak is selected to provide this vital
component in ITC’s system.
• ITC need not invest in building and securing a physical infrastructure such as a kiosk for
housing the e-Choupal computer.
• The sanchalak is trained in computer operation and can act as a familiar and approachable
human interface for the often illiterate farmers and other villagers.
• ITC expects to leverage the profit-making power of the small-scale entrepreneur.Sanchalaks
indicate three equally-weighted motivations for assuming their role: a means to help their
community, a profitable business for themselves, and a means of getting access to a functional
computer.The sanchalaks receive a commission for every transaction processed through the eChoupal and also benefit from increased social status that accompanies the position—a
significant advantage in rural Indian life. ITC insists that sanchalaks should not give up farming,
for this would compromise the trust that they command. To help ensure that sanchalaks serve
their communities and not just themselves, ITC projects the role as a public office: hence the title
“sanchalak,” and a public oath-taking ceremony where the sanchalak takes an oath to serve the
farming community through the e-Choupal. Successful sanchalaks usually have a number of
common characteristics, including risk-taking ability and the willingness to try something new,
ambition, and the aspiration of earning additional income through the e-Choupal. Sanchalaks are
usually of median wealth and status in their communities, able to read and write, and are part of
an extended family large enough so that they can find time to service the e-Choupal. Sanchalaks
undergo training at the nearest ITC plant.
They receive education on basic computer usage, the functions of the e-Choupal Web site, basic
business skills, as well as quality inspection of crops. For the sale of products through e-Choupal,
the sanchalaks receive product training directly from the manufacturer with ITC involving itself
only in product design and facilitation. Nonetheless, their role requires considerable
entrepreneurial initiative and entails some operational costs, between US$60 and US$160 per
year, for electricity and phone-line charges; the latter of which are gradually declining as ITC
replaces phone-based Internet connections with a VSAT system.Selecting and training the
sanchalaks is just the first step. Most do not have retail experience and may lack motivation to
actively promote ITC products. ITC employs a variety of motivation techniques to encourage
sales. One technique is to hold a ceremony where sanchalaks are presented with their annual
commission checks and public announcements of earnings are made. Stories how sanchalaks
spent past commissions serve to demonstrate the income potential and spurs non-performers to
work.
The zeal to perform sometimes leads to territorial disputes, but ITC does not interfere in their
resolution because it encourages sanchalaks to better serve their customer-base.A secondary, but
still important, role is played by the samyojaks, or cooperating commission agents.Samyojaks
earn income from ITC by providing logistical services that substitute for the lack of rural
infrastructure, by providing information and market signals on trading transactions to the eChoupal system. In effect, ITC uses agents as providers of essential services, not as principals in
38
a trading transaction. They play an especially important role in the initial stages of setting up the
e-Choupals, because they know which farmers grow soya, what kind of families they have, what
their financial situation is, and who is seen as “acceptable” in the villages and might thus make a
good sanchalak.
ITC is strongly committed to involving samyojaks in the on-going operation of the e-Choupal
system, allowing them revenue streams through providing services such as management of cash,
bagging and labor in remote ITC procurement hubs, handling of mandi paperwork for ITC
procurement, and as licensed principals for the retail transactions of the e-Choupal.Since the eChoupal system by-passes the agent-controlled mandis and has considerably reduced
commission income, why do agents agree to cooperate with ITC? First, the company has made it
clear that they will continue to buy produce through the mandis. Second, the company offers
significant commissions for samyojak services. Finally, the agents are fragmented and fear that if
they do not agree to work with ITC, another agent will gain the promised e-Choupal revenues.
One samyojak reported that he saw globalization as an irresistible trend, and although he saw
loss of revenue in the short-term, his long-term interest lay in cooperating with an international
company.
THE E-CHOUPAL SYSTEM
The re-engineered supply chain looks very different from the existing system and has the
following stages:
E-Choupal Supply Chain
Pricing
The previous day’s mandi closing price is used to determine the benchmark Fair Average Quality
(FAQ) price at the e-Choupal. The benchmark price is static for a given day. This information
and the previous day mandi prices are communicated to the sanchalak through the e-Choupal
portal. The commission agents at the mandi are responsible for entering daily mandi prices into
the e-Choupal. If and when the Internet connection fails, the sanchalak calls an ITC field
representative.
Inspection and Grading
To initiate a sale, the farmer brings a sample of his produce to the e-Choupal. The sanchalak
inspects the produce and based on his assessment of the quality makes appropriate deductions (if
any) to the benchmark price and gives the farmer a conditional quote. The sanchalak performs
the quality tests in the farmer’s presence and must justify any deductions to the farmer. The
benchmark price represents the upper limit on the price a sanchalak can quote. These simple
checks and balances ensure transparency in a process where quality testing and pricing happen at
multiple levels.If the farmer chooses to sell his soy to ITC, the sanchalak gives him a note
capturing his name, his village, particulars about the quality tests (foreign matter and moisture
content), approximate quantity and conditional price.
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Weighing and Payment
The farmer takes the note from the sanchalak and proceeds with his crop to the nearest ITC
procurement hub, ITC’s point for collection of produce and distribution of inputs sold into rural
areas. Some procurement hubs are simply ITC’s factories that also act as collection points.
Others are purely warehousing operations. ITC’s goal is to have a processing center within a 30 40 kilometer radius of each farmer. There are currently 16 hubs, but there will eventually be 35
in the state of Madhya Pradesh.At the ITC procurement hub, a sample of the farmer’s produce is
taken and set aside for laboratory tests.A chemist visually inspects the soybean and verifies the
assessment of the sanchalak. It is important to note that this is the only test assessment before the
sale. Laboratory testing of the sample for oil content is performed after the sale and does not alter
the price.
The reason for this is that farmers, having historically been exploited, are not mmediately
willing to trust a laboratory test. Therefore pricing is based solely upon tests that can by
understood by the farmer. The farmer accepts foreign matter deductions for the presence of
stones or hay, based upon the visual comparison of his produce with his neighbors. He will
accept moisture content deductions based upon the comparative softness of his produce when he
bites it.ITC is working to change farmer attitudes towards laboratory testing. It is developing an
appreciation of better quality by using the subsequent lab tests to reward farmers with bonus
points if their quality exceeds the norm. At the end of the year, farmers can redeem their
accumulated bonus points through the e-Choupal for farm inputs, or contributions toward
insurance premiums.After the inspection, the farmer’s cart is weighed on an electronic
weighbridge, first with the produce and then without. The difference is used to determine the
weight of his produce.
Hub Logistics
After the inspection and weighing are complete, the farmer then collects his payment in full at
the
payment counter. The farmer is also reimbursed for transporting his crop to the procurement hub.
