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Product Strategies

Product Strategies

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Product Strategies

The specific strategies, which can be employed to develop or modify the products to targets the rural market, can be classified as follows: 1. Small unit packing: Given the low per capita income & purchasing habits of the rural consumers, small unit packages stand a good chance of acceptance in rural market. Single serve packets or sachets are enormously popular in India. They allow consumers to buy only what they need, experiment with new products, & conserve cash at the same time. This method has been tested by products life shampoos, pickles, biscuits, Vicks cough drops in single tablets, tooth paste, etc. Small packing stands a good chance of acceptance in rural markets. The advantage is that the price is low and the rural consumer can easily afford it. Also the Red Label Rs. 3.00 pack has more sales as compared to the large pack. This is because it is very affordable for the lower income group with the deepest market reach making easy access to the end user satisfying him. The small unit packing will definitely attract a large number of rural consumers. 2. New product designs: Keeping in view the rural life style the manufacturer and the marketing men can think in terms of new product designs. The rural product usage environment is tough because of rough handling, rough roads & frequent power fluctuations. Thus, all these environmental factors must be considered while developing the products meant for rural audience. Rural marketing Page 98

Nokia s 1100 model is a very good example of a customized model for rural markets. Its design has been modified to protect it against rough usage in rural environment; it is dust resistant & has a small torch light in view of the frequent power cuts in rural India. It is also introduces messaging in Hindi language now, in some of the economically priced models in order to cater to the semi-urban or rural consumers. This is in real terms, thinking global & acting local. 3. Sturdy products: Sturdiness of a product is an important factor for rural consumers. The product should be sturdy enough to stand rough handling, transportation & storage. The experience of torch light dry battery cell manufacturers supports this because the rural consumers preferred dry battery cells which are heavier than the lighter ones. For them, heavier weight meant that it has more over and durability. Sturdiness of a product either or appearance is an important for the rural consumers. 4. Utility oriented products: The rural consumers are more concerned with utility of the product and its appearance Philips India Ltd. Developed and introduced a low cost medium wave receiver named BAHADUR during the early seventies. Initially the sales were good but declined subsequently. On investigation it was found that the rural consumer bought radios not only for information and news but also for entertainment. Rural marketing Page 99 5. Brand name: For identification, the rural consumers do give their own brand

name on the name of an item. The fertilizers companies normally use a logo on the fertilizer bags though fertilizers have to be sold only on generic names. A brand name or a logo is very important for a rural consumer for it can be easily remembered. Many a time s rural consumers ask for peeli tikki in case of conventional and detergent washing soap. Nirma made a peeli tikki especially for those peeli tikki users who might have experienced better cleanliness with the yellow colored bar as compared to the blue one although the actual difference is only of the color. e.g.: Coca-Cola targeted the whole Indian rural market with the positioning of Thanda Matlab Coca-Cola advertisements because most of the villagers say when wanting a drink refer to it as Thanda so Coca-cola used that word. Rural marketing Page 100 Pricing strategies 1. Low cost/ cheap products: This follows from the product strategy. The price can be kept low by low unit packaging s like paisa pack of tea, shampoo sachets, vicks 5 grams tin, etc. this is a common strategy widely adopted by many manufacturing and marketing concerns. 2. Refill packs / Reusable packaging: In urban areas most of the health drinks are available. The containers can be put to multipurpose uses. Such measures can a significant impact in the rural market. For example, the rural people can efficiently reuse the plastic bottle of hair oil.

coffee. 6. Low volume-low price strategy: This strategy of reducing prices by reducing the package size in order to make it appear more affordable. 3.Similarly the packages of edible oil. Ariel Super Compact. the strategy should be to cut down the production. Soya protein is being used instead of milk protein. If an organization gets the price point right. Overall efficiency & passing on benefits to consumers: For rural products. Pet jars free with the Hasmukhrai and Co Tea. Application of value engineering: in food industry. then it can work in rural market. Most often. 5. Large volume-low margins (Rapid or slow penetration strategy): Marketers have to focus on generating large volumes & not big profit margins on Rural marketing Page 101 individual products. then they can still generate good returns on the capital employed. in . thus. but the nutrition content of both is the same. If they price their product at a level which can lead to good volumes. so that a larger segment can afford it. 4. expanding the market. is delivering very good results for a large number of FMCG product categories. it has been observed that advertising has less to do with product sales in the rural areas. The basic aim is to reduce the value of the product. distribution & advertising costs & passing on these benefits to the customers to further increase the turnover. ghee etc can be reused. tea. Milk protein is expensive while Soya protein is cheaper.

