Strategies of FMCG Companies in Rural Market

MBA Projects | HR Professionals | Finance & Money | Media Live!

Sponsers
http://ManagementFunda.com http://HRGyaan.com http://Mediagyaan.com

http://FinancenMoney.in

MBA Projects | HR Professionals | Finance & Money | Media Live!

Introduction
Fast Moving Consumer Goods (FMCG), also known as Consumer Packaged Goods (CPG), are products that have a quick turnover. The classification generally includes a wide range of frequently purchased consumer products including: toiletries, soaps, cosmetics, teeth cleaning products, shaving products, detergents, and other non-durables such as glassware, bulbs, batteries, paper products and plastic goods. The Indian FMCG sector is the fourth largest sector in the economy with a total market size in excess of US$ 13.1 billion. 3
MBA Projects | HR Professionals | Finance & Money | Media Live!

 Also, the rural market has been growing steadily over the years and is now bigger than the urban market for FMCGs (53% share of the total market) with an annual size in value terms currently estimated at around 50,000 crores. THE Indian FMCG is realizing the that most of the India lies in the rural India so rural marketing has become the latest mantra of major FMCGS like HLL, COLGATE PAMOLIVE, BRITANNIA,MARICO INDUSTRIES. The FMCG companies are understanding the needs and latent feelings of rural people i.e. being very well aware of rural scenario Before Launching their products and create4 aMBA Projects | HR Professionals | Finance & Money | Media Live! winning strategy.

 All biggies in the industry be it HLL, Marico, ColgatePalmolive or Britannia, are showing deep interest in rural India Inspite of the major hurdles in tapping the rural markets like lack of infrastructure, Physical distribution ,problem of channel management, sales force management. Rural India has to be the hottest target in future for major FMCG Players who are now learning to play well in rural India.

MBA Projects | HR Professionals | Finance & Money | Media Live!

MBA Projects | HR Professionals | Finance & Money | Media Live!

4PS OF NIRMA
Packaging Price Planning Promotion
7

MBA Projects | HR Professionals | Finance & Money | Media Live!

SUCCESSFULLY DIVERSIFYING INTO PREMIUM BRANDS

Nirma is today ranked among India's top 20 .most distributed brands. It has built up a 30% market share in the premium detergent segment and also achieved greater than 20% share, in less than two years, in the premium soaps market. Today Nirma has diversified into personal care market with Shikakai, Beauty Shampoo, and toothpaste and has also launched the Nirma brand of iodized salt.
8

MBA Projects | HR Professionals | Finance & Money | Media Live!

NIRMA-PROFITS AND POSITION (AT HOME AND ABROAD)

Nirma's products over 800,000 tonnes of detergent and over 80,000 tonnes of toilet soaps annually are consumed by over 250 million customers, through a wide network of 400 distributors and about a million retail outlets. It ranks No.2 in toilet soaps; but mainly, in just seven years of marketing soaps, Nirma sold more volumes than the others had in 25 years!
9

MBA Projects | HR Professionals | Finance & Money | Media Live!

NIRMA - SWOT ANALYSIS

Strengths Weakness Opportunities Threats
10

MBA Projects | HR Professionals | Finance & Money | Media Live!

11

MBA Projects | HR Professionals | Finance & Money | Media Live!

THE BRITANNIA TIGER LAGAAN MATCH

You needed to purchase a 100 gm. Pack of TIGER biscuits for which you will get a special "Britannia Lagaan Booklet". 10000 early birds will win a prize. There is also the possibility of being selected in the team that will play against the "Lagaan XI" team.

12

MBA Projects | HR Professionals | Finance & Money | Media Live!

HOARDINGS
There are hoarding, which are put up by the company in the rural areas. The hoardings are mostly put up with complete information regarding the product. The information is given in the local language in order to let people know about the product. The hoardings also have the mascot tiger which emphasises a strong healthy individual.
13

MBA Projects | HR Professionals | Finance & Money | Media Live!

T.V.
The various ad campaigns throughout the country are done by preparing a single advt but the language in which it features is according to the regional language of that state. The ads include famous personalities like Saurav Ganguly. The ads mainly focus on the children and emphasise a strong diet for a healthy mind and body.

14

MBA Projects | HR Professionals | Finance & Money | Media Live!

Ps OF TIGER BISCUITS
Pricing & packaging: Packing Price 250 gms Rs. 10 100 gms Rs. 4 75 gms coconut Rs. 5
15

MBA Projects | HR Professionals | Finance & Money | Media Live!

Packaging
The products are packed in airtight plastic wrappers in an attractive bright red and yellow colour, which catches the eye and is an important feature to market a product in rural areas

16

MBA Projects | HR Professionals | Finance & Money | Media Live!

Place
The distribution network is very strong. Manufacturing Plant Location C & F Agent: At district level in various states of India Wholesaler: At taluka levels in various states Retailer: Retailers in villages are supplied by the wholesaler at the taluka level Final Customer
17

MBA Projects | HR Professionals | Finance & Money | Media Live!