Every stage of the process is accompanied by appropriate documentation. The farmer is given a
copy of lab reports, agreed rates, and receipts for his records.Samyojaks, who are adept at
handling large amounts of cash, are entrusted with the responsibility of payment, except at
procurement centers near large ITC operations where ITC is handles cash disbursement.
Samyojaks also handle much of the procurement hub logistics, including labor management at
the hub, bagging (if necessary), storage management, transportation from the hub to processing
factories, and handling mandi paperwork for the crops procured at the hub. For his services in the
procurement process, the samyojak is paid a 0.5% commission.
Farmer Gains
Prior to the introduction of e-Choupal, farmers’ access to agricultural information was
incomplete or inconsistent. The only sources of information were word of mouth within the
village and the commission agent. E-Choupal allows farmers daily access to prices at several
nearby mandis. Some e-Choupal sanchalaks have taken this a level further by accessing external
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pricing sources such as prices on the Chicago Board of Trade, in order to track global trends and
determine the optimum timing of sales Moreover, through e-Choupal, farmers have access to
prices and make the critical decision of when and where to sell his crop. Both factors work
together to provide the farmers a better price for their crops.Under ITC’s system, farmers no
longer bear the cost of transporting their crops to the mandi and are instead reimbursed for
transport to the procurement hub.
The transaction at the ITC hub is also much faster than at the mandi, usually taking no more than
two or three hours. Moreover, ITC’s electronic weighing scales are accurate and not susceptible
to sleight of hand like the manual weighing system at the mandi. The system also does not
require produce to be bagged, which avoids the associated loss of produce by intentional
spillage. Thus the e-Choupal system has logistical and transaction efficiencies.Finally, the ITC
procurement center is a professionally run operation where the farmer is treated with respect and
served as a customer. The dignity accorded farmers by the professional process of the e-Choupal
cannot be understated. ITC’s recognition that farmers are not simply agricultural producers, but
integral partners in the supply process has elevated the level of respect paid to them. Simple
provisions such as a shaded seating area where farmers can sit while waiting for their paperwork
serve as indicators of ITC’s respect for farmers and their produce. Though intangible, the selfconfidence created by this professional treatment is affecting the way farmers conduct
themselves. Sanchalaks and even commission agents have noted a change in farmer attitudes.The
incremental income from a more efficient marketing process is about US$6 per ton, or an
increase of about 2.5% over the mandi system. Farmers also can make use of the information
available to them through e-Choupal to improve yields. Moreover, the seed, fertilizer, and
consumer products offered them through e-Choupal cost substantially less than through other
local sources such as village traders. Thus there are meaningful net economic benefits to farmers,
and it is having a measurable impact on what farmers choose to do: in areas covered by eChoupals, the percentage of farmers planting soy has increased dramatically, from 50 to 90% in
some regions, while the volume of soy marketed through mandis has dropped by as much as
50%.
ITC Gains
The commissions paid to the agents under the mandi system were not excessive, but because of
the inefficiencies discussed earlier, the true cost of intermediation through the mandi system was
between 2.5 and 3% of procurement costs. While retaining commissions paid for the sanchalaks’
services, the 0.5% commission paid to them is significantly less than the costs associated with
the mandi system. Direct reimbursement of transport costs to the farmer is estimated to be half of
what ITC used to pay the commission agents for transport to their factory. Removal of
intermediary manipulation of quality and the ability to directly educate and reward quality in the
customer base results in higher levels of quality in e-Choupal procurement. This results in higher
oil yields, which, in turn, lead to higher profits for ITC.
E-Choupal also allows ITC to develop long-term supplier relationships with farmers and attain
some degree of supply security over time. Risk is also managed in the e-Choupal system by a far
stronger information infrastructure. Sanchalaks and samyojaks working on behalf of ITC provide
excellent bottom-up information on pricing, product quality, soil conditions, and expected yields.
This allows ITC to better plan future operations.In the mandi system, there was a mark up of 741
8% on the price of soybean from the farm gate to the factory gate. Of this mark up, 2.5% was
borne by the farmer while 5% was borne by ITC. With e-Choupal, ITC’s costs are now down to
2.5%. Figure 4 shows transaction costs incurred by the farmer and ITC per metric ton of soy
procured in the mandi and e-Choupal. In absolute numbers, both the farmers and ITC save about
US$6 (Rs 270) per metric ton.6
Sustaining Commercial Volume
“Virtual vertical integration” can only work if there is a continuous flow of information between
the e-Choupals and ITC. Because of the number and physical dispersion of the e-Choupals, this
communication must be initiated by the sanchalaks. If their motivation to communicate with ITC
diminishes, the channel will still function for procurement, but will lack the vitality to supply
risk management, distribution, or product design. Maintaining continuous commercial flow
keeps the sanchalak motivated to spend time and money calling the ITC representative to ask
about new products, convey village demand, and providing ITC with local updates. An example
of the power of local information was seen early in e-Choupal implementation. A competitor
attempted to divert produce coming to the ITC factories by stationing representatives on the
roads leading up to the plant. This person would stop farmers on their way to the ITC hub and
offer them a price higher than the ITC rate at the competitor’s plants. Farmers alerted the
sanchalaks and they in turn provided ITC with the information necessary to address the situation.
Sanchalaks thus provide an essential role in the chain of communication.ITC maintains
commercial volumes by sequencing procurement and sales year-round, thereby securing the
continuous flow of commission checks through e-Choupals. Purchases and sales have been
arranged so that kharif (the cropping season that coincides with India’s monsoon, July through
October) and rabi (winter cropping season in irrigated areas) inputs and procurement maintain a
steady stream of revenue for sanchalaks.
Scaling the Model
Profitable re-engineering requires the unambiguous understanding of value provided, the
circumstances in which they are applicable, and the revenues they are capable of generating.
ITC’s model identifies three sources of value for the company that can help scale the model:
• Crop Specific Intervention. ITC recognized that agrarian systems vary by crop. This means that
the inefficiencies in the supply chain, the correction required from e-Choupal, and the magnitude
and timing of the resulting revenues will differ by crop. For example, the systems, and
consequently the e-Choupal models and payback streams, for coffee and shrimp are very
different from those for soy.ITC’s goals for soy intervention reflected this nuanced analysis and
the project was targeted with recovering the entire cost of infrastructure from procurement
savings. This is contrasted with the coffee and shrimp efforts where the source of e-Choupal
value is such that the investment recovery horizon is much longer.