but the commonalities of their ethos & simple living habits need to be understood for advertising to succeed. or by ensuring the availability of products at the retail outlets directly.the rural markets of India. The only we can have insights like Thanda matlab Coca Cola . most of the times. The manufacture has to ensure price compliance either through promotional campaigns. storyline. Think Global Act Local Rural population is diverse. this strategy is delivering very good results. Rural marketing Page 102 Promotion strategies Customized promotional media & messages need to be developed by the organizations to effectively target the rural market. . such as family-love. For that. charges more than the MRP. 2. Think in Local Idiom This is the need of the advertising professionals who can think like the rural people. Ensuring price compliance: Rural retailers. as was done by Coca Cola. 7. But the context. In categories where maintaining the price point is extremely critical. language & idioms should be such that the rural audience of different rural market segments can relate to. the theme of the advertisement needs to revolve among universal themes. The following strategies can be considered while developing promotional campaigns for the rural markets: 1.

4. & they should not include any confusing elements. 5. Choice of Brand Ambassador Brand Ambassador for the rural markets need to be picked carefully as urban successes might not get replicated in the rural markets. Promotional message should highlight only the functional values of the product & explains how those values can make the consumer s life even better & solve any of his problems. The theme of the story line can be about how the product can solve the problems of the rural consumers. It is preferable that it has only a few propositions at a Rural marketing Page 103 time. Bombarding rural consumers with too much. in less time can easily confuse them & leave them bewildered.There should be the use of language writers who understands the rural & regional pulse better. which can be easily understood. That is why Govinda in the Mirinda as boosted the sales of the drink in the rural . Simplicity & Clarity All promotional messages targeted at rural audience need to be simple & clear. Narrative Story Style The promotional message can be delivered in the form of an entertaining story with a message depicting how the brand delivers larger good to the family & society. 3.

Unfortunately. namely. What has been found is that if we have to serve the rural consumer we will have to take our products to him through the channels that he is using and some innovative ways of getting to him. it is almost impossible to transplant strategies which work successfully in urban markets onto rural markets. y Lack of proper retail outlets y Lack of mass media infrastructure. Rural marketing Page 104 Distribution Strategy Many companies view the rural markets as great opportunity for expanding their sales but find distribution as a major problem. The road blocks to reach the rural customers are: y Lack of adequate transport facilities. The marketers were of the opinion that the villagers would come to nearby towns and buy the products that they want. y Lack of pucca roads connecting villages to nearest townships. extensive retailing and sustained pull generation through mass media advertising. . An organization might spend a lot of money in hiring a brand ambassador only to find out later that it had little impact on the rural consumer. y Large distances between villages.markets.

Use of co-operative societies: There are over 3 lacks co-operative societies operating in rural areas for different purposes like marketing cooperatives. Therefore.000 villages. villages with lesser populations can be added. companies or distributors can carefully examine the market potential of different villages & target the villages that can be served in a financially viable manner through an organized distribution effort. but the rural population covered will be substantial. Segmentation: the number of villages in India is huge & it is not viable to contact & serve all villages directly. coverage of villages with up to 2000 and above population could be the breakeven point for a distribution setup. Coverage of villages with 2000 and above population: Ideally. to the extent of about 40 to 45 percent. 3. With a distribution network in about 55. These cooperatives have an arrangement for centralized procurement and distribution through their respective state level federation. This strategy is good to begin with & then subsequently.Rural marketing Page 105 The following distribution strategies formulated for the rural category. By doing so the percentage of villages covered comes to only 10% of all the villages. farmer s service cooperatives and other multipurpose cooperatives. which have a population of 2000 persons & above each. one can cover about 25 crores rural consumers. 2. 1. Such state level federation can be motivated to procure and distribute consumables items and .

