Marketplace Literacy: A Key to Unleashing Rural Consumption and Entrepreneurship

Rural marketplaces represent the next frontier of socio-economic growth. They offer value-creation opportunities to private enterprises and public and civic institutions alike.

Madhu Viswanathan ENLARGE
Madhu Viswanathan

However, they also represent some of the poorest settings in the world, where many struggle to subsist and survive. The rural poor face considerable challenges in participating in the marketplace as consumers, producers, or entrepreneurs.

The work of Prof. Mohammed Yunus and Grameen has shown one way to solve this significant conundrum by demonstrating the inclusive powers of microcredit. Facilitating access to markets is another. Our research highlights what we believe to be a third key element: Marketplace literacy.

In countries like India, where rural economies are characterized by poor infrastructure and inadequate basic amenities, the poor are further set back by a lack of educational opportunities that could empower them to confidently pursue economic progress and overcome the debilitating effects of low literacy and rigid social hierarchies.

Srinivas Sridharan ENLARGE
Srinivas Sridharan

A long history of producing to consume traditionally made India's rural households well-versed in the tradeoffs between buying and making (e.g. branded versus indigenous soap.) And of course, it meant foregoing when necessary.

But with market goods increasingly dominating consumption, procuring even basic products may foist on consumers an undue dependence on the local retailer or require onerous travel to a neighboring town. Thus, with an acute shortage of market-economy skills, confidence, and awareness of their rights, rural consumers face a stark economic scenario, a situation worsened by failing yields in agriculture and increasing ecological imbalances. In our research, we have found rural women experience difficulty in even seemingly minor tasks such as widening their search for retail outlets and switching - or at least threatening to switch -- shops.

Despite the bleak prognosis, however, rural settings possess one inimitable advantage: They are rich in intensely personal, social relationships, which often yield economic solutions that (ironically) money cannot buy.

One-to-one interactions and relationships borne out of shared adversity blur the economic and human spheres and are part and parcel of marketplace life. Another blurring is between the role of buyer and seller. Many women we interviewed are vendors to support their family and consume to survive, learning both consumer and seller skills from this experience. Diverse influences from family, social groups, self-help groups, and local governing bodies render business decisions that are uniquely adapted to the local social fabric. This suggests that efforts to impart new-economy skills to the rural poor must be socio-culturally embedded rather than standardized.


The Marketplace Literacy educational program, designed on the basis of our research on urban and rural Indian consumers, reflects this insight and has been administered in rural and urban settings in South India. It focuses on the socially-mediated skills necessary to negotiate rural society. Marketplace literacy connotes skills, awareness of rights, and self-confidence in relation to marketplace dealings.

Although literal literacy (reading and writing) is ideal, marketplace literacy can be an effective solution in economic decisions and more importantly, it can be inculcated even in the absence of basic literacy. For example, skills of bargaining, verbally counting money, judging products by look and use, and estimating credit-worthiness of customers can yield optimal economic outcomes that do not rely upon being educated. In a socially rich rural setting, such skills can be even more effective.

Marketplace literacy manifests itself at three levels: a concrete level comprised of livelihood skills or trades - cooking, sewing, farming, working with computers; a relatively more abstract level comprised of expertise in complex and variable processes -- designing products, communicating benefits, closing a sale; and a third, almost philosophical, level comprised of an understanding of meta-processes - the nature of the marketplace, its connections with individual learning and adaptability, the benefits of customer-oriented enterprises, and such.

For instance, poor women may rely on cooking skills to start an enterprise making and selling food. But to run it successfully would require more abstract knowledge for designing menus, ensuring raw material inventory, identifying an optimal location etc.

Further, to thrive and achieve enduring economic progress by adapting to changing circumstances and opportunities, they need a deeper understanding of marketplace complexities. They must consider options such as retailing partly-prepared food to households or supplying restaurants or, perhaps most importantly, even changing from food to some other business based on a broader consideration of opportunities. Otherwise, among the rural poor, ill-advised enterprises can cause a slide into deeper debt.