• Low-Cost Last Mile. The same system of physical and information exchange that brings
produce from the village can be used to transfer goods to the villages. As infrastructure has
already been paid for by procurement, it is available at marginal cost for distribution. This ties in
nicely with ITC’s larger goal of transformation into a distribution super-highway. ITC's current
channels reach areas with populations of 5,000 and above. E-Choupals allow penetration into
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areas with populations less than 5,000. Products such as herbicides, seeds, fertilizers, and
insurance policies, as well as soil testing services are sold through e-Choupal. E-Choupal as a
distribution channel begins in agriculture but extends well into consumer goods and services. In
the traditional channel, comprised of mobile traders and cycle-based distributors, farmers lack
the resources to make informed purchasing decisions. More often than not, traders and
distributors do not understand the farmers’ issues and end up selling them products and services
that do not satisfy their needs. With many larger companies hesitating to serve the rural market,
farmers often do not have variety in their choice of products and services. This lack of choice
means that not only are farmers forced to buy whatever is available, they often must pay a
premium for those products.
• Intelligent First-Mile. The global resources, best practices, and remunerations that the eChoupal brings to farmers have encouraged innovation and provided an avenue to see their ideas
realized. This illustrates ITC’s vision of using e-Choupal as the “intelligent first mile.” Farmers
are now coming up with products and services that ITC could provide to further improve
operations. Farmers are demanding that ITC certify and make available the “Samrat” variety of
seeds that is preferred over the currently certified JS300 variety. Some farmers have urged ITC
to bring its resources to bear on onion and potato crops. Responding to the fact that the Indian
onion crop is regarded as inferior to the Chinese crop in the world market, farmers recognize that
this is due to the lack of availability of high quality seeds and information. They have
approached ITC with a suggestion to create e-Choupals for these crops, pointing to the mutual
profitability of such an effort.ITC’s objective is not to be a platform provider for sale of thirdparty products and services but rather a network choreographer who orchestrates bi-directional
demand and supply of goods through a collaborative business model. ITC intends to differentiate
itself by serving only those products and services to which it can add value. ITC’s core asset is
its knowledge of the customer. By transforming the value chain and setting up a platform for
procuring commodities from them directly, they now have a foundation for forging a close
relationship with the farmers. This relationship leads to a better understanding of the issues
plaguing farmers.
Through e-Choupals, hubs, and processing centers, ITC has the ready infrastructure needed to
implement an alternative channel for distribution of goods and services to rural India. EChoupals can double as storefronts and hubs as centers for stocking inventory. In the long term,
ITC sees vast opportunities from its e-commerce platform and low-cost distribution
system.Company officials have expressed the ambition to become “the Wal-Mart of India,” and
ITC chairman Y.C. Deveshwar told the media recently that “The e-Choupal network will serve
area where nearly 70% of the country's population resides…(including) villages with populations
of less than 5,000 people where most businesses never venture." In addition, the information
infrastructure implemented by ITC can be used to enhance its business decision-making, better
manage risk, and identify opportunities for cross-selling and up-selling.
The company can leverage detailed transactional data and transform it into actionable
knowledge. Data mining and data warehousing will help company executives to better
understand the behavior of their customers, identify unfulfilled needs and ways to serve them
efficiently. The communication infrastructure compensates for the lack of physical infrastructure
needed for marketing products and services in rural India. It enables rapid, low-cost information
dissemination and a trusted brand for introducing new products, while minimizing the need for a
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traveling sales force. Online ordering and order management eliminate the need for physical
storefronts. And the IT infrastructure and local sanchalak provide customer intelligence, thus
maximizing customer satisfaction and profitability.
Additional Services: Credit and Insurance
Farmers’ low income and difficulty in accessing credit severely limits their capacity to pursue
opportunities within and outside the agriculture sector. Access to credit has long been considered
a major poverty alleviation strategy in India. Demand for rural credit is estimated at US$31.6
billion (Rs 1.43 trillion). The Indian government has implemented a number of subsidized creditrelated programs.Among such programs, the Integrated Rural Development Program (IRDP),
started in 1978, was a major national rural poverty alleviation program with a large credit
component. Under the IRDP, nearly 53 million families were assisted with bank credit of
US$684 million (Rs. 31 billion) and subsidy of US$231 million (Rs. 10.5 billion). But its impact
had not matched the resources expended. The loans were not tailored to meet individual needs
and it lacked the support systems necessary to help farmers.Many financial institutions are
hesitant to serve rural India due to lack of credit history, high delivery,transaction, and
administration costs, and a perception of high risk that leads to high borrowing costs imposed on
farmers.ITC proposes to address these problems through e-Choupals and partnerships with
financial institutions tocapture needed information and offer new products:
• Capturing Credit History. Farmers in rural India borrow money from local
moneylenders,through government incentives, friends, relatives, or traders. Local moneylenders
and intermediates are aware of farmers’ creditworthiness and are therefore willing to loan
money,
albeit at a high interest rate. Through e-Choupal, ITC now has the capability to manage credit
risk
through its sanchalak network which can be used not only to verify creditworthiness of
individual
farmers but also to continuously monitor credit risk. ITC will be able to create a consolidated
farmers’ database with information pertaining to their holdings and transactions that can be used
as a source of credit report profiles.
• Transaction and Administration Costs. For major financial institutions, transaction costs
involved in servicing the rural market have been high because of the difficulty in reaching the
market. EChoupal can help overcome this problem by leveraging the IT infrastructure and the
sanchalak network, thereby lowering administrative costs.ITC plans to partner with larger banks
such as ICICI to design products for rural India. Some of the products being designed include:
• Non-cash loans for farm inputs. Instead of giving cash to the farmer directly, the financial
institutions will purchase farm inputs on behalf of the farmer. Farmers are expected to pay back
loans for the purchase price to the financial institution.
• Loans to sanchalaks. Instead of giving loans directly to farmers, loans will be given to
sanchalaks who, in turn, will loan money to farmers. Sanchalask can manage credit risk better
44
than financial institution because they have better access to the farmer, and therefore more
accurate information.
• Direct loans to farmers based on sanchalak recommendations. In this case,
sanchalaks’commissions are based on the loan recovery and therefore the have incentive to
monitor the risk on a continuous basis.
• Insurance and Risk Management Services. Insurance products have been designed to deal with
rural cash-cycles. There is recognition that in bad years, farmers may not be able to pay the
insurance premium. Rather than penalize the farmer when his policy, ITC allows for catch-up
payments in later years or, as an alternative, the reduction of the final payout. ITC uses the eChoupal Web infrastructure to set up and issue electronic reminders for premium payments. This
addresses a major weakness of the current insurance system. The agents currently selling
insurance have little incentive to encourage renewals and the lapse rate among policy is high. A
system of interlocking instruments has been set up so that insurance premiums can be credited
with quality bonus points from the farmer’s soy sale. The sanchalak is assisted in making the
sales pitch by informational Web-casts and video presentations.