Positioning
Positioned mainly for the rural segment and with a new slogan "Eat healthy, think better", as a brand of premium quality with factors pertaining to health and needs of the consumer being the main factor.

18

MBA Projects | HR Professionals | Finance & Money | Media Live!

Competition
From local players in many states who infringe with low quality products and similar packaging. Since the rural customer depends mainly on the packaging available, it is easy for competitors to sneak in the market affecting the market share of TIGER.

19

MBA Projects | HR Professionals | Finance & Money | Media Live!

ROLEPLAY
20

MBA Projects | HR Professionals | Finance & Money | Media Live!

21

MBA Projects | HR Professionals | Finance & Money | Media Live!

INTRODUCTION
HLL's Nihar coconut oil achieved a market leadership in the rural coconut oil market in October 2000. Nihar's market share stood at 25.4 per cent in volumes, while that of Parachute was at 23.6 per cent. The total volume of the rural coconut oil market is around 54,000 tonne, growing at 6-7 per cent annually. HLL believes that low-unit price packs will lead to substantial conversions of the loose oil consumers to packaged and branded oils.
22

MBA Projects | HR Professionals | Finance & Money | Media Live!

INTRODUCTION
While Parachute's growth rate fell from 14 to 6 percent in the first half of 2000-01, nihar Perfumed Coconut Oil continued to grow well, while Clinic All Clear Dandruff Oil registered substantial growth of more than 50%. Nihar Amla Oil was also launched around the end of the year, to exploit opportunities in this segment of hair oil.

23

MBA Projects | HR Professionals | Finance & Money | Media Live!

MARKETING MIX
Product: Packaging innovations Nihar, India's only double filtered coconut oil has made a change in packaging and logo. Nihar has consistently been bringing innovations to its consumers. It was the first to introduce the wide mouth jar and pouches packaging. The essence of the new packaging is to bring about practicality in daily usage of the Nihar coconut oil. HLL believes that low-unit price packs will lead to substantial conversions of the loose oil consumers to packaged and branded oils.
24

MBA Projects | HR Professionals | Finance & Money | Media Live!

Process The double Filtration process involves the production of filtered coconut oil from copra. The copra is then crushed at a higher pressure. The filtered coconut oil is mixed with special quality silica and recirculated, this continues until the required clarity is achieved. HLL believes that low-unit price packs will lead to substantial conversions of the loose oil consumers to packaged and branded oils.
25

MBA Projects | HR Professionals | Finance & Money | Media Live!

Pricing To tackle the pricing issue, HLL has launched Nihar and Cococare in various price points in pouches. HLL believes that the low-unit price packs will result in upgradation of the loose oil consumer to this brand.

26

MBA Projects | HR Professionals | Finance & Money | Media Live!

Place ( Distribution) HLL has a very good distribution network. Leveraging the micro-credit model to expand its rural market, it is piloting `Project Shakti, involving women. This will help the company to expand its rural market from its existing 40 per cent penetration in villages with population of over 2000. AP was chosen for the pilot project as 20% of its rural population is covered by the micro-credit model.
27

MBA Projects | HR Professionals | Finance & Money | Media Live!

 The micro-credit concept, that impacts 45 lakhs women belonging to 3.33 SHGs in the State, creates wealth for the members of the groups. The micro-finance collected in the State, through savings as well as institutional loans, is around Rs 800 crore.

28

MBA Projects | HR Professionals | Finance & Money | Media Live!

Promotion Nihar attracts a large consumer preference in Bihar, Uttar Pradesh, Madhya Pradesh, Rajasthan, Andhra Pradesh and Bengal. Promotional activities are regionspecific and locally flavored. The customers in the rural area are very price sensitive, hence, great emphasis is laid on the price factor. They use advertising through T.V. Nihar's "kudrat ki shakti" ad clicked in the market place
29

MBA Projects | HR Professionals | Finance & Money | Media Live!

PROBLEMS & STRENGTH

PROBLEMS FACED BY NIHAR Strong competition from other players in the market. Pricing is a critical issue in the branded coconut hair oil market. STRENGTH OF NIHAR Nihar can gain market share from conversion of loose oil consumers. Nihar has a very strong distribution network.
30

MBA Projects | HR Professionals | Finance & Money | Media Live!

31

MBA Projects | HR Professionals | Finance & Money | Media Live!

Introduction
Soap maker Medimix, from the Chennai-based Cholayil group, is the maverick marketer that got its product and marketing mix just right. Six plants of the Cholayil group making different size of soap. Large user base in rural areas in the 30-plus age group. Sales turnover of Rs.200 crore at present.

32

MBA Projects | HR Professionals | Finance & Money | Media Live!

 12 new brands added in the portfolio. A national entity 1,200 distributors across the country. Highest seller in TamilNadu after HLLs Hamam. Coca cola company using the network of Medimix to sell its soft drink concentrate brand Sunfill.
33

MBA Projects | HR Professionals | Finance & Money | Media Live!

