STRATEGIES ADOPTED BY VARIOUS SELECTED FMCG PLAYERS IN RURAL MARKETS

Transcription

1 CHAPTER VIII STRATEGIES ADOPTED BY VARIOUS SELECTED FMCG PLAYERS IN RURAL MARKETS The best way to exploit rural markets is by ruralising the strategies, rather than treating them as inconvenient and poor extensions of urban markets. Organizations have to create rural consumer specific products and they also need to explore new distribution models, to tap the rural markets. Brands such as Nirma and Videocon sell in the rural markets because they know their market needs and also know how to sell their brand. Message, media, channel and prices i.e. all the major constituents of marketing need to be tailored to meet the needs of rural market. The development of rural markets involve the additional cost both in terms of promotion and distribution, so only those companies can be successful in the rural markets which develop efficient and cost effective distribution channels. Cost cutting, distribution, strategic tie ups are the keys to success in the rural India (Gopalaswamy, 2005; Easwaran, 2006). Among the major FMCG companies, HUL, ITC, Godrej, Colgate Pamolive, Amul, Eveready Batteries, Nirma, Jyothi Laboratories, etc. are the leading organizations that have the strong focus on rural marketing. There is not any one principle that that fits, when it comes to development of strategies for rural markets. The organizations are investing huge amounts of money in creating separate sales and marketing teams for rural markets and are also appointing special agencies to advice them for implementing rural marketing endeavors. While the FMCG sector has been looking at rural markets for quite some time, the largest spender in the rural areas is HUL, followed by Colgate, ITC, Jyothi Labs, Eveready Batteries, LG Electronics, etc. (Dogra and Ghuman, 2008) Strategies Followed by Major FMCG Organizations The strategies followed by various FMCG players are discussed below in terms of Promotion strategy, Pricing strategy, Operational Efficiency, Disinvestment, Corporate restructuring, Packaging, Product Line Pruning, Line Modernisation, Brand Management, Operation Streamline, etc. The various FMCG players, who have been 152

2 successful in tapping the rural markets, are discussed below: 8.1 Hindustan Unilever Limited (HUL): HUL is amongst those companies in India that derive huge revenues (over 50 percent) from the rural areas in their initial years of penetration in rural markets. Later, when the company was unable to meet the targeted goals, it focused on business restructuring, power brands strategy, business divestments. In order to fuel growth, HUL formulated a set of new strategies to expand its presence in India s rural markets. It implemented innovative projects like Project Shakti and Operation Bharat. HUL s strategy has been on penetrating the market down the line and focusing on price point. According to the former HUL Chairman, M.S. Banga, This exercise of penetrating in rural markets may not pay in the immediate future, but will definitely give long-term dividends. Over 50 per cent of the sales of HUL s fabric wash, personal wash and beverages are in rural areas and there is a great future in going rural in a major way (Nagarajan, 2006). Some of the strategies implemented by the HUL to retain its leadership in rural markets are as below: Divestment In the 1990 s, HUL took to inorganic growth with a goal of building a Rs.10, 000 crore company. HUL decided to disengage from all non-fmcg or commodity businesses. It divested and discontinued fifteen low margin and unrelated businesses including even the big ones as animal feed, specialty chemicals and oil and fats, with sales of Rs.1750 crores in It also divested nickel catalyst, adhesives, thermometers, seeds and mushroom businesses. This released cash for investments in core operations. Low margin exports were also weeded out for greater attention to export of manufactured FMCG products. The divestment by HUL resulted in increasing a large proportion of sales from FMCG businesses and the rest came from several non FMCG businesses which were neither very profitable nor did they offer prospects for long-term leadership. The company then invested the amount realized from these divestments into building the FMCG businesses. Today, HUL is a focused FMCG 153