4. Many of the societies extend credit to the members for purchases. Utilization of public distributory system: The PDS in the country is fairly well organized. sugar. Here again there is an arrangement for centralized procurement and distribution. The revamped PDS places more emphasis on reaching remote rural areas like the hills and tribal s. co-operatives as well as private entrepreneurs. 5. Utilization of multipurpose distribution centers by petroleum/oil companies: In order to cater to the rural areas the petroleum/oil companies have evolved a concept of multipurpose distribution centers in rural areas. The purpose of PDS is to make available essential commodities like food grains. lubricants. these outlets also stock consumables agricultural inputs like fertilizers. These shops are run by the state civil Supplies Corporation. The rural consumer who has tractors. It is estimated that there are about 450 such outlets in operation in the country. pesticides and seeds. kerosene. The shops that distribute these commodities are called fair price shops. In addition to petrol/diesel.Rural marketing Page 106 low value durable items to the members to the society for serving to the rural consumers. oil-engine pump sets and mopeds frequent these outlets for their requirement. These outlets can be profitably utilized for selling consumables and durable items also. The manufacturing and marketing men should explore effective utilization of PDS. . edible oils and others to the consumers at a reasonable price.

torch cells and other durables and consumer products. as there will be ready captive audience. depending upon the township. Jathras and melas are held once or twice a year for longer durations. Promotion can be taken. The rural customers visit these towns at regular intervals not only for selling the agricultural produce but also for purchasing cloth.Rural marketing Page 107 6. From the feeder markets and mandi towns the stockiest or wholesaler can arrange for distribution to the village shops in the interior places. While shandies/heaths are held a particular day every week. They are normally timed with religious festivals. It can be beneficial for companies to organize sales of their product at such places. Biggest fair Pushkar . For convincing the manufacturing and marketing man with regard to the importance of these places from rural marketing point of view a visit to such places is necessary. bullock-carts. jewelry. camelbacks etc. Shandies/Haaths/Jathras/Melas: These are places where the rural consumers congregate as a rule. Only temporary shops come up selling goods of all kinds. It is estimated that over 5. This distribution can be done by mopeds. hardware. the feeder markets and mandi towns offer excellent scope for distribution. 7. Such places attract large number of itinerant merchants.000 fairs are held in the country and the estimated attendance is about 100 million rural consumers. radios. cycles. Distribution up to feeder markets/mandi towns: Keeping in view the hierarchy of markets for the rural consumers.

providing consumers immense choice and prices.P. Agricultural Input Dealers: Fertilizers should be made available to the . raw materials and a host of products are available. it is an attractive place to those who want to buy second hand durables and to those who prefer barter transactions. buying in bulk for. machinery. which attract urbanite also like Mankanavillaku in Malappara in Kerela. jewellery. y Availability: It is a market for everyone and for everything. Further the freshness of the produce. where the advantage is a one-stop shopping exercise.Mela is estimated to attract over 10 million people. Merits: y Convenience: The entire market can be related to large departmental stores in cities. durables. Afterwards. There are 50 such big rural Rural marketing Page 108 fairs held in various parts of country. Periya Kirthigai at Tiruparunkunaram in Tamil Nadu. These outlets crop up every week. a week and the bargaining advantage attract the frugal and weeklong hard working rural folk. y Attractive: The weekend shopping is not only convenient but also entertaining. Kumbh Mela at Hardwar in U. farming equipment. cattle. The markets start early and will be over by lunch. 8. there will be entertainment. Household goods. In respect of transactions. clothes.

. as the salesmen are the resident of the village or community itself.N) arranges free transit of rural consumers to the supermarket of their purchases. different non-competing companies can come together to jointly operate distribution vans for the rural market. 9. the entire operation can become financially viable for all the players. This is why there are about 2 lakh fertilizer dealers in the country. This will enable them to share the cost of operating the van & on account of the sharing of the cost by four or five companies. making it easier to sell the product & maximise sales for the company. as per the essential commodities act. both in cooperative & private sector.farmers within the range of 4-5 km from their residence. The supermarket in Varana Nagar caters exclusively to rural consumers. Similarly a co-operative supermarket called Chintamani in Coimbatore (T. 10. Example of Varana Nagar in Rural marketing Page 109 Maharashtra proved an eye opener in this regard where the sugar and milk cooperatives have totally changed the life style of people. Personal Selling Network: It is very successful distribution channel being developed by companies like HUL. It adds a personal touch to the marketing. Joint distribution by Non-competing Companies: As the cost of distributing the products in the rural market through distribution vans can be unviable for a single company.