Medimix soap
5 plants of manufacturing in different states. Soap made from 18 herbs in a coconut oil base One-stop-cure for a range of health-related problems. Offers total health protection and addresses each of your individual needs. Widened the strategy by placing the soap on a value-for-money platform It got an ORG rating of number nine
34

MBA Projects | HR Professionals | Finance & Money | Media Live!

 Competitors-Mysore sandal,Nirma,Jai Cinthol fresh,Pears,Lux international,Liril,etc. 6th highest seller in south zone with 1,873 tonnes. financial targets would be to build their organisation to a Rs 1,000-crore entity in the next five years. This will be done by growing in the categories they are present in and eventually by getting into new areas of growth
35

MBA Projects | HR Professionals | Finance & Money | Media Live!

Strategies
The story of Medimix is the evolution of a home-grown product... from idea to research to manufacture, packaging, distribution and marketing, all done by a family proprietary concern. Place strategy-targeted the village kiranawala, their best friend and local influencer of decisions so far as buying habits go. Village melas were attended.

36

MBA Projects | HR Professionals | Finance & Money | Media Live!

 Price strategy- slow and steady increase in price of soap from the launch to present price. Promotion strategy-went all over India to sell their product with a network of large distributors. Ayurvedic soap comprises 7 percent, of which we have 3 per cent. Medimix decided to woo the stockiest and distributors and claims there are 25-year-old loyalties here.
37

MBA Projects | HR Professionals | Finance & Money | Media Live!

 Targeted hotels- aggressively market to over 3,000 small hotels all over India, even in small towns. Impressed Indian people and even foreign tourist by the medicated quality of Medimix. No compromise on the packaging or appearance or the perfume or colour of the soap Brand extension Vrinda tulisi Soap Conducted an ayurveda Congress in Hyderabad and got an impressive response.
38

MBA Projects | HR Professionals | Finance & Money | Media Live!

39

MBA Projects | HR Professionals | Finance & Money | Media Live!

MARKETING MIX FOR COLGATE PALMOLIVE INDIA LTD

Products CP would come up with another strong brand name other than Colgate and Cibaca In toothpowder, it would endorse the development of Colgate Ayurvedic Toothpowder' focused toward rural rich and consuming class It would also launch a special toothpaste and toothbrush for kids in the age group from 4-10 years.
40

MBA Projects | HR Professionals | Finance & Money | Media Live!

Packaging It will work to improve the environmental compatibility of all our packaging materials.

41

MBA Projects | HR Professionals | Finance & Money | Media Live!

Price The price would largely be based on the competitor's price The pricing would be done on the basis of price points

42

MBA Projects | HR Professionals | Finance & Money | Media Live!

Promotion CP would be positioning Colgate dental white crme and toothpowder towards rural rich segment. Most of the promotional expenses would be T.V. media Apart from T.V., FM radio for urban population and MW and SW radio would also be used

43

MBA Projects | HR Professionals | Finance & Money | Media Live!

Place CP would try to increase product penetration to rural population as by 2006-07 CP would try to increase the wholesalers to smaller towns

44

MBA Projects | HR Professionals | Finance & Money | Media Live!

Facilities Colgate-Palmolive is committed to the health and safety of their employees and the communities in which we operate, as well as the protection of the environment.

45

MBA Projects | HR Professionals | Finance & Money | Media Live!

Business
Colgate-Palmolive will consider environmental, health and safety issues in all significant business transactions, including acquisitions, divestitures, discontinuance of operations, and entry into joint ventures.

46

MBA Projects | HR Professionals | Finance & Money | Media Live!

COLGATE'S BRIGHT SMILES, BRIGHT FUTURES

47

MBA Projects | HR Professionals | Finance & Money | Media Live!

COLGATE IMPROVES MARKET SHARE

48

MBA Projects | HR Professionals | Finance & Money | Media Live!

CONCLUSION

49

MBA Projects | HR Professionals | Finance & Money | Media Live!

 First, let's take a look at the distribution networks of three leading FMCG companies in India - Hindustan Lever Limited, Colgate Palmolive and Britannia.

Colgate and Britannia now derive 35% and 30% respectively of their turnover from rural markets Britannia and Colgate, apart from Hindustan Lever, are the only FMCG companies in India that derive over 30% of their revenues from rural markets
MBA Projects | HR Professionals | Finance & Money | Media Live!

50

 The success of these companies has as much to do with understanding the psyche of the rural family as it have to do with a rural distribution network. In the end that FMCG companies will have to really gain inroads in the rural markets in order to achieve double digit growth targets in future Ultimately the winner would be the one with the required resources like time and money and also with the much needed innovative ideas to tap the rural markets

51

MBA Projects | HR Professionals | Finance & Money | Media Live!

52

MBA Projects | HR Professionals | Finance & Money | Media Live!