TECHNOLOGY
Characteristics of the Operating Environment
Understanding the constraints imposed by the physical and social environment in e-Choupals
operate is necessary to provide the context for understanding the system design.
Overcoming Power Constraints
Power availability in rural India is unreliable and the quality of power is sub-standard. As power
is usually available for only a few hours a day and at on a sporadic schedule, the e-Choupal
computer cannot always be accessed when information is needed. Access to information in a
timely manner is critical to the success of the business model. ITC has overcome the problem of
local power supply by providing a battery-based UPS (uninterrupted power supply) backup.
With the reliability of a battery backup, the sanchalak can use the system at least twice a day—in
the morning to check the prevailing mandi prices, and again in the evening to check the rate ITC
is offering the next day. While the battery backup addresses the power supply issue, insufficient
line power during the day poses the challenge of not having enough power to charge the backup
battery.
This has caused ITC to explore other power sources and ultimately ITC decided to use solar
battery chargers. One full day of sunlight is enough to charge the battery for 70 to 80 minutes of
computer usage. The second problem with power is quality. Voltage fluctuations are endemic.
The UPS unit is the most affected component. As a result of the erratic power supply, fuses are
susceptible to being blown. To overcome this problem, ITC plans to install specially designed
UPS units that remain effective between 90V and 300V. In order to control voltage spikes, they
have introduced spike suppressors and filters.Phase imbalances, which lead to damage of
equipment, have been addressed through the use of isolation transformers to correct neutral
voltages.
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Transportation
Most e-Choupal villages lack proper roads, limiting vehicle access. As such, public
transportation access to many of the villages is infrequent. Some villages are served only once or
twice a day by rural taxis. The population relies on two-wheeled bicycles and motorbikes and
bullock carts as the main means of transportation. Moving equipment into and out of the villages
is not an easy task. Providing system support and maintenance requires the technician to travel
from outside areas to visit the e-Choupal. For these, and other reasons ITC initially placed eChoupals in villages that are within a ten to fifteen kilometer radius of a city.
Telecom Infrastructure
Telecommunication infrastructure in villages is poor. Telephone exchanges are subject to
sporadic power supply and have limited battery backup. When power is lost, phones cease to
function. In addition, there is no local support staff to maintain or troubleshoot telephone
exchanges. The support team at the main exchange typically is responsible for eight to ten
villages and is short-staffed. The turn-around time for fixing problems is often measured in days,
not hours. Overhead telephone lines are exposed to the elements and run alongside high voltage
power lines which can cause transmission quality problems.Currently, village telecommunication
infrastructure is designed to carry voice traffic only and transmission speed is so slow that it
renders Internet access impractical.
Customer Base
Before the arrival of e-Choupal, most villagers had never seen a computer. ITC realized the
importance of appropriate user interfaces. They organized meetings and focus groups of farmers
to gather information about potential user groups. The main focus of these meetings was to
determine what information farmers wanted to see, how the information would need to be
presented (graphics or text), and how often each page would need to be refreshed. The feedback
that was collected from these focus groups was used in the design of the functionality and user
interface of the application.
THE SOCIAL IMPACT OF E-CHOUPAL
A major impact of the e-Choupal system comes from bridging the information and service gap of
rural India. Agricultural research centers (such as the Indian Council for Agricultural Research),
universities,and other agencies in India have developed several practices and technologies to
improve productivity and crop quality. The impediment to implementation has been affordable,
large-scale dissemination of this knowledge. The e-Choupal system leverages technology that
can reach a wide audience literally at the click of a mouse. The constant presence of sanchalaks,
who themselves are farmers who apply these techniques, ensures that the practices actually make
their way from the Web site to the field. Some areas about which information and services are
provided by the e-Choupal Web site and e-commerce system include:
• Weather. This is a very popular section on the Web site because it provides localized weather
information at the district level. Other public sources generally provide only aggregated
statelevel
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weather information. E-Choupal’s weather information is intelligently coupled with advice on
the activities in the agricultural lifecycle. One farmer observed that prior to e-Choupal, unreliable
weather information would result in prematurely planted seeds that would be washed out by
early rains. The availability of accurate rain information has cut losses due to weather by more
than half.
• Agricultural Best Practices. Scientific practices organized by crop type are available on the
Website. Additional questions are answered through FAQs and access to experts who respond to
emails from the villages.
• Customized Quality Solutions. After sale of a crop is completed, ITC performs laboratory
testing of the sample collected. Based on these results, farmers are given customized feedback on
how they can improve crop quality and yield. Intelligent Product Deployment. Inputs such as
fertilizers and pesticides are not generic in their application. The optimal application is relative to
the soil and crop. Determining these parameters requires services such as soil testing. Past
providers brought inputs but not the information and services required to make them effective.
ITC’s “full-service” approach corrects this by coupling the input sale to the information on the
Web site and services such as soil testing.
The collective impact of better information and new services can be gauged by the fact that prior
to e-Choupal, soy cultivation was on the decline. Productivity was stagnant and farmers saw no
future in it. In Khasrod, soy production declined from a high of 100% to 50% of farmers planting
soy and was expected to decline further. Since ITC’s involvement, soy is seen as profitable again
and nearly 90% of farmers are planting the crop.A second major area of impact stems from the
ability of the e-Choupal system to open a window on the world and thus impact the future of the
villages in which they operate. Computers are bringing the same resources to villages as they
brought to urban India, and their impact is no less dramatic. This, coupled with higher incomes
and changes in farmers’ attitudes, is causing several shifts in the social fabric of village
life.Some accounts from villages include:
• Children are using computers for schoolwork and games. A particularly poignant story is that
of Khasrod, where 2,000 local students used the local e-Choupal to print their grade sheets,
saving them days of waiting and travel time.• Sanchalaks use the Internet to chat extensively
among themselves about the status of operations and agriculture in their villages.• Villagers
access global resources to learn about agriculture in other parts of the world and are taking action
to compete in the world outside, not merely in the local mandi.. Youngsters in the village use
computers to research the latest movies, cell-phone models, and cricket news.
Winners and Losers
Not everyone has benefited from the introduction of e-Choupals. Indeed, lost income and jobs is
directly connected to the overall increase in efficiency in the e-Choupal system. Some of the
players in the mandi system have suffered loss of revenue. They include: Commission agents.
Despite ITC’s best efforts to maintain mandi volumes and compensate commission agents for
lost income, there is little doubt that on the whole they have lower incomes as a result of the
introduction of e-Choupals.
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• Mandi laborers. The workers in the mandi who weighed and bagged produce have been
severely impacted by the drop in volume. In the Sonkach mandi, for example, some 28 tulavatis
and 300 laborers have been affected. ITC’s long-term vision is to employ many of these people
in the hubs in much the same functions as they perform in the mandi.• Bazaars near the mandi.