Prahalad India is a nation of opposite cultures.Rural Marketing: The Go Rural Mantra ³The destiny lies with those companies who see a bad as their customers. What creates µRural Markets¶ attractive? Importance of farming market can be substantiated by following attributes: Population 742 million Estimated annual distance of a farming market ± Rs.´ ± C. In these resources it has turn a plea for manufacturers to compute their offerings according to a Indian market. farming marketing is confused with farming marketing. Accordingly farming direct for industrial as good as civic associated products is additionally growing. farming population¶s purchasing energy has grown tremendously over a years. rural marketing has emerged. a special marketing strategy. While latter denotes marketing of furnish of a farming areas to a civic consumers or industrial consumers. K. With about 70% of Indian race residing in farming areas a need of a hour for a marketers is perspicacious this market. farming marketing involves delivering made or processed inputs or services to farming producers or consumers. In this context. Driven by immature revolution. namely. But often. languages as good as rituals. crores FMCG Rs 65000 Durables Rs 5000 Agri-Inputs .

identical to H2O & physical materialisation has not kept gait with that. . Strategies for Improving Rural Marketing Considering a sourroundings in which Indian farming market operates as good as alternative associated problems. identical to Lux soap being used in farming areas for soaking hair. soaking appurtenance manufacturers have introduced soaking machines which will keep operative even if there is no trickery of using H2O nonetheless it¶s an additional story which a little of these machines were used to shake spread as good as hope for buttermilk. need of a hour is to rise some-more in effect strategies for farming marketing which would be in sync with farming physique. 50% have been in tiny towns / villages. To strike this phenomenon. being a closely weave community. a targeted shred of a farming market.Rs 45000 2/4 Wheelers Rs 8000 . MNC¶s identical to Coca-Cola have attempted to customize their charity by introducing ³chotacoke´ costing 5 rupees. Fourthly. a preference of a farming area as good as a mercantile condition. Secondly miss of believe of product use by roughly lettered race hinders market penetration. Idea Telecom Company has used Abhishek Bacchan in a single of a advertisements shown as a sarpanch usually to have a certain interest between a farming customers. Ironically nonetheless purchasing energy in farming India is flourishing nonetheless associated infrastructure. The strategies discussed here nonetheless not zodiacally germane rely upon product characteristics. Sarpanch is a single such perspective personality who can change farming consumer¶s squeeze decision.5bn worth FMCG products sole in farming India in 2009 of dual million BSNL mobile connections. alternative than resources as good as mercantile condition. Firstly infancy of farming consumers stay in a corner family as good as most of a squeeze decisions have been taken by elders. Buying function of a farming consumer is debasing to sundry factors as good as is opposite from civic consumers in most ways. opinion-leadership plays a really critical purpose in squeeze decisions in farming areas. Thirdly as good as a greatest plea in farming markets. is a normal mindset to buy things which have been according to their informative setup. creation broadside by announcement roughly redundant.

3. gathering pattern. Nokia 1100 has positioned itself in a identical manner. This is a usual plan being adopted during large by most production as good as marketing companies. function categories. irrigation facilities. sachets) privately meant for farming areas gripping their lifestyles in view. farming labourers as good as artisans form a largest shred in farming market (about 2/3rd) where as abounding farmers consecrate about a single third of farming market 1 New product designs A tighten regard of farming domicile equipment indicates a significance of redesigning or modifying products used up by farming population. The production as good as marketing companies can consider in conditions of latest product designs identical to tiny packs (e. Price indicate can be kept low by tiny section packing. Brand name The farming consumers being worth for income business have been some-more endangered with a focus of a products. sociological factors. 2. Low cost/cheap products Pricing plan for farming market will mostly rely upon range for shortening cost of a product to fit a farming incomes as good as during a same time not compromising with focus as good as sturdiness of a product. liberality of farmers. 1.Some of a standard characteristics which start a farming market segmentation have been land land pattern. Being often roughly literate. Some of these strategies have been referred to here. The product meant for farming areas should be stout sufficient to mount severe doing as good as storage.g. preparation levels. brew of enterprise. Sturdy products Sturdiness of a product is an critical cause for farming consumers. 2. Small as good as extrinsic farmers. vicinity to cities/towns. Avoid worldly packing . a code name and/or trademark which can be simply remembered is really required for farming consumers Pricing strategies Pricing strategies have been really most related to product strategies.