3 company consisting of 35 power brands across twenty categories and the branded business accounting for 90 per cent of the sales. (Vijayraghavan, 2005) Capital Investments in Tax Havens HUL also invested about Rs.250 crores in two separate facilities in the states providing excise rebates and tax holidays - Personal care facility at Uttaranchal and for soaps and detergents in Himachal Pradesh. These investments provided efficiency gains and huge savings on account of excise and tax benefits provided by these states. These benefits have made HUL more competitive and in the position to cut the prices of its product whenever it is required to match the competitive offers by local and regional brands. The edge of local brands, which were manufactured by small-scale organization, who were exempted from certain form of taxation are also neutralized by this move Corporate Restructuring HUL s all major businesses except for new ventures were merged under two divisions HPC (Home and Personal Care) and the Foods (Foods, ice creams, confectionery and beverages). The organization was restructured into eight profit centers and two divisions. This was done with an objective to have a simple and leaner organization with less hierarchy, fewer levels and greater empowerment. This move was aimed to eliminate complexity and to increase the speed of strategic planning and decision-making Rural Market Division Earlier each business division of HUL dealt with rural market on an individual basis. Now with creation of rural market division, company deals with rural markets as a single organization. This approach is expected to lead to better cohesion, greater push and deeper penetration, which might eventually lead to better sales and balanced growth Sales Team Restructuring The sales team was restructured from two distinct sales teams i.e. one that 154

4 supplied soaps and detergents and another that supplied personal products such as Fair & Lovely, Close Up and Pond s to the brand portfolio of 30 power brands. The company needed more focus to generate better profitability from lesser number of brands. The sales teams, which comprised of Area Sales Managers, Sales Officers and Territory Sales Incharges, have been restructured. Territory Sales Incharges who were earlier reporting to Sales Officers would now directly repor6t to the Area Sales Managers. The Sales Officers would now supervise promotion and activation of brands in their respective areas. HUL also tried to rejuvenate the distribution by shifting emphasis on touching the consumers with three-way convergence: product availability, branded communication and higher level of brand experience instead of just ensuring the product reach. (Prahalad and Hammond, 2002) Multiple Price Points Realizing that the consumers do not necessarily upgrade in a linear fashion HUL offered products at every price point and provided value added options for different product categories by practicing segmented marketing. For example, Indian detergent market is structurally like a pyramid: laundry soap, low priced detergents, mid priced detergents and premium powders. HUL has Wheel laundry soap, Wheel detergent powder and International Wheel Active at the base. Rin Shakti powder and bar, Sun Light powder and Super 501 bar at mid price level and International Surf Excel at the top Product Line Pruning HUL in some of the product categories like soaps relied heavily on brand extensions. In case of Lifebuoy toilet soap, so many variants were launched that this meant diluted focus, on part of company, more investment for retailer and confusion for the consumers. HUL planned to trim its product portfolio and concentrate on key brands only. It decided to withdraw from the market variants of its toothpaste brand Close Up such as Close up Renew and Close up Oxyfresh. 155

5 8.1.8 Line Modernization HUL made significant investments in quality up-gradation by investing more than Rs.400 crores or 5 per cent of the sales revenue from 2001 to For example, Wheel was strengthened with enhanced fragrance to differentiate it in the discount segment, VIM dish wash bar was re-launched with a superior formulation. As about 20 to 25 per cent of the detergent soap can be lost washing in running water. Therefore, HUL developed soap with a coating on five sides, which saves 20 per cent wastage even in a hostile user environment. (Vijayraghavan, 2005) Lifebuoy is one of the few examples of innovation led growth. In the midst of continuous decline for 5-6 years, HUL made a drastic, non-incremental change to revive the brand of 107 years. Perfume, colour and shape were changed; it was now toilet soap as against carbolic one. The launch of green Lifebuoy is also attributed to the changing aspirations of rural consumers (Carvalho, 2005) Brand Management In order to promote its leading scouring brand Vim, HUL also launched live demonstration and promotional campaign across the country with special focus on small towns in states like MP, Bihar and Orissa. It was done with an objective to educate rural consumers about the ongoing Vim Ghar Ghar Challenge television commercial that portrayed the women who were struggling to clean the utensils with ordinary dishwasher bars. By conducting live demonstration about vessel cleaning, it showed the effectiveness of its brand over other brands and other available substitutes. HUL used shop-fronts, walls, wells and other water points to increase the visibility for Vim brand in the rural markets. Special stickers were pasted on hand pumps, walls of wells were lined with the advertising tiles; tinplates were put on trees surrounding ponds, the three main water sources of any village. The various projects instigated by HUL to uplift their sales in rural markets and to tap the rural potential were: 156