When farmers sold produce in the mandi, they would also make a variety of purchases at local
bazaars. This revenue has now been diverted to shops near the ITC hubs. This, however, can be
considered a diversion of revenue rather than elimination.
• Some mandi operations. ITC still pays mandi tax for all the crops procured through e-Choupals
but it now pays the tax to the mandi nearest to the procurement center. As a result, taxes are
being diverted from several mandis to the few mandis near procurement hubs. The result of this
is that regional mandis have lost taxes that contribute to maintaining their infrastructure.
• Competing processors. Even before the advent of the e-Choupal, the soya crushing industry
suffered from severe overcapacity (half of all capacity was excess). The efficiency pressures
imposed by e-Choupal has spurred industry consolidation.
CHALLENGES
The e-Choupal system faces multiple continuing challenges. The first is the possibility that
radical shifts in computing access could fundamentally alter community-based business models.
That is one of the reasons ITC seeks to build and control its own ICT infrastructure. Second, as
the number and power of the sanchalaks increase, there is a threat that they will unionize and
extract “rents” – unwarranted additional payments based on their increasing influence on the
system. Third, ITC’s relationship with the samyojaks seems to be uneasy, and competitors with
the financial muscle to invest for scale could conceivably use discontented samyojaks as the base
to obtain market share. Fourth, the scope of the e-Choupal operation, the diversity of activities
required of every operative, and the speed of expansion create real threats to execution
management.ITC has awakened the aspirations of farmers. If ITC fails to fulfill these aspirations,
the farmers will look elsewhere for satisfaction. As an example, in our conversation with a
sanchalak about the potential for Indian onions to succeed in the global market, he also
understood what the key to succss was – better seeds. He half-complained that he had told ITC
several times to begin selling better onion seeds, but he had not heard back from them. In a
competitive environment, ITC would have to provide faster and more responsive customer
service to maintain its distribution system.
The computer in the village is no doubt revolutionary, but there is also no doubt that the villages
we saw were stratified to the point where not everybody can walk up to the sanchalak and ask to
be shown the computer. There are clearly some segments of village society, including the entire
adult female population, that does not have access to the computer—although this may not be
true in all regions. The presence of the computer by itself will not transcend this barrier unaided.
This is not a reflection on ITC,but rather the nature of society in rural Madhya Pradesh. The
solution might lie in observing where the system has driven social change. Village farmers
belong to many social and economic strata. Yet the sanchalaks are servicing all of them equally.
In this case, the potential for commerce has broken a barrier that society has built. Similarly,
engagement with poorer segments of society and women may be possible through the active
distribution of products tailored specifically to them.
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STRATEGY FOR THE FUTURE
ITC recognizes the limitations of today’s e-Choupals as a vehicle of procurement efficiency. Not
every crop lends itself to such an intervention. In crops such as soy where value can be
maximized, followers will soon imitate ITC and eliminate the company’s competitive
advantage.ITC’s vision for e-Choupal extends many generations as e-Choupal evolves into a
full-fledged orchestrator of a two-way exchange of goods and services between rural India and
the world. The soy e-Choupal is “Wave 1,” with several more to follow.
• Wave 2. The source of value in this generation will be identity preservation through the
chain.This is a significant source of value in crops such as wheat, where the grade of the grain
determines its end use. The ability to separate different grades from field to consumer will
command a price premium. E-Choupals in Uttar Pradesh have already started wheat
procurement.
• Wave 3. This wave takes identity a step further by building the concept of traceability into the
supply chain. This is vital for perishables where traceability will allow ITC to address food
safety
concerns and once again provide a value that the customer is willing to pay for. Shrimp is a good
example of a crop for which Wave 3 will be important. ITC’s intervention in such products will
occur level of production. ITC will define standards that producers must adhere to and work with
farmers to ensure product quality. Farmers in turn will get the best price from ITC because ITC
commands the traceability premium.
• Wave 4. The first three waves fill institutional voids while Wave 4 creates institutions. The first
three waves apply to environments in which ITC is the sole buyer in the e-Choupal channel. In
commodities where the underlying markets have reached a high degree of efficiency, such basic
sources of value will not exist. In crops such as these, e-Choupal will serve as the market-place
where multiple buyers and sellers execute a range of transactions. A good example of this is
coffee. ITC’s source of value will be the sunk cost of the IT infrastructure and the transaction
fees.
• Wave 5. While the first four waves related to sourcing from rural India, the fifth wave
elaborates
the rural marketing and distribution strategy. This is not the same as the rudimentary distribution
of agri-inputs that is being done today. ITC plans to bring together knowledge of the
customer,knowledge of the business, deployed infrastructure, its reputation, and experience
gained over the first four waves, with an organization of people, processes, and partners. This
base will allow ITC to bring value-added products and services to rural India.
• Wave 6. After the sourcing of goods from rural India, ITC’s last wave has the ambitious vision
of eventually sourcing IT-enabled services from rural India. Telemedicine, eco-tourism,
traditional medicine, and traditional crafts are some of the services that can be sourced from rural
India.While still a ways off, it is an agenda that inspires scale of the vision and potential impact
on development in rural India.
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SUMMARY
The e-Choupal model shows that a large corporation can combine a social mission and an
ambitious commercial venture; that it can play a major role in rationalizing markets and
increasing the efficiency of an agricultural system, and do so in ways that benefit farmers and
rural communities as well as company shareholders. ITC’s example also shows the key role of
information technology—in this case provided and maintained by a corporation, but used by
local farmers—in helping to bring about transparency, to increase access to information, and to
catalyze rural transformation, while enabling efficiencies and low cost distribution that make the
system profitable and sustainable. Critical factors in the apparent success of the venture are
ITC’s extensive knowledge of agriculture, the effort ITC has made to retain many aspects of the
existing production system, including retaining the integral importance of local partners, the
company’s commitment to transparency, and the respect and fairness with which both farmers
and local partners are treated.
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Module IV
Green Marketing &Cause Related Marketing
Introduction
Yes, green marketing is a golden goose. As per Mr. J. Polonsky, green marketing can be defined
as, "All activities designed to generate and facilitate any exchange intended to satisfy human
needs or wants such that satisfying of these needs and wants occur with minimal detrimental
input on the national environment."
Green marketing involves developing and promoting products and services that satisfy
customer's want and need for Quality, Performance, Affordable Pricing and Convenience
without having a detrimental input on the environment.