Besides these. open placement system. in this citation can be a make-up of fertilizers. though sacrificing a peculiarity or organic potency of a product. special campaigns etc. For decades. µsoya protein is being used instead of divert protein.g. Distribution strategies which have been privately written for farming areas are: by associated societies. non-price competition. With flourishing farming purchasing energy as good as a 3 times incomparable race than urban. . Packaging element used should preferably lend itself for reuse. This plan worked pretty good with a some-more abundant civic consumers whose function is rather identical to Western consumers. Distribution strategies Most manufacturers as good as marketing companies have placement agreement for encampment with a race of during slightest 5000 people. farming submit dealers etc. multi-purpose placement centers. a characteristics of a product. Some creation in wrapping record is really required for farming markets. for e. Now companies have proposed make-up fertilizers in LDPE or HDPE sacks.Adopting cheaper nonetheless permanent & cultured wrapping can pierce down a cost. placement up to tributary markets/mandi towns shanties/hat/jathras/melas. MNCs have sole mutated products in India. Milk protein is costly whilst soya protein is cheaper nonetheless a nourishment worth is same. cinema. banners of a schemes etc. in food industry. as it is currently being finished in a box of biscuits. as good as radio. Promotion strategies Mass media is a absolute middle of communication. companies will need to rise suitable products for this market. imitation media. This technique yields itself for focus in most engineering or product written areas so which a cost can be kept during an affordable level. Refill packs/reusable packaging Such measures have a poignant stroke upon a farming market as it helps in shortening price. a shelf hold up have to be kept in mind. While it is -essential to delineate specific strategies for placement in farming areas. The globalization or teenager alteration will not work as farming consumers have been really different. It could be television. An preferred e. shanties/hats/melas. which have been not usually breach explanation nonetheless additionally reusable for horde of made during home chores. stickers. 3. The µGo Rural¶ mantra is a need of a hour for most of a companies to tarry for a longer time in a rival market scenario. posters. a routine during large famous as globalization. 4.g. Application of worth engineering This is a technique which can be attempted to rise cheaper products by substituting a dear tender element with a cheaper one. alternative mass media identical to palm bills as good as booklets. Other equates to of mass media accessible have been hoardings/wall paintings.

guarantee a splendid destiny for those intending to go rural.Rural marketing is an elaborating concept. a bang in a IT zone as good as high enlarge in corporate salaries. By 2012 it is approaching which each encampment will be continuous by an all continue road. expenditure patterns of products as good as services. This poignant alleviation in farming infrastructure joined with cultivation reforms already underneath approach you can design farming markets to strech inflexion point. . With income levels taking flight farming consumers have been penetrating upon branded products nowadays. Marketers have prolonged satisfied this opportunity. as good as as a partial of any manage to buy has outrageous daub means potential. as good as roughly each home will have physical materialisation as good as retain a mobile phone. habits. Improvement in infrastructure as good as reach. The farming race has shown a direction of wanting to pierce in to a state of light urbanization in conditions of exposure. each encampment will have internet connectivity. lifestyles as good as lastly. so a market distance for such products as good as services seems to have burgeoned. Companies have been not expecting this bang as good as most will be taken by warn when it happens. This will lead to an blast in direct a approach it happened in a civic markets in a midst 90s as a outcome of easy consumer finance.

Earlier. the company launched Coca-Cola University ² a virtual. companies like PepsiCo and Coca-Cola are looking at emerging markets like India and China for growth. [In 2007. Bilaspur and Lucknow) and rural markets in India. Coke is targeting small towns (tier II and III towns like Agra. Coca-Cola has renewed its focus on the rural market in India and believes there is huge opportunity with vast growth potential in these markets. Last month. global university for all learning and capability-building activities.] The company calls this the ³parivartan´ program (meaning ³Change´ in English).000 of them) in a program launched by the Coca-Cola University. Coke has a new strategy and has renewed its focus on semi-urban and rural markets in India. Coca-Cola India had been outsourcing all R&D functions from its facility in Shanghai. The parivartan program Training small town retailers Coke¶s new strategy involves training retailers (around 6. Presentations (including audio/visual technology) in local Hindi language help small retailers (with stores less than 200 square feet in average size) to better understand the concepts involved. The CocaCola Company (Coke). is not one to be left behind.Coke¶s new strategy in India Business Strategy ± India ± Training ± Retailing ± November 2008 With slowdown in developed markets. Coke too set up an R&D faculty in India to develop beverages that suit local taste and increase focus on localizing its portfolio of beverages. PepsiCo set up a research facility in India. Market Focus Targeting rural India The soft drink consumption market in India is mainly concentrated in urban cities. Each retailer also receives a Coca-Cola ³Certified Retailer´ certificate at the conclusion of the program. tools and techniques required to succeed in a constantly changing retail scenario. However. PepsiCo is aiming to triple its businesses in India over the next five years (and also setting up a new leadership structure in India). Some examples of local flavors include Maaza aam panna by Coca-Cola . Even. Adapting to local culture and taste Last year. the world¶s largest nonalcoholic beverage company. The goal of the innovative training program is to provide traditional Indian retailers with the skills. market research data suggests that consumers in urban cities spend ten times more than consumers in semi-urban and rural markets. Shop owners (traditional retailers) are given training on displaying and stocking products well.

