Context: An overview of new vision and adaptations needed in the MSME sector, addressing the changing market dynamics.
Pathways before MSMEs: Focus on the micro-level of where each MSME lies and the segmentation it wishes to appeal to:
‘Local for local’ should be their first priority: Since MSMEs’ strengths are nimbleness, keeping costs low and catering to local consumers.
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.
Leverage traditional and new channels of advertisement: Like print media, social media, outdoor advertising and radio.
Innovate marketing strategies: Backing tie-ups with retail chains could save on distribution cost.
For e.g. Khadi and Village Industries Commission (KVIC) started supplying and marketing local rural products and will be adding 30 lakh, new members to its consumer base.
Address changing preferences of consumers: Like preference to tier-2 and tier-3 cities, increased online shopping and Work From Home (WFH) (which has led to reverse retail migration).
Post-Covid, tier-2 and tier-3 consumers are expected to contribute 55-60% of online grocery demand.
Focus on building trust: For e.g. Ghari Detergent in Uttar Pradesh succeeded in building consumer trust and moved to the Hindi heartland after building a brand across UP’s towns and villages.