6 Project Shakti Project Shakti is a strategy adopted by HUL to tap the rural households directly. Project Shakti covered 62,000 villages across twelve states, through the village women entrepreneurs, called Shakti Amma (empowered mother), who have understanding of village needs and the products that are in demand. Project Shakti is the combination of micro credit, training in enterprise management and self-help groups. The women guided by the company s representative called the rural sales promoters (RSPs) were responsible for selling the products door to door at MRP to consumers as well as to the retailers at a discount typically given out by a distributor. They would pocket different margin for each different sale. The shopkeepers did not feel threatened because these women were not undercutting the MRP; also the stocks would come to their doorstep. (Gupta and Rajshekhar, 2005) Operation Streamline Operation Streamline was conceptualized by HUL in 1998 to enhance its control on the rural supply chain through a network of rural sub-stockists based in the village. As part of Operation Streamline, HUL moved the distribution hub for small towns based stockists to rural sub stockists. These sub-stockists at village level were appointed and serviced through super-stockists through the route schedule. The sub stockists, who are served as stock points in turn, serve the rural areas. This extended its direct reach to 37 per cent of the country s rural population Operation HARVEST In order to increase the penetration, awareness of brand, generate demand, and to make the routes viable for coverage by route schedule vans HUL launched Operation HARVEST (Harmonise All Resources in Village to Enhance Sales and Turnover) in 1989 as a seeding exercise with an objective. This operation was conducted in villages that were not covered by route schedules and where the reach of conventional media was weak. The company hired vans and had fitted them with the public address system, and in some cases, audiovisual equipment. These vans covered six villages a day for six 157

7 days a week. The cycle was repeated couple of times in the same villages. On reaching the village, they would play audio cassettes and video films provided by HUL and these tapes and films had a song and dance sequence, from popular films with advertisements of HUL products coming at some intervals. The company representatives distributed free samples and in the meantime staff identified key distribution points. Small shops in these villages were serviced by providing the primary products like Lifebuoy and Wheel Project Bharat Project Bharat, was the first and largest rural home-to-home operation to have ever been prepared by any company in which it covered 2.2 crore homes. During the course of operation, HUL vans visited villages across the country distributed sample packs comprising a low-unit price pack comprising shampoo, talcum powder, and toothpaste and skin cream priced at Rs.15. This was to create awareness of the affordability of company s product categories and also to eliminate barriers to trial Swasthya Chetna Campaign Lifebuoy Swasthya Chetna campaign, was launched by HUL to built awareness about good health and hygiene. It demonstrated how simple habits like washing of hands regularly with soap could prevent transmission of diseases. HUL expected this social benefit campaign would also boost the sales of Lifebuoy, a leading soap brand in rural market, positioned on the health and hygiene platform Project Vani The main aim of Project Vani was to increase the brand usage of HUL amongst the rural consumers. The project vani promoted the concepts like health and hygiene through public service demonstration, which in turn, increased the demand for its personal care products. In late 1999, HUL engaged Ogilvy Outreach for planning and implementing the rural communication campaign. Messages were presented through colourful flyers, entertaining jingles and traveling cinema vans. The video ads were shown from the video vans with commercial lasting from two to twenty minutes. Ogilvy 158

