Sept. 19 - India's new flock of small businesses embrace ''frugal engineering'', applying it to their products, and to their entire business process. Lyndee Prickitt reports.
Ashwani Mishra is diligent about brushing his teeth once a day with toothpaste. But it wasn't always so. For most of his life Ashwani used a twig from a neem tree to clean his teeth. Until Raj Verma came around with tubes of toothpaste and toothbrushes packed on his bicycle. Riding 20 kilometers a day, he's one of 200 rural distributors on a pilot scheme helping Colgate reach emerging consumers in India. Businesses trying to tap the next level of India's booming consumer market - towns and villages with fewer than 5,000 people - are at the forefront of business innovation. It starts with the product. From the Nano to the detergent that requires little water, India has gained a reputation for its frugal engineering - creating rugged, inexpensive products. SOUNDBITE (English) REUTERS CORRESPONDENT, LYNDEE PRICKITT, SAYING: "GE coined the phrase 'reverse engineering'. Instead of bringing products designed in the West and tweaking them for the emerging markets, they started looking at the local challenges and designed bespoke products for that market. Like this battery-operated ECG machine which is able to take 500 readings - and costs a fraction of the price of this more state of the art variety." But now companies are taking that frugally motivated mindset and applying it to their entire business models to tap the rural masses. SOUNDBITE (English) GE HEALTHCARE INDIA PRESIDENT AND CEO, V RAJA, SAYING: "When you look at adversity, the mother of that is opportunity. When you look at that mindset, invariably you'll find a way to reach your product to your customer." One of the earliest ways a south Indian company sought to reach emerging consumers was sachet packaging. Now ubiquitous throughout the country, many foreign brands rely on it to reach millions of new customers. They might only buy a sachet of shampoo or detergent today, but they could afford an entire bottle in the near future. Hindustan Unilever went a step further. When it wanted to reach remote consumers it had to think of an entirely different method. Who better to promote and distribute household and hygiene products than women from rural villages? SOUNDBITE (English) MART FOUNDER AND CEO, PRADEEP KASHYAP, SAYING: "This model really took advantage of the social infrastructure of the women's micro-financing groups, where women save smalls sums of money and then sell something. So we appointed these women as dealers for the Unilever brands and they go around selling from house to house in their villages." Many husbands and sons have become distributors too, helping HUL triple their rural reach. The scheme is now used in two other South Asian countries. Harish Hande has just won the Asia's equivalent of a Nobel - for coming up with a financially viable business solution to get half a million poor people access to electricity. The idea - a financing programme for people with no credit history that allows them to buy a solar panel or to rent solar-charged batteries by the hour. SOUNDBITE (English) SELCO-INDIA CO-FOUNDER AND MD, HARISH HANDE, SAYING: "What we are doing is something that we think a lot of processes we're building for the the poor. It could be poor in India, Chicago, New York or Indonesia. It's applicable to not only governments in any country, but also corporates." SOUNDBITE (English) REUTERS CORRESPONDENT, LYNDEE PRICKITT, SAYING: "Because India is such a large and diverse developing country, the belief is, if a company can make it work in India, it can make it work anywhere ." In Uttar Pradesh, I'm Lyndee Prickitt and this is Reuters