Selling to the GARIB

By Allen L. Hammond, C.K. Prahalad May/June 2004

Recently Professor C. K. Prahalad earned the third spot on Suntop Media's 2005 "Thinkers 50" list, behind Harvard strategy specialist, Michael Porter, and Microsoft founder, Bill Gates.

When the Indian industrial and technology conglomerate ITC started building a network of Internetconnected computers called “eChoupals” in farming villages in India's rural state of Madhya Pradesh in 2001, soy farmers were suddenly able to check fair market prices for their crops. Some farmers began tracking soy futures on the Chicago Board of Trade, and soon most of them were bypassing local auction markets and selling their crops directly to ITC for about $6 more per ton than they previously received. The same ITC network enables farmers to buy seeds, fertilizers, and other materials directly, at considerable savings, as well as to purchase formerly unavailable soiltesting services. Today, the growing eChoupal network reaches 1.8 million farmers, and ITC is receiving demands from rural farmers for new products and services—the beginnings of consumer market power at the poorest level of Indian society.

The ITC network is one example of how access to information can increase productivity and raise incomes. It also reveals what happens when large businesses stop regarding the world's 4 billion poor people as victims and start eyeing them as consumers. For decades, corporate executives at the world's largest companies—and their counterparts running wealthy governments—have thought of poor people as powerless and desperately in need of handouts. But turning the poor into customers and consumers is a far more effective way of reducing poverty.

Why hasn't the business world caught on? The explanations are well known: Infrastructure in the developing world is often poor or nonexistent, creating the need for substantial upfront investment. Illiteracy tends to be high, requiring nontraditional marketing approaches. Tribal, racial, and religious tensions, as well as rampant crime, complicate hiring and...

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