Let’s get local for local: The opportunity for MSMEs is huge – The Economic Times

Clipped from: https://economictimes.indiatimes.com/small-biz/sme-sector/lets-get-local-for-local/articleshow/82071369.cms

Synopsis–For MSMEs, marketing has always been considered difficult and expensive. Today, the sector seems even more circumspect because of the second wave of Covid-19. At a macro level, the problems appear unsolvable. But people must start looking at these problems by wiping the slate clean.

For MSMEs, marketing has always been considered difficult and expensive. Today, the sector seems even more circumspect because of the second wave of Covid-19. At a macro level, the problems appear unsolvable. But people must start looking at these problems by wiping the slate clean.

A case in point is khadi. The Khadi and Village Industries Commission (KVIC) has started supplying and marketing local rural products, and will be adding 30 lakh new members to its consumer base. MSMEs will discover many opportunities if they look at each issue at a micro level, and drill each down to achievables.

We must learn to live with Covid, rather than building a cocoon for ourselves. Economists talk about various shaped recovery curves. Even ‘Z’ has now been added. At an MSME level, it’s best to learn to ignore these and focus on the micro level of where each MSME lies and the segmentation it wishes to appeal to.

MSMEs’ strengths are nimbleness, keeping costs low and catering to local consumers. ‘Local for local’ should be their first priority. Each state is of the size of, if not bigger than, a country in Europe. Think of being No. 1 or No. 2 in the state that one function in, rather than India as a whole. MSMEs can then become smarter and outcompete larger companies by producing quality products and communicating the benefits clearly (never overstate the benefits). They can have a lower consumer price for demand pull, or give a higher retail margin for demand push compared to their bigger competitors.

Many brands have been built like this — Bisk Farm (biscuits in West Bengal), Sapat (tea in Maharashtra), etc. All such businesses started as micro businesses and, as they succeeded, they extended themselves to adjoining states. There is no point in wasting money on TV advertising as today one can localise one’s spends through print media, social media, outdoor advertising and radio, which are proven strategies helping businesses all over.

While not all media may be right for a particular business, it’s best to experiment and discover. Many new entrants have only distributed their products through tie-ups with retail chains. This way, they save on distribution cost. But, above all, MSMEs must remember that ‘cash is king’ — it’s always better to have lower sales with no credit than higher sales with credit.

Consumers are changing, too. Many of India’s young have moved beyond large cities and prefer tier-2 and tier-3 towns, where the cost of living is lower. Work from home (WFH) has also resulted in increased online shopping. WFH is leading to a reverse retail migration, resulting in higher purchasing power in towns below one lakh population.

Post-Covid, tier-2 and tier-3 consumers are expected to contribute 55-60% of online grocery demand. These consumers come with no baggage of the past and wish to try out new products, affordability and value-for-money being key. They are also more liberal in their spending habits, and saving is not a norm.

Once trust is built, then word of mouth takes over. Ghari Detergent in Uttar Pradesh, for instance, was successful in building itself on this basis. It moved to the Hindi heartland after building a brand across UP’s towns and villages.

WFH will not last, as human nature will draw people out. Brands should be prepared for this. They must analyse and predict trends in their localised market and internalise these trends and events.

The opportunity for MSMEs is huge. All one has to do is to open the door when opportunity comes knocking and not live in the past. The consumers are ready. Are you?

The writer is a business and brand consultant

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