It was in news yesterday that a village in India named Shivnagar, changed it’s name to ‘Snapdeal.com’-Nagar. When I read the headline, my reaction was, ‘What? How much would they have paid to sponsor the entire village? For how long?’
However, I soon realized that my hypotheses were absolutely wrong. As TechCrunch pointed out, it wasn’t a cheap marketing stunt. Truth is that the village itself changed its name as a sign of gratitude towards the company.
Shivnagar is a small impoverished village in the state of Uttarpradesh in northern India. Like many other villages in this region, Shivnagar also suffers from poverty, lack of infrastructure and lack of attention from authorities. Villagers get electricity only for a couple of hours every day and there has been an acute lack of drinking water in the village. Kunal Bahl, Founder of Snapdeal.com – India’s answer to Groupon (And the leader in Indian market) – got to know about this village from one his employees. He decided to help the villagers by installing 15 hand pumps across the village. The act didn’t cost the company more than $5000 but had a profound impact on lives of the villagers. Finally villagers, decided to change the name of the village from Shiv Nagar to ‘Snapdeal.com’ Nagar. (Nagar meaning Town/City in languages of Sanskrit-family).
Research on Strategy for dealing with ‘Bottom of the Pyramid’ (Prahlad, 2002) has explored different sources of value creation in low-income or poor markets. (Sanchez & Ricart, 2010). One such source of value creation could actually be the business model itself. Sanchez and Ricart (2010) have shown that in low-income markets, firms may choose an interactive business model, whereby the firm would not just interact but establish strong relations with fringe stakeholders and seek long term positive impact. The philanthropic gesture of Snapdeal, despite being a truly altruistic deed, will definitely bring about positive results for the company in the long run. These positive results may not be visible in the bottomline numbers but would be in terms of positive social capital that the company would build up. Many Indian companies have in recent times, shown a greater inclination towards indulging in community initiatives and bringing in fringe stakeholders within the purview of their business models. Yes Bank, the fastest growing private sector Bank, for example has an initiative called ‘Yes-Community‘ wherein they organize ‘micro-events’ in their branches for people living in the neighborhood and try to help them about prevention of pollution, management of waste and more efficient energy management. Positive signs indeed!!
Prahalad, C. (2002). Strategies for the Bottom of the Economic Pyramid: India as a Source of Innovation Reflections: The SoL Journal, 3 (4), 6-17 DOI: 10.1162/152417302760127192
Sanchez, Pablo and Ricart, Joan Enric (2010). Business model innovation and sources of value creation in low-income markets. European Management Review, 7 (3), 138-154 DOI: 10.1057/emr.2010.16