Coke had already targeted rural consumers by bringing down the entry price (Rs 5 a bottle) for its product. Coca Cola India's Thirst for the Rural Market "We want to be the Hindustan Lever1 of the Indian beverage business. it has stepped up distribution of its 200-ml (priced at Rs 7 and Rs 8 ) returnable-glass-bottles.and Pepsi has locally-produced flavors under its Tropicana juice brand (with nimbu pani (lemon water) in the pipeline). Moving from a price strategy to stepping up distribution In the past (in 2002-03). Now.Sanjeev Gupta." .2 "The rural market is a significant part of our marketing strategy which enables us to help the consumer link with our product. Coca-Cola India (CCI) (Refer Exhibit I for information about CCI) launched a new advertisement campaign featuring leading bollywood actor Aamir . Marketing Director Cola-Cola India.Sanjeev Gupta." . in August 1995.3 'Thanda' Goes Rural In early 2002. Deputy President Coca-Cola India in May 2002.

According to company sources.Khan. given the huge size of the untapped rural market in India (Refer Exhibit II to learn about the rural market in India). the poor rural infrastructure and consumption habits that are very different from those of urban people were two major obstacles to cracking the rural market for CCI. The advertisement with the tag line 'Thanda Matlab CocaCola4' was targeted at rural and semi-urban consumers. Nantoo Banerjee. If you can crack it. the idea was to position CocaCola as a generic brand for cold drinks. The campaign was launched to support CCI's rural marketing initiatives. Coca Cola India's Thirst for the Rural Market . "The real market in India is in the rural areas. Because of the erratic power supply most grocers in rural areas did not stock cold drinks. With flat sales in the urban areas."5 However. there is tremendous potential. This decision was not surprising. CCI began focusing on the rural market in the early 2000s in order to increase volumes. said. it was clear that CCI would have to shift its focus to the rural market.Next Page >>> . spokeswoman CCI.

2] Kripalani. 2002. May 27. 5] Bailay. HLL was credited with pioneering rural market initiatives in India with its Project Bharat (1988) and Project Shakti (2002). Have a Coke. Thanda' Goes Rural Contd.rediff. Rural India. The first 'A' Availability emphasized on the availability of the product to . The Great Rural Bazaar. Further. CCI's Rural Marketing Strategy CCI's rural marketing strategy was based on three A's Availability. 3] Guha Ray. Big Business. Shantanu. people in rural areas had a preference for traditional cold beverages such as 'lassi'6 and lemon juice.. www. the price of the beverage was also a major factor for the rural consumer. Affordability and Acceptability. Also. Small Packets. Rasul. Manjeet. January 23. The company boasts of the largest rural distribution network and presence in India. August 28.. BusinessWeek. 2003.com. Far Eastern Economic Review. 4] Cool drink means Coca Cola. 1995.1] Indian arm of FMCG major Unilever.

CCI not only changed its distribution model. it also changed the type of vehicles used for transportation. and the third 'A'Acceptability focused on convincing the customer to buy the product. the stock was transported to spokes which were situated in small towns. CCI realized that this distribution system would not work in rural markets. the product was transported directly from the bottling plants to retailers (Refer Figure I). Availability Once CCI entered the rural market. Under the hub and spoke distribution system. it focused on strengthening its distribution network there. However. It realized that the centralized distribution system used by the company in the urban areas would not be suitable for rural areas. stock was transported from the bottling plants to hubs and then from hubs. as taking stock directly from bottling plants to retail stores would be very costly due to the long distances to be covered. In the centralized distribution system. These spokes fed the retailers catering to the demand in rural areas.the customer. The company instead opted for a hub and spoke distribution system (Refer Figure II). The company used large trucks for transporting stock from . the second 'A' .Affordability focused on product pricing.