8 Outreach recruited local dancers, actors, magicians, who knew about the villages in which they had to perform. There were around 50 teams of 13 performers who carried the brand message to the rural audience. The scripts were modified according to the dialect, educational background and religion of the people of the area. Excitement was created in the villages, many days before the event. (Gupta and Rajshekhar, 2005) Participation in Fairs HUL participated along with other organizations like Parle, Colgate, and Mahindra & Mahindra in rural communication programme Grameenon Ke Beech, which was organized by Rural Communication and Marketing Ltd. Before the commencement of the mela, merchandising, audio publicity and distribution of lucky draw coupons were carried out. On the mela day, interactive stalls, spot sales, product briefings, interactive games like mehndi competition, magic show and distribution of lucky draw coupon were organized. HUL also ran a campaign at the Allahabad Kumbh Mela to demonstrate to the visitors the importance of usage of soap for better health and hygiene. As typically the rural people, who could not see dirt and germs with naked eye, felt that there hands are clean and there is no need to wash them with soap frequently. HUL representatives with help of ultra violet brand showed the area, where the dirt and germs resided on the hands. Then they educated how they could prevent this and have better health and hygiene with regular washing of the hands. With Lifebuoy, a lower priced soap widely available in rural areas and positioned as one that protects from germs, HUL hopes that this awareness would lead to higher sales for the brand. (The Financial Express, 2001) I -Shakti Project I- Shakti was carried out by installing net enabled computers in the home of Shakti dealers. This is an IT based rural information service that provides solution to the key requirements of rural people in the areas of education, vocational training, agriculture, health and hygiene. There was also an option of e-learning, to learn how to prepare pickle and curry powders. The information on crop protection, weather 159

9 forecasting, soil conditions, cropping patterns in different weathers and integrated pest management was also imparted in this project. (Nagarajan, 2006) 8.2 Imperial Tobacco Co. (ITC): ITC is another dominant FMCG player which has made its presence felt in the rural markets. It is an example, of holistic and multi-faceted positive approach of creating a win-win situation rather than the typical exploitation approach of the corporate world (Business World, 2001). The involvement of ITC with rural markets was initiated with the creation of e-choupals E-Choupal E- Choupal is a powerful illustration of corporate strategy linkage business. It leverages the internet to empower small and marginal farmers, who constitute a majority of the 75% of the population below the poverty line. By providing them with farming know-how and services, timely and relevant weather information, transparent price discovery and access to wider markets, e-choupal enables economic capacity to proliferate at the base of the rural economy. The E-Choupal kiosk programme also supports other services like soil and water testing. Thus, it is facilitates the supply of quality inputs and vital information to both farmers and ITC. The kiosks also serve as an e-procurement system for ITC and in process helps farmer to earn higher prices by minimizing transaction costs. The strategic intent of ITC is to develop e-choupal as a significant two-way multidimensional delivery channel, efficiently carrying goods and services out of and into rural India. By progressively linking the digital infrastructure to a physical network of rural business hubs and agro-extension services, ITC is transforming the way farmers do business, and the way rural markets work. ITC is procuring the farm produce through the network of these choupals, which are managed by village-based entrepreneur known as sancchalak. 50 sanchalaks are managed by sanyojak (co-ordinator) who is either former mandi trader of a local dealer of ITC products and acts as a link between sanchalaks and ITC and also earns 160

10 commission on e-choupal deals.this model has favourably impacted the chain of activities related to agriculture. Not only quality and volume but also the prices of farm produce have risen and their cost of transaction has declined. Small and poor farmers have been the principal beneficiaries. (Ramachandran, 2005) Choupal Sagar Choupal Sagar is a large rural shopping complex replete with super market, petrol pump, bank, healthcare and training facilities and more. The agriculture research inputs that the farmer gets at these rural malls along with the soil conditions tests at the right time proves that they are set to be benefited in addition to the better products provided by the organizations Sustainable Development The live stock development programme has been started by ITC to create the high yielding progenies through genetic improvements. Re.1 is contributed from every Classmate notebook sold by ITC toward supporting rural development initiatives including primary education in villages. It has started comprehensiveness natural resource management initiative called Sunehra Kal in the vicinity of choupals. (Deveshwar, 2005) 8.3 NIRMA Chemicals: Detergents penetrated the Indian markets in 1959 by HUL, with the introduction of Surf. It was unchallenged and was having virtually a monopoly with brand becoming generic to the product category. Only ten years later in 1969, Karsan Bhai Patel, who worked as a chemist with Gujarat government's Department of Mining and Geology created his washing powder. It was a tiny setup almost a one-man show in 10 by 12 feet room where he himself was doing everything right from mixing, packing and then subsequently selling. The price of the washing powder named Nirma was Rs.3.50 per kg, at a time when Surf was selling for Rs.15 per kg and the lowest price detergent of the time was at Rs per kg. 161

