This story originally appeared in our April 7, 2011 e-magazine. Click here to subscribe.

Reaching the rural poor has always been a challenge. We look at five models that work.

1. Hub and Spoke

This is one of the most common business models employed by rural businesses. A company will set up a hub or center in a city or larger village. From that point, employees travel to the more rural areas to sell or provide services. Many microfinance institutions (MFIs) function on this model. Field officers leave the branch office in the morning to travel to villages to collect the payments.

2. Piggyback

In our cover story, we looked at the Multi Commodity Exchange of India Limited’s Gramin Suvidha Kendra and ColaLife. These two programs use existing networks, the India Post and Coca Cola respectively, to deliver information and products to rural villages. In this model, the new organization gains the trust and credibility earned by the existing network.

3. Local Entrepreneurs

In this model, the company employs local entrepreneurs to sell and sometimes repair their products. The Grameen Foundation uses this model for their Village Phone program where women are given mobile phones that villagers then pay to use. Greenlight Planet also employs local entrepreneurs—called Sun King Saathis—to sell their solar lanterns in villages throughout India.

4. Market Linkage

Instead of selling to the rural poor, many companies buy material and products from the rural poor to market to a larger audience. Under the Mango Tree, featured in our “Eye On” piece, sources organic honey from rural beekeepers to sell in the retail market in big cities. Zameen Organic works with rural farmers to produce organic cotton. The company sets up partnerships with buyers looking for cotton thus simplifying the supply chain.

5. Local Centers

Setting up local centers in the areas a company serves is a way to have constant engagement with the customers. Onergy, a company aiming to provide complete energy solutions, sets up renewable energy centers (RECs) to demonstrate different technologies and sell products such as solar lanterns to the local villagers. The company currently operates three centers that serve up to 5,000 people.
Photo credits: Flickr user lecercle, ColaLife, Greenlight Planet, Zameen Organic and Onergy.

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