Coca Cola India's Thirst for the Rural Market . the company had added 25 production lines and doubled its glass and PET bottle capacity8.bottling plants to hubs and medium commercial vehicles transported the stock from the hubs to spokes. Further it also distributed around 2. Through its rural distribution initiatives. a company spokesperson said. It also purchased 5. cycle rickshaws and hand carts to even camel carts in Rajasthan and mules in the hilly areas.000 refrigerators to its rural retailers. CCI made an additional investment of Rs 7 million (Rs 5 million from the company and Rs 2 million from the company's bottlers) to meet rural demand. to cart our products from the nearest hub. By March 2003. CCI was able to increase its presence in rural areas from a coverage of 81.342 villages in August 2003. For transporting stock from spokes to village retailers the company utilized auto rickshaws and cycles.00. Availability Contd.383 villages in 2001 to 1. Apart from strengthening its distribution network.Next Page >>> 6] Lassi is a homemade drink made by blending thick curd with sugar or salt.. CCI also focused on pricing in rural market. "We use all possible means of transport that range from trucks.. Affordability .58."7 In late 2002.000 new trucks and auto rickshaws for boosting its rural distribution. auto rickshaws. Commenting on the transportation of stock in rural markets.

5 and 2 litre PET bottles. 9] Small Coke .A survey conducted by CCI in 2001 revealed that 300 ml bottles were not popular with rural and semi-urban residents where two persons often shared a 300 ml bottle. In 2002. July 3. CCI also began to focus on the home segment. For these reasons. as the rural market was very pricesensitive. Ajit. Coca Cola India's Thirst for the Rural Market . Colas' Countryside Crusade. It was also found that the price of Rs10/. CCI announced that it would push the 200 ml bottles more in rural areas. 1. by introducing 1 litre.Next Page >>> 7] Shashidhar. 8] Apart from the rural markets. CCI launched 200 ml bottles (Chota Coke)9 priced at Rs 5.per bottle was considered too high by rural consumers. The Hindu Business Line Catalyst. 2003. CCI decided to make some changes in the size of its bottles and pricing to win over consumers in the rural market.

It was widely felt that the 200 ml bottles priced at Rs. CCI also targeted the rural consumer aggressively in its marketing campaigns.Coca Cola India's Thirst for the Rural Market << Previous Affordability Contd. It was reported that in the states of Rajasthan and Gujarat the local cola brands such as Choice and Tikli cost only half the price offered by CCI. . Reports put the annual per capita consumption of bottled beverages in rural areas at one bottle as compared to 6 bottles in urban areas.. which gave them the advantage in garnering the major market share before CCI came out with Chota Coke. CCI also participated in the weekly mandies10 by setting up temporary retail outlets. Acceptability The initiatives of CCI in distribution and pricing were supported by extensive marketing in the mass media as well as through outdoor advertising. Further. The company put up hoardings in villages and painted the name Coca Cola on the compounds of the residences in the villages.. The 200 ml bottles priced at Rs. 5 would increase the rate of consumption in rural India. which were aimed at increasing awareness of its brands in rural areas. 5 would also make CCI competitive against local brands in the unorganized sector.

. CCI also launched television commercials (TVCs) targeted at rural consumers. The commercial was shot in a rural setting. CCI came up with a new commercial featuring Aamir Khan. conducted during festival season. In the summer of 2003. When CCI launched Chota Coke in 2002 priced at Rs..and also took part in the annual haats11 and fairs . In order to reach more rural consumers. to further strengthen the Coca-Cola brand image among rural consumers.12 The company ensured that all its rural marketing initiatives were wellsupported by TVCs. According to reports it reaches around 70 million homes.Next Page >>> 10] Weekly fairs where villagers gather and sell their produce 11] Annual exhibitions.major sources of business activity and entertainment in rural India. CCI increased its ad-spend on Doordarshan. Coca Cola India's Thirst for the Rural Market . it bought out a commercial featuring Bollywood actor Aamir Khan to communicate the message of the price cut and the launch of 200 ml bottles to the rural consumers.. 5. 12] State-owned broadcaster in India. Acceptability Contd.