11 The strategies and marketing mix which Nirma employed to emerge as one of the market leaders was largely related to the knowledge about customer insight. Nirma became generic to the product category and virtually ruled the rural market with no competition worth the name for a long time (Ratna, 2002). The strategies implemented by Nirma, which resulted in tremendous success, especially in the rural market where it created a market, which never existed before, are as follows: Product Strategy Nirma though did not offer a very high quality product but it offered value for money and provided an alternative to the common masses at the Bottom of the Pyramid, which earlier thought that the detergent was a costly proposition and hence not a product made for them. The product symbolized the common man's value system of saving money wherever it is possible. Customers were delighted with a product made for them, which offered them benefits more than what they paid for. Nirma remained a single product company for eighteen years till 1987, till the detergent cake was launched. After that it gradually increased the product portfolio by introducing carbolic soap, beauty soap and in 2001, it launched the Nirma Salt. The enlarged portfolio of products provided it with an opportunity to leverage the existing distribution system as the growth for the detergent market was saturating both the urban and rural areas Packaging Strategy The strategy used for packaging by Nirma was very simple with a very simple printing to save the cost. It was pedestrian packaging i.e. the colour of printing was bad, sealing was not proper and sometimes it could not hold the powder inside or keep the moisture outside. But the most important thing for the customers was that it saved money and all the benefits were passed on to the customers Promotion Strategy Nirma adopted wall paintings and celebrity advertisements as its promotion strategy. Nirma believed in long lasting commercials and ads that last for a long time without need for withdrawing a campaign. All this was done with a conscious focus on 162

12 the keeping the cost to the bare minimum Pricing Strategy The main price strategy that was adopted by Nirma was to price its products lower than the market leaders. Although, the products of Nirma were of reasonable quality but savings from overheads and promotions were passed on to consumers as a lower price. Nirma's washing powder adopted a market penetration strategy by pricing its product 40 per cent lower than the highest priced product in the market. For keeping its prices low it opted for backward integration by setting up plants to manufacture Linear Alkyl Benzene (LAB) and soda ash both the key ingredients for detergents. The backward integration and lean distribution system helped to price the products much lower than competitors. In the year 2000 Nirma introduced the Nima bathing soaps at penetration price of Rs.5 and took away share from Lux and other brands in the popular soap segment. (Business World, 2001) Distribution Strategy Nirma has utilized a very lean and simple distribution system for the detergent business with 400 Nirma distributors and 20 lakh retailers to save the margins, which otherwise would have been demanded by the additional middleman. Its distribution efforts were highly concentrated in western and northern zones. Nirma has demonstrated the fact very clearly that to be successful in rural market requires a very common sensible approach of delivering the value proposition that is very attractive for the consumer. 8.4 Coca-Cola India Limited: Coca-Cola India has identified rural markets for volume growth in India in the new millennium. The cola giant is slowly adopting a localized marketing strategy with regional brand ambassadors and localized marketing campaigns to reach out to the rural consumers (Ratna, 2002). Rural marketing strategies adopted by Coca Cola can be 163