This last and highest level of abstraction is directly inspired by our research and closes a critical gap in existing educational programs available for the rural poor around the world. It is at this level that an entrepreneur learns to "know why" - why choose a particular enterprise, why strive for customer value -- a consumer understands how (and why) value is added and learns to gauge the retail monetary value of a product, and consumers and entrepreneurs understand how (and why) to balance consuming for the short term with conserving scarce resources for the medium and long term through sustainable consumption and production.

Thus, an entrepreneur who applies this lesson would have carefully considered specific opportunities and gathered relevant information before committing to a course of action, would strive to understand consumer needs in designing offerings, and would incorporate product ingredients that provide relevant benefits.

The program uses methodology that takes into consideration both the vulnerabilities (low literacy, low incomes) and strengths (social skills) of the rural poor. For example, pictorial rather than verbal or text-based tasks predominate.


Similarly, participants are led through simulated shopping experiences that mimic pitfalls in real-life transactions. The program also trains participants to more accurately gauge value by considering multiple dimensions of what they give up (money, time, and effort) in exchange for acquiring a product.

Consumers learn relevant skills, often for the first time, of checking products, planning purchases, bargaining, and switching stores. Entrepreneurs learn skills of identifying opportunities to begin an enterprise, and determining and responding to consumer needs. Perhaps the most impactful aspect of marketplace literacy is that it treats consumer and entrepreneurial literacy as two sides of the same coin. Learning to assess value as a consumer also teaches entrepreneurial value creation to people who often engage in the twin roles of consumption and enterprise to meet survival needs.

What did we find in our follow-up assessments? Consumers began switching stores, avoiding overly expensive retailers, bargaining, checking expiry dates on medicines, understanding the meaning of regulated maximum retail prices (often quoted by shopkeepers as the price), pooling resources to buy staples wholesale, etc.

In one village, a participant reported being addressed thus by the shopkeeper in the days after the program: "You are one of the women who received training. Here, take this good deal and go away." Perhaps the shopkeeper did not want more of his customers to learn and mimic this empowered consumer behavior!

The entrepreneurial side is a somewhat different story because of the many uncontrollables involved - getting permission from husbands, having start-up resources, etc. We find that it takes a while for even a small proportion of participants to dabble in or begin a small enterprise.

Caveats certainly apply. Deep understanding and know-why literacy may be a luxury for the poor whose lives are often stigmatized by their socio-economic and cognitive limitations. Facing deprivation on multiple fronts, they may not be able to envision and act on creating alternative realities for themselves. Everyday survival anxieties may override long-term hopes.

Nevertheless, we believe that marketplace literacy education that is rooted in local socio-cultural contexts and that recognizes strengths and vulnerabilities without overemphasizing one or the other has undeniable potential to unleash rural consumption and entrepreneurship.

The meeting of the rich social milieu of rural marketplaces and globalization has already been yielding interesting outcomes. Mobile phones and internet kiosks dot the Indian rural landscape; technology that leapfrogs existing but poor infrastructure has been welcomed with fervor.

For a rural household, the ability to use the cell phone to call a doctor in the middle of the night to tend to a sick child is not merely a communication advantage, it is a lifeline. A computer kiosk is not only a learning tool but can double as a livelihood opportunity, as rural BPOs have shown.

Thus, the global-rural marketplace has shown that it has room for innovation in products that can create a dynamic mixture of the old and the new, the traditional and the modern. What it needs additionally is marketplace literacy for its constituents, the rural poor, which can impart credibility to transact -- a vital ingredient for effective and equal participation in this exciting new marketplace.

—Madhu Viswanathan is a Professor at the Department of Business Administration, College of Business, University of Illinois, Urbana-Champaign,

—Srinivas Sridharan is an Assistant Professor at the Richard Ivey School of Business, University of Western Ontario, London, Canada

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