Evolution of Green Marketing
The green marketing has evolved over a period of time. According to Peattie (2001), the
evolution of green marketing has three phases. First phase was termed as "Ecological" green
marketing, and during this period all marketing activities were concerned to help environment
problems and provide remedies for environmental problems. Second phase was
"Environmental" green marketing and the focus shifted on clean technology that involved
designing of innovative new products, which take care of pollution and waste issues. Third phase
was "Sustainable" green marketing. It came into prominence in the late 1990s and early 2000.
Why Green Marketing?
As resources are limited and human wants are unlimited, it is important for the marketers to
utilize the resources efficiently without waste as well as to achieve the organization's objective.
So green marketing is inevitable.
There is growing interest among the consumers all over the world regarding protection of
environment. Worldwide evidence indicates people are concerned about the environment and are
changing their behavior. As a result of this, green marketing has emerged which speaks for
growing market for sustainable and socially responsible products and services.
Benefits of Green Marketing
Companies that develop new and improved products and services with environment inputs in
mind give themselves access to new markets, increase their profit sustainability, and enjoy a
competitive advantage over the companies which are not concerned for the environment.
Adoption of Green Marketing
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There are basically five reasons for which a marketer should go for the adoption of green
marketing. They are -
pressure
Green Marketing Mix
Every company has its own favorite marketing mix. Some have 4 P's and some have 7 P's of
marketing mix. The 4 P's of green marketing are that of a conventional marketing but the
challenge before marketers is to use 4 P's in an innovative manner.
Product
The ecological objectives in planning products are to reduce resource consumption and pollution
and to increase conservation of scarce resources (Keller man, 1978).
Price
Price is a critical and important factor of green marketing mix. Most consumers will only be
prepared to pay additional value if there is a perception of extra product value. This value may be
improved performance, function, design, visual appeal, or taste. Green marketing should take all
these facts into consideration while charging a premium price.
Promotion
There are three types of green advertising:  Ads that address a relationship between a product/service and the biophysical environment
 Those that promote a green lifestyle by highlighting a product or service
 Ads that present a corporate image of environmental responsibility

Place
The choice of where and when to make a product available will have significant impact on the
customers. Very few customers will go out of their way to buy green products.
Strategies
The marketing strategies for green marketing include: with regard to 4 P's
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Challenges Ahead
treatment technology, which is too costly
Some Cases
ade of recycled paper.
-Cola pumped syrup directly from tank instead of plastic which saved 68 million
pound/year.
-ash that
has been a major source of air and water pollution.
Conclusion
Green marketing should not neglect the economic aspect of marketing. Marketers need to
understand the implications of green marketing.
you think customers are not concerned about environmental issues or will not pay a premium for
products that are more eco-responsible, think again. You must find an opportunity to enhance
you product's performance and strengthen your customer's loyalty and command a higher price.
Green marketing is still in its infancy and a lot of research is to be done on green marketing to
fully explore its potential.
Case Study:
The Orchid ECOTEL®
Re-Certified December 2000
Globe Status
Industry Pioneer Award Winner
The Orchid, in Mumbai, India, became the first ECOTEL® in Asia in 1996, received the
ECOTEL® Industry Pioneer Award from Steve Rushmore in 1998, and was re-inspected late in
2000. The hotel is one of the hospitality industry's most committed members, as it was the third
hotel ever to win all five ECOTEL® Globe awards in addition to dozens of other eco-awards. For
details on the Orchid's environmental initiatives, click below.
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Photos of Orchid-
The Orchid - An Ecotel Hotel is Asia's first certified eco-friendly five-star hotel and world's
only Ecotel to be certified as ISO 14001. This 245-room hotel is strategically located adjacent
to the domestic airport making it a convenient place for the business traveler to stay.
Everything is designed so as to be unobtrusive. Like The Club Privé, an exclusive club floor with
a private lounge and butler service. Or the well-appointed business and conference center to take
care of your business needs.
The exclusivity of The Orchid is experienced as soon as one enters the atrium that is serenaded
by a 70-foot indoor waterfall. Around the waterfall, on the first level is the Boulevard, the 24hour coffee shop. The beautiful Orchids growing there give you a feel of the truly Orchid
experience. Besides, The Boulevard provides a unique guaranteed time-bound service aptly
called the "Lightening Menu" or the "10 Minute Menu". If the service is even a minute late, the
meal is on the house!
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From the first level to the top most.Mostly Grills the lovely roof top barbecue restaurant serves
modern fusion cuisine. The setting is a very surrealistic Mexican village with a pool by the side
and the breathtaking view of the airport runway on the other.And then the piece-deresistance.Vindhyas, which many Mumbai gourmets consider the best Indian restaurant in town,
is a unique concept showcasing the cuisine and culture of peninsular India. Here in a very ethnic
temple setting you can experience the intriguing flavors of nine Indian peninsular states, the folk
dance performances only go to serve as the perfect accompaniments. Abutting Vindhyas is
Merlin's Bar. The name itself conjures images of magical concoctions that will help lift your
spirits and unwind, and what's more Merlins is open till 3.00 am, giving you ample time to enjoy
the magic. At the lobby is The Gourmet Shop, a deli and cake shop.The 51 international awards
and the recent ISO 14001 certification reiterate the efforts of The Orchid of being a pioneer
amongst environment friendly hotels. Our clientele form the who's who of the discerning
international corporate.
CAUSE RELATED MARKETING
Definition of Cause Related Marketing
Cause-related marketing (CRM) is defined as "the public association of a for-profit company
with a non-profit organization, intended to promote the company's product or service and to raise
money for the nonprofit."
What is cause-related marketing?
Cause-related marketing, or CRM, has exploded in recent years even though it is a relatively
young concept. It began, on a national scale, in the early 1980s when American Express joined
with the nonprofit group that was raising funds to restore the Statue of Liberty.
American Express gave a portion of every purchase through their credit card to the endeavor and
an additional amount for every new application that resulted in a new credit card customer. The
company also launched a $4 million advertising campaign.
The results are now legendary: the Restoration Fund raised over $1.7 million and American
Express card use rose 27%. New card applications increased 45% over the previous year. All this
was accomplished with a three-month campaign.
Everyone involved was a winner...the nonprofit cause received needed funds, American Express
increased sales of its product and achieved a reputation for social responsibility. American
Express even trademarked the term "cause-related marketing."
Now, companies are fully embracing what is called "doing well while doing good." Causerelated marketing may becoming the principal way that businesses express their social
responsibility. One industry group estimates that in 2005 cause-related marketing spending was
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$1.08 billion. Back in 1990, when the group started keeping figures, that spending was only $125
million.
Why Corporate’s opt for CRM?