13 classified as following: Product Strategy Coca-Cola made available to the rural consumers, the reduced package size of 200 ml only for Rs.5 for the first time. This package size was based on insight that the two rural consumers were sharing one soft drink bottle of 300 ml. Along with this smaller pack Coca Cola was also launched in 500 ml, 1 litre, 2 litre in Pet bottles as carry packs for family use. Thus, consumer was targeted at all the price points and for all possible consumption levels from single person, two persons, family use, for guests and also the party packs. For those who were not in position to afford the soft drink as an option it introduced its instant ready-to-mix powder soft drink concentrate 'Sunfill' Pricing Strategy The smaller package bottle was priced at Rs.5 in accordance with the reference price for the other alternatives available in the rural market like lemon water. It brought down the average price of its products from Rs.10 to Rs.5, thereby bridging the gap between soft drinks and other local options. The promotional campaign of the Rs.5 price point Panch was launched with high decibel to ensure price compliance as rural retailers were charging more than the MRP. The Rs.5 price point campaign did not involve just the pricing and packaging alone. It was imperative to make this price point feasible, therefore slew of measures were undertaken to cut the cost. Even the weight of crates and empty bottles were reduced to lessen the overall transportation cost Place Strategy The company also invested steadily to build its infrastructure to meet the growing needs of the rural market, which reiterates the fact that this multinational has realized the potential of the rural market. It has evolved the 'hub and spoke' distribution to reach rural villages, which were earlier not touched directly by the company. The company depots supply the large distributors twice a week, who provide supplies to small distributors once a week. These small distributors in semi urban or rural areas supply to the retailers using smaller or customized means of distribution like 'jugad', an 164

14 engine fitted cart, a very cost effective means of distribution, to serve the rural retailers on almost daily basis. As the electric power problem is a big challenge because of frequent power cuts and supplying the refrigerator to each and every shop is not feasible, Coca-Cola supplies rural retailer with low cost ice boxes: tin boxes for new outlets and thermocol boxes for seasonal outlets Promotional Strategy The strategies followed for the promotion of products by Coca Cola is mainly focused on advertisements on television and local platform of fairs. The advertisement campaign by Coca-Cola with the tagline "Thanda matlab Coca Cola" was very successful as it employed the local idiom on the basis of insight that the soft drink is known as "Thanda" in most of the rural areas. Therefore the consumer was asking for a "Thanda" and not a specific brand name. Thus the retailer was free to sell whatever it wanted to sell. Coca Cola through this campaign tried to make the rural consumer believe that "Thanda" actually means Coca Cola. So that consumers should start asking the product by brand name. The campaign was highly successful on all the counts as it built top of the mind recall association with the brand and brought in additional sales for the brand. 8.5 Colgate Palmolive India Limited: Colgate claims to have persuaded over 30 crore people into using oral hygiene products in India since 1976 and majority of them reside in rural areas. It has been a committed player in the rural market and is following an integrated strategy, which has made it virtually the number one and most preferred brand in rural areas (Khader, 2005). The strategies followed by Colgate in the rural market can be classified as following: Product Strategy Colgate tooth powder was specially conceived and made for rural India. The tooth powder seemed more in line with the rural mouth washing habits at that stage than the toothpaste. Villagers were habitual to use charcoal powder, brick powder, salt 165

15 powder and other substitutes. Colgate tooth powder was direct extension to these products as they could apply Colgate tooth powder on their index finger in a similar manner as they were applying other powders. By understanding rural mouthwash habits it was able to position and successfully sell its tooth powder in the rural market. Colgate very innovatively used the rural consumers' habits to gradually upgrade them to toothpowder from other substitutes and from there on to the toothpaste. This strategy of launching the toothpowder also did not require the purchase of toothbrush for the whole family members. This reduced the overall cost, considering the fact if the entire family, which were not using oral dentifrice, had to purchase the toothbrushes, it would have been significant investment by their standards Packaging Strategy Colgate has followed very successful sachet route by introducing 10 gm sachet of tooth powder for Rs.1.50 and toothpaste with Super Shakti in 15 gm packs for Rs.3 each. Affordable pricing is something that has increased its sales in rural India and there have been many who have upgraded from toothpowder to tooth paste successfully in the process. Colgate has also gone ahead with combi-packs offering a toothbrush with 30 gm toothpaste for Rs That helped it to increase the user base in rural regions to great effect. Sachets and combi-packs are the ones that find encouraging responses in the rural segments and are the fastest moving pack sizes in these markets. It also developed the value pouches of tooth powder of different denominations, priced in accordance with reference price points. The package size starts from as small as 10 gm. sold for Rs.1.50 and there are four different package sizes upto 200 gm, which was sold for Rs The larger sachets of toothpowder has been developed with capping facility, because of insight that large number of bathrooms in the rural areas do not have proper storing place. The capping on the sachets prevents the spillage and loss of toothpowder as the capped sachet can be stored even in difficult conditions and places. (Krishnamurthy, 2000) Promotion Strategy Colgate executes in rural promotion drives along with the IDA (Indian Dental 166