the creative mind just opened up. in the ad he makes the association between Coca-Cola and the word 'Thanda. Because the character. Thus making 'Thanda' generic for Coca-Cola. represented a culture. the creator of the commercial. With the long-playing possibilities of the 'Thanda' idea becoming evident. Go to any restaurant in the north. and attendants would promptly ask. "Thanda is a very North India-centric phenomenon. All the three commercials aimed to make rural and semi-urban consumers connect with Coca-cola. national creative director McCann Erickson. since 'Thanda' too is part of the popular dialect of the north.' Of the reason for picking up the word 'Thanda'. we wanted to equate Coke with 'Thanda'. CCI launched three commercials with the 'Thanda Matlab Coca-Cola' tag line. Once we decided to work on that idea.The commercial aimed at making coke a generic name for 'Thanda. 'Thanda' became the central idea.' The second commercial in the series featured Aamir Khan as a 'Hyderabadi shop-keeper'. 'garam' is essentially tea. in itself. The third commercial featured Aamir Khan as a 'Punjabi farmer' who offers Coca Cola to . here again he equates the word 'Thanda' with Coca-Cola."13 Between March and September 2003. 'thanda ya garam?' 'Thanda' usually means lassi or nimbu pani. Prasoon Joshi. said. The first ad featured Aamir Khan as a 'tapori' (street smart).

Future Prospects CCI claimed all its marketing initiatives were very successful. Coca Cola India's Thirst for the Rural Market .. with the shopkeeper asking customers to ask for Thanda instead of Coke. and the third commercial showed that when one asked for Thanda.Next Page >>> 13] Shartrujeet . CCI also said that volumes from rural markets had increased to 35% in 2003. In the first commercial the connection of Coke with Thanda was made. The company said that it would focus on adding more villages to its distribution network. its rural penetration increased from 9% in 2001 to 25% in 2003. Vaid Dixit.agency Future Prospects Contd. Analysts said that all the three commercials succeeded in make rural consumers connect to Coke and increased awareness of the brand among them. www. Sumita. CCI also launched print advertisements in several regional newspapers.ladies asking for Thanda. The three commercials showed progression in associating 'Coke' with 'Thanda' in a rural/semi-urban context.N. in the second one there was a subtle difference.. Along with TVCs. and as a result. one would get Coke. 'Thanda III' Coke Scores on Naturalness. .

Analysts pointed out that stiff competition from archrival PepsiCo would make it increasingly difficult for CCI to garner more market share. due to the flat volumes in urban areas.For the year 2003.to boost volumes in urban areas. CCI had announced plans to launch beverages such as nimbu paani (lemon juice). CCI had a target of reaching 0. and iced tea in collaboration with Nestle India. In 2002.1 million more villages. the question was whether the company would be able to take this success further. Like CCI. Around same time BBC Radio in .14 Though CCI was upbeat on account of its early success in its drive to capture the rural market. when the Delhi-based Center for Science and Environment announced that it had found high pesticide content in soft drinks manufactured and sold by both cola majors15. PepsiCo too had started focusing on the rural market. PepsiCo too launched 200 ml bottles priced at Rs.) In early 2003. A major media setback occurred in August 2003. cold coffee. fruit juice. (Refer Exhibit III for Pepsi Co's rural marketing initiatives. Company sources said that increasing volumes of cola drinks had made the company rethink its plans of launching juice and milk-based beverages. CCI announced that it was dropping plans to venture into other beverage businesses. Going one step ahead. PepsiCo slashed the price of its 300 ml bottles to Rs 6/. 5.

Exhibits Exhibit I: CCI Exhibit II: The Rural Market in India Exhibit III: Pepsico's Rural Marketing Initiatives 14] Wholly owned Indian subsidiary of Swiss FMCG major Nestle. Government of India constituted a Joint Parliamentary Committee headed by Sharad Pawar to investigate the issue. water resources and also the food chain in the region. 15] In the light of the allegations. With many social and political groups becoming active against the cola companies in rural areas. Though CCI refuted these allegations. . the company reportedly experienced a considerable decline in sales after August 2003. thereby harming the land. it remains to be seen whether CCI will be able to quench its thirst for the rural market.its program 'Face the Facts' alleged that Coke's plant in Kerala was making excessive use of groundwater resources in the region and was also contaminating the groundwater through discharge of toxic elements.

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