Cause marketing, also referred to as cause-related marketing, corporate responsibility, corporate
philanthropy, and corporate social responsibility, is a public relations practice that links forprofits with not-for-profits for mutual benefit. The non-profits benefit from cause awareness and
media relations, while the corporation receives visibility that results in goodwill, positive
employee relations, customer loyalty – and sales.
Embracing a cause makes good business sense. Nothing builds brand devotion among today’s
increasingly hard-to-please consumers like a company’s proven commitment to a worthy cause.
In fact, most people prefer to do business with a company that stands for something beyond
profits.
Cause-related marketing can become a cornerstone of your marketing plan. Your cause-related
marketing activities should highlight your company’s reputation within your target market.
Cause marketing can positively differentiate your company from your competitors and provide
an edge that delivers other tangible benefits, including:
Increased visibility and sales
Improved customer loyalty
Enhanced company image
And a media relations advantage
By selecting a charity you are passionate about, cause-related marketing can be emotionally and
economically rewarding. It is a way to build a business that parallels your personal and corporate
values and beliefs. If your cause also resonates with your target audience, your activities will
create tremendous goodwill and media attention.
Fact: Cause-related Marketing Builds Customer Loyalty and Good Will.
What are the advantages of cause-related marketing?
There are advantages for both nonprofit and business. For business, cause-related marketing
proves that it is socially responsible, and provides great public awareness of its values and
willingness to support good causes.
For the nonprofit, the contributions from a cause-related marketing project can be significant,
and those funds are usually unrestricted so even overhead costs can be supported by them.
Besides actual monetary benefit is the intangible value of the publicity and advertising that
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usually accompanies a cause-related marketing program, which is often done by the corporation's
public relations and marketing departments.
What are the disadvantages of cause-related marketing?
There is always the possibility that one of the entities involved (nonprofit or corporation) will do
something that hurts its reputation. In that case, the other party may be perceived negatively as
well. For that reason, corporations and nonprofits should choose their partners wisely.
In addition there has been considerable concern about nonprofits lending their good names to
for-profit activities. Does it weaken the trustworthiness of a nonprofit? Does it blur the lines
between business and philanthropy? Could a nonprofit "sell out" by lending its support to
products that are less than benign for the public? These questions continue to be debated by both
fundraising and marketing professionals.
Today, there is also a potential problem given that there are so many cause-related marketing
programs. The Chronicle of Philanthropy made these caveats about the question:

Merchandising deals are not appropriate for just any charity. The ones that do well have
significant name recognition or expertise in a particular topic.
 It can take up to two years of research, negotiation, and product development before an
organization realizes any profit.
 Too many charities pursuing high profile deals can result in "cause clutter." Consumers may
grow tired of the constant appeals to buy things to support good causes.
 A recent survey by the leading cause marketing firm, Cone, found that while 30 percent of
surveyed consumers in 2004 said they would pay more for a product if it supports a good cause,
a follow-up survey more recently showed that only 14 percent of consumers say they would do
so.
Case Study on Toyota Prius:
The Toyota Prius is a hybrid electric mid-size car developed and manufactured by the Toyota
Motor Corporation. It first went on sale in Japan in 1997, making it the first mass-produced
hybrid vehicle. It was subsequently introduced worldwide in 2001. The Prius is sold in more than
40 countries and regions, with its largest markets being those of Japan and North America.
According to the United States Environmental Protection Agency, in 2007, the 2008 Toyota
Prius is the most fuel efficient car sold in the U.S. The EPA and California Air Resources Board
also rate the Prius as among the cleanest vehicles sold in the United States based on non-CO2
emissions. The UK Department for Transport also reported the Prius is tied as the sixth least
CO2-emitting vehicle on sale in the UK.
Toyota is not only the pioneer in manufacturing Hybrid cars; but they have created the need for
hybrid car or in other words Eco-Friendly car. Toyota Prius is one of the expensive hybrid car
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available in the market. The car is specially designed for a class and is not for low budget buyers.
Toyota purposely made this car costly since the target audience as per the market survey was
lying in this segment.
Toyota sold about 1,028,000 Prius cars as of the end of April’08.
However, Toyota won’t be the leader in the market like previous years, since Honda has been
doing lot of R&D on Hybrid cars and coming with a lot of new fuel efficient version in this
segment. Recently at Geneva auto show - 2009, Tata launched its prototype Hybrid Nano car and
stunned the competitors with the price they will be offering this new model from the year 2010.
It’s will cost merely around INR 3.5 lacs which will be the cheapest hybrid car available in the
market. This move will definitely attract a large lot of the middle class segment in all the world
areas.
All in all, Toyota Prius created a need for eco friendly car which was not at-all present until
1997, while on other hand it showed the advantage of lower operating cost. So the cause of being
Eco friendly was emphasized and the purpose of profit was also achieved by selling a huge no. of
Toyota Prius.
END OF MODULE – III
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MODULE V
Future of Social Marketing Challenges, Constraints
Introduction
The more important an idea or a concept becomes to individual or society, the more challenges
and constraints it faces. Social Marketing is no exception. Social Marketing, as a concrete
concept may be relatively new, but as an idea it is as old as the philosophy of Aristotle. Though
Aristotle never used the word “social marketing”, but he was the first philosopher to speak about
the social upliftment.
In the modern world, social marketing is being treated as the only way to address various social
issues as it does not remove the commercial interests from the corporate agenda and at the same
time it it adds the social objective to the agenda. For a vast country like India with lot of social
problems, Social Marketing is very relevant.
But challenges and constraints are many. This concept requires a major shift in thinking pattern
of the corporate, i.e., from “Profit only” to “Profit & Social upliftment together”. It also needs
huge funding without much commercial return in the initial period which is difficult to digest for
the myopic corporate. Government intervention is also desirable in the initial years. In the
subsequent paragraphs, we will discuss the challenges, constraints, and future of Social
Marketing in a little more detail.
The Challenges
1. Lack of Awareness among corporate:
This springs from the fact that the current middle and top management of most of the corporate
have not inculcated the concept of Social marketing during their academic years. The social
media learning curve is very steep. Few books or courses teach social marketing and much of the
information available online is unreliable or even biased. As a result, they don’t include the
Social Marketing in their marketing plan. It is recommend that one seeks experienced outside
professional help to chart the social marketing path, set policy and facilitate implementation.
2. Skepticism and resistance by the Management/Trustees in donating Funds for
implementation of Social Marketing strategy:
This reaction is normal to anything radically new. And majority of the Indian top slots of
corporate are those who stand at the end of a tradition, and not at the beginning of it. An
unconventional and new strategy faces a tough resistance in getting funded. It is suggested that
while presenting the social marketing strategy to the management, it must be presented as an
experiment that will complement conventional multichannel marketing if successful, not replace
it.