16 Association) to ad value. It also conducts contests, road shows, wall painting and sampling. These promotional activities are conducted in two villages within radius of five kilometres from a town. The word of mouth publicity generated by these campaigns further ensures that significant percentage of population of the area gets the intended message. Haats and shandies where people gather in large number are also used to demonstrate the benefits of toothpaste and toothpowder. Young and receptive children are demonstrated and explained the usage of these products. They are further asked to share their experience with others Project Jagruti Project Jagruti was a village consumer contact programme launched in It increased penetration of Colgate dental cream in the villages. Globally, Colgate is looking at the rationalization of the manufacturing facilities as one of the key cost saving initiatives to expand margins. A five-year plan has been outlined to cut down toothpaste manufacturing locations to fifteen and toothbrush manufacturing locations to eight globally. New manufacturing facilities are being set up in India for toothpaste and in China for toothbrushes. The cost saving would enable organization to be more competitive in the Bottom of the pyramid markets, large percentage of which is residing in the rural areas. With learner organization structure and manufacturing bases in cost effective countries, it would have very competitive cost structure. These benefits would enable it to deliver better value proposition to the consumers and match the offers of local and regional players. 8.6 CavinKare: CavinKare is a Chennai based FMCG company which started its business as a regional company in a market dominated by multinationals. In many of the categories it has carved out decent market share with innovation in packaging and forced the rest to follow the unit. The company is primarily into two product categories i.e. hair care and skin care and fragrances. Chik Shampoo launched by CavinKare in 1983 is a successful case study of building a brand in the rural market, as it became the second largest shampoo brand 167

17 nationally after HUL's Clinic Plus. The strategy of occupying strong regional niche and filling need gap for an economical shampoo by looking at areas that national players overlooked took CavinKare to this envious position. They targeted rural and small town consumers who were earlier using bathing soap to wash their hairs (Bhushan, 2002). The various strategies adopted by CavinKare are: Product Strategy CavinKare is a company known for quality and it is one of the companies which never lowered their quality for price. In its newly launched food-processing initiative CavinKare has created two separate brands Chinni for smaller pack sizes and Priya for longer packs. It has also launched pickles and spices in single serve sachets that cost as little as 50 paise. Besides offering convenience, these packs are encouraging out of home consumption and allow consumer to taste a variety of flavors at an affordable price Pricing Strategy The shampoo experience was offered at a price that delighted the consumers of very specific target audience of lower middle with low monthly household incomes. The company observed that target market would consider buying a shampoo only if it was within their range. The insight that shampoo sachet of Rs.2 makes the monthly budget for average family size of a five having one wash per week to be Rs.40. This was too much and if it could be reduced to the budget of the Rs.2 per person per month and the family budget of Rs.10, they would definitely use a shampoo. This led to the idea to create 50-paisa shampoo sachet, which initially seemed almost impossible but with few years of research of formula and packaging; it was launched in September Promotion Strategy CavinKare used radio advertising based on popular cinema dialogues and cinestars that were popular with the rural audience as their promotional strategy. Vans were 168

