When C K Prahlad authored ?Fortunes at the Bottom of the Pyramid? little did he know that many Indian companies, particularly those belonging to the FMCG sector, would take it as a Bible before embarking on rural focus in their marketing strategies. This is a strategy on which very little guidance and learning points are available from the developed countries and this may be the reason why many of our city bred managers of steel companies are wary of venturing into rural markets. This however does not undermine the excellent endeavours made by the steel majors to operate distribution outlets in the rural areas which have more or less taken care of the availability issues.
To a large extent these local dealers engaged by the producers could capture the pattern and variety of rural demand for steel and could also influence the major steel plants of SAIL, Tata, RINL, Essar and Jindals to initiate changes in the product-mix, delivery patterns, pricing strategies and promotional avenues. Thus the frequent sight of colourful shops away from the large cities with small inventories of GC and GP sheets, TMT bars, light angles, channels gives an impression that steel has long last penetrated the rural sector.
But to what extent easy availability leads to demand growth? Empirically, it has been proved so. However, supply induced demand has a limited period of success and is not known to be sustainable over a longer period. To perpetuate the growth story, it is essential that some more enabling factors are brought into play. Some are of the view that with increasing urbanisation the rural scenario is undergoing a paradigm shift and as urbanisation is irresistible, there is no point in making special efforts to tinker with the rural sector. This logic is misplaced as the process of urbanisation itself ensures a number of conscious reforms in making a meaningful change in the way of life of the rural population.
Increasing use of steel in daily life is a precursor of these changes. For this to happen in a big way and to expedite the process of urbanisation, supply facilities are necessary but not sufficient condition. The local residents must be assured that materials made of steel are fabricated in the nearby shops which have adequate repairing facilities available with them which would save them from all the hassles of going to the cities. Thus, steel fabrication shops in the vicinity of the villages would make a sea-change in the lifestyle of the rural population. Steel chairs, tables, racks, beds, furnitures, storage bins, agricultural implements are all fabricated items. Presently, models of low cost houses using steel and other materials are available which can also be a part of steel fabrication.
This would also provide excellent opportunities to the village youths to become young entrepreneurs cum fabricators and get subsidised loans under Prime Minister?s Employment Generation Programme. The government as well as the major steel producers must come forward to help and assist such schemes of generating village entrepreneurs as steel fabricators in the interest of income and employment generation in the rural sector.
The author is DG, Institute of Steel Growth and Development. The views expressed are personal