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3. Social media can overshadow a brand, not just strengthen it — it can be very
unforgiving:
However, this is true even if companies elect not to use it for marketing or for their public
relations. It’s therefore better to be proactive than reactive
4. Lack of Government Support:
In India, Government is all powerful. Government’s support to social marketing can really make
a lot of difference. Government can really support it by providing various tax benefits, mass
purchase of such products etc. But unfortunately, the awareness and will among the Government
is non existent. If Government wishes, it can really clear a lot of hurdles and bottlenecks which
are in the way of success of social marketing in India.
5. Results aren’t achieved nearly as quickly for social marketing as they are with other
marketing modes:
Therefore, when planning an experiment, the corporate must be careful about forming unrealistic
timing expectations.
6. Social marketing is handled by traditional marketers:
And they tend to think in terms of generating leads and building databases rather than building a
following and a community — new media style. Furthermore, social marketing is about relating
person to person, not about relating impersonally to people as a company. Corporate must be
prepared to think in new ways. Since social marketing is community oriented, contributing to
one’s community is essential. It’s not enough to communicate just to customers or to prospects
as done by the traditional marketers.
7. Message is diluted:
Traditional push marketing and list building techniques are usually regarded as spam and are
ineffective in the social marketing communication world. Old and new media approaches tend to
be incompatible. In the social marketing paradigm information is made available online for
discovery and hopefully action, and this process isn’t something that can be forced.
8. Most newcomers to social marketing think one dimensionally and latch onto fads such as the
social media site du jour. Social marketing isn’t one site or one strategy fits all.
9. Lack of Mass involvement:
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Social marketing is still evolving rapidly and tends to be a moving target. While social marketing
is global, participation in India is stilted towards English speaking demographics such as students
and upper classes.
10. Social marketing products are often things that people don't particularly want:
What woman enjoys getting a mammogram or pap smear? Who wants to give up their favorite
high-fat foods? Or have to get up from their comfortable sofa to go exercise? These products are
not like the Apple iPhone that people can't wait to get.
11. Social marketing products don't always have personal or immediate benefits:
Preventing health or environmental problems in the future may not be compelling enough to
motivate someone to take action now. It's a harder sell to get people to inconvenience themselves
for something they may not ever see a benefit from. After all, if someone actually manages to
prevent a case of cancer or heart disease twenty years from now, they will never know that fact.
And by recycling, they may never benefit directly from that action, though society in general
does.
12. Intangible products pose communication challenges.
How do you show traffic safety? Or volunteerism? Or racial tolerance? And if you are trying to
prevent someone from engaging in a particular behavior, like smoking or child abuse, how do
you convey that idea without portraying the behavior you don't want?
13. The organization doing the marketing does not usually have any control over the actual
product design.
The product is what it is, and there's not much we can do about it besides try to position it in a
favorable way. We can't change the fact that immunizations must be given as a shot or that
cardiovascular exercise requires a certain level of physical exertion to be effective.
14. Health issues are very private and may be difficult to talk about in public:
This complicates audience research because people may be less willing to talk frankly about an
issue in front of others. And societal mores can dictate how explicit the campaign itself can be,
despite a desperate need for information. This reticence to speak about potentially embarrassing
topics can limit the extent of word of mouth communication.
Some ways to face these challenges:
1. Be as specific as possible about what the behavior is that you want people to adopt:
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This will make it more concrete and easier to communicate. So, you don't just want to promote
the abstract idea that people with disabilities have a lot to offer society, but encourage employers
to hire people with disabilities in their own companies.
2. Redefine what the product is to align with what is most important to your audience:
To promote child car safety, the product is not the booster seat. The product is being a good
parent. To prevent broken bones in the elderly, don't sell calcium supplements and safety
modifications in their homes, but do promote the product of independence, which may be one of
the things most valued in that age group.
3. Show how adopting the product helps someone be the kind of person they aspire to be:
So, while they may not benefit directly, their self-image gets bolstered. A person who fancies
himself as socially responsible will do things like recycle, conserve energy and consider taking
public transportation to work. Someone who thinks of herself as in control of her own fate will
schedule a skin check with the dermatologist and an annual exam with her gynecologist.
4. People who are working in commercial marketing often ask me how they can switch over to
social marketing because they are not feeling fulfilled by selling soap and cola. If you are a
marketer, you probably already have the basic skills you need to work on health and social
issues, but it does require a mental adjustment to understand the unique challenges these sorts of
products pose. The world definitely needs more social marketers - offer your services to a
nonprofit and put your expertise toward making change for good!
The Constraints
1.
Lack of Fund:
This is perhaps the most challenging constraint. Corporate hesitate in making fund available for
the social marketing. Government’s funding for such causes is still inadequate. Philanthropists
are not so many. In fact, here government can come forward for some sops to motivate such
funding.
2.
Corporate do not take it seriously:
In fact, here also the role of some outside agency supported and funded by Government comes
into picture which can properly make the corporate aware of the importance of social marketing,
how it is important for our future generations, and how it will also benefit the corporate
commercially.
3.
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Competitions don’t allow social marketing:
The race to jack up the market share is so intriguing that corporate are not ready to allocate the
resources and time to any thing other than this race. Thinking of social marketing is far away
from their minds. They never take it seriously. Until the corporate takes it seriously, it will never
be successful in India as only corporate has the financial muscle for it.
4.
Short term gains are negligible:
Normally, the social marketing is successful only in long term. The plan for social marketing can
be made only in phased manner. It is very difficult for some one or some corporate to think on
something new which is not giving any short term gain.
Future of Social Marketing
1. In future social marketing, there will be more focus on strategies dealing with
competitions. This strategy will also include how to deal with unhealthy cultural forces,
and the inertia in policy makers.
2. In future, the line between the social marketers and the social activists may get blurred. In
both the activities, ultimately some section of the society or the other get benefit.
Scholars emphasize that the dividing line between the two may get blurred in the future.
3. Social marketers will be a big force for policy change.
4. Government’s pressure and NGO’s pressure (Greenpeace is an example) will increase in
future to give a push to social marketing. In fact, government will make it mandatory in
the long run for corporate to include social marketing in their marketing plan. The
accountability clause may be added even to the Indian companies act.
5. There will be excellent brand positioning and goodwill creation through social marketing.
Corporate will realize that social marketing is an excellent vehicle for social upliftment
and commercial gains together. (e.g.: Orchid hotels, Toyota hybrid case).
6. The mode of communication used in social marketing will change to electronic
predominantly. This will get great impetus from rising no. of networking sites and blogs.
It will make the communication faster, though it may lose the personal touch which is
very important in Social Marketing.
Wish u ALL THE BEST for your Exams!!!!
Feedback about this study material can be emailed @
[email protected]
...THE END…
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