18 sent to distant villages and popular film shows were organized for villagers, sometimes with regional celebrities accompanying them as part of aggressive road promotion programme. Live demonstrations were also organized in rural areas where teams caught hold of school boys to demonstrate how to lather, wash and comb hair and showed the difference and they benefit directly. These campaigns also created lot of word of mouth publicity. Consumer promotional scheme was launched to encourage trials. Anyone who would take five used empty shampoo sachets to a retailer can take one sachet of Chik shampoo free of cost. This encouraged specific brand demand for Chik brand at retail outlets, as with empty sachet of any other brand they would not have got the free sachet (Shukla, 2004). To complete with big companies, the key strategy is value pricing, product performance and brand building. Pricing is important, but pricing is not the only component of the value equation. It goes along with product performance and brand building. 8.7 Godrej Consumer Products: Godrej is a company with country wide distribution network to cater to rural market (The Hindu Business Line, 2005). The various strategies employed by Godrej to promote its band in the rural market are: Product Strategy As a start, Godrej marketed the same pack sizes and variants of its soaps nationally. But since the poor states of India were not responding the company decided to change the pricing and the gram mage of the soaps for these markets Pricing Strategy Godrej Consumer Products introduced smaller pack sizes of some of its soap and put the 50 gm cakes of Cinthol, and Fair Glow at Rs.5 while Godrej No.1 offered for Rs.4 meant especially for states like Bihar, Madhya Pradesh and Uttar Pradesh to increase per capita consumption Place Strategy Godrej tied up with FMCG Company Jyothi Labs for marketing Godrej tea across the country. As Jyothi Labs has large field sales force and distribution network, it 169

19 ensures faster availability of Godrej tea across the country in maximum number of outlets. Procter & Gamble had similar tie ups with Godrej, where Godrej distributed the P&G's products across the country but because of some reasons this tie-up came to an end Promotion Strategy Along with promotion on mass media like television, Godrej also uses the vans, as below the line promotional activities to promote products in the rural areas. These vans play music and provide free gifts to the audience, which has gathered in the village choupal. Thereafter the vans sell the brands to few shop in the village that are able to sell these brands on the basis of top of the mind recall, because of recent promotions and trials of the free gifts. These campaign and trials also generate lot of word of mouth publicity for the brands. (Das, Surajeet and Menon, 1990) 8.8 Dabur: Dabur is a homegrown national level FMCG Company, which has established many successful brands in the rural markets. Its brands command a lot of respect and association in the rural areas (The Financial Express, 2001). Some of the marketing mix strategies adopted by Dabur for tapping the rural market potential are described as following: Product Strategy Dabur Lal Dantmanjan, an ayurvedic non-cosmetic toothpowder, is a flagship brand of Dabur, which is doing very well in rural areas. Right from name of the brand to the consequent pricing, positioning and promotion, the brand demonstrate rural ethos in letter and spirit. With changing aspiration of the rural consumers, Dabur has also launched the toothpowder in the form of toothpaste, Dabur Lal Promotion Strategy Dabur launched an innovative promotional campaign to promote its chyawanprash brand in the rural market. It selected a cluster of 300 villages in Banda district Maharashtra and sent three mobile bowling alleys each spatially fabricated for Rs.30, 000. The bowling pins represented the germs that chyawanprash protects 170

20 against, whereas the ball represented the chyawanprash. This imagery was deliberately employed in the form of interactive game to register the brand in the minds of the rural consumer as one, which beat the germs. Dabur also distributed religious texts like Hanumanchalisa and calendars with religious themes along with the ayurvedic products in order to built an association with the brand. As the objects of religious importance are likely to be kept at central or prominent places in the house and that too for a long time span this ensured good visibility for the brand. (Bansal et al., 1999) Dabur is a brand respected for quality and relied upon in both urban and rural areas. Along with offering the traditional products, it has been able to create a contemporary image by employing Amitabh Bachchan as brand endorser who truly symbolizes the brand personality of quality, consistency and traditional yet contemporary. It even transformed the logo making it more colourful, modern but at the same time it also retained the traditional ethos by retaining the symbol of tree. Conclusion: Changes in lifestyle, rising incomes and a focus on value, are pushing up growth for different product categories in the rural areas. Indications of larger disposable income and a perceptible shift in consumption priority in the rural sector also appear to be favouring the FMCG organizations. But, in order to be successful, organizations need to develop business models and marketing mix strategies that are developed in accordance with this changed scenario in the rural markets of India. It is the responsibility of the companies to supply a right product to the right customer at right time at the right place at the right price. The companies shall no longer decide the marketing mix for rural market in accordance with the urban consumer alone; but the rural customer shall decide it. 171