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Rural Marketing Mix in Bhutan:

An FMCG Perspective

Dev Narayan Sarkar* and Gagan Pareek**

Almost all large consumer goods companies operating in Bhutan actually operate through their Indian offices since India has a free trade agreement with Bhutan. Bhutan has a unique rural market structure, and the 4Ps (Product, Place, Price and Promotion) and 4As (Awareness, Availability, Affordability and Acceptability) of rural marketing are also governed by unique regulations formulated by the Government of Bhutan. Bhutan is 69.1% rural, and rural marketing becomes the most important subject for marketing in Bhutan—in fact, if Indian census benchmarks were applied to the Bhutan demographics, the percentage of rural population would be beyond 90%. This present study is the most comprehensive ex post facto qualitative and quantitative study of the 4Ps/4As of rural marketing in Bhutan. The research tool used is a qualitative survey of the national distributors operating in Bhutan and of some wholesalers in each district of Bhutan, followed by a quantitative analysis of the associations between the factors. Absolutely no literature is available on rural marketing in Bhutan, and this paper aims to advance that body of knowledge from a practitioner’s point of view.

Introduction

Bhutan has an indigenous population of 634,982 (of which rural population is 438,871) and is very sparsely populated with only 18 people per sq km (PHCB,

2005). The population, including the non-Bhutanese, is 672,425. In contrast to this, the Indian census defines any area with less than 400 people per sq km as rural (also 70% of adult male population should be engaged in agriculture and there should not be any municipal board). As per PHCB (2005), 69.1% of population of Bhutan reside in rural areas. Though the percentage of rural population in Bhutan seems almost same as that of India, the point to note is that Bhutan Census

board has a less stringent criterion for classifying a place as Urban—the urban- rural classification used in the PHCB (2005) is according to the classification of the

*

Senior General Manager, Sales, PepsiCo Holdings India Pvt. Ltd., Kolkata 700107, West Bengal, India. E-mail: devnarayan.sarkar@gmail.com

**

Assistant Professor, Management Education Centre, Heritage Institute of Technology, Kolkata 700107, West Bengal, India. E-mail: gpareek76@gmail.com

Department of Urban Development and Engineering Services (DUDES) and is not

based on any standard criterion. If we use the Indian standard criterion, Bhutan is

considerably more rural. Hence, Bhutan can be termed as a predominantly rural

country and rural marketing is very important for the country. The rural marketing

tools and challenges are presented in Table 1.

Rural marketing does not exist as a

proper academic or research discipline

in the western world. Though there are

some Indian books and articles on rural

marketing, there is almost nothing

written on rural marketing in Bhutan, a

seamless neighbor to India. Since there

is no material on rural marketing mix of

Bhutan, this paper aims to develop

scholarly material on rural marketing

mix.

Table 1: Rural Marketing Tools vs. Marketing Challenges Marketing Marketing Tools Challenge Product Acceptability
Table 1: Rural Marketing Tools vs.
Marketing Challenges
Marketing
Marketing
Tools
Challenge
Product
Acceptability
Price
Affordability
Place
Availability
Promotion
Awareness
Source: Kashyap (2005)

The scope of Fast Moving Consumer Goods (FMCG) distribution in rural Bhutan

is best represented by Figure 1 describing the domain of rural marketing in rural

marketing theory presented by Jha (1988). Anything produced in rural and supplied

to rural falls in the unorganized sector; anything produced in urban areas and

supplied to rural areas falls under consumer goods distribution (which is the scope

of this paper); anything produced in rural and supplied to urban areas falls under

agricultural marketing, artisan products and cottage industry; and anything

produced in urban areas and supplied to urban areas is outside the purview of

rural marketing. FMCG marketing in the rural markets of Bhutan falls in the realm of

urban to rural marketing quadrant as highlighted in Figure 1. Figure 1: Classification of Rural
urban to rural marketing quadrant as highlighted in Figure 1.
Figure 1: Classification of Rural Marketing
Supplied to
Rural
Urban
Rural
Unorganized Sector
(Farm and Non-Farm)
Agricultural Marketing,
Artisan Products,
Cottage Industry
Produced in
Urban
Consumer Goods
Distribution (Scope of
this paper)
Not in the Realm
of Rural Marketing

Geography and Demography of Bhutan

Bhutan’s geographical area is comparable to Switzerland, Denmark, Netherland and Taiwan but it lags behind in terms of per capita income and Human Development Index (HDI) ranking. Bhutan, officially the Kingdom of Bhutan, is a landlocked state in South Asia, located at the eastern end of the Himalayas and bordered to the south, east and west by the Republic of India and to the north by the People’s Republic of China. Bhutan is separated from the nearby country of Nepal to the west by the Indian state of Sikkim, and from Bangladesh to the south by the Indian states of Assam and West Bengal. The total area of the country has been reported as 38,394 sq km. Bhutan has a population of 634,982 as per its 2005 census and is very sparsely populated with only 18 people per sq km and is predominantly rural (PHCB, 2005). The population, including the non-Bhutanese, is 672,425. Bhutan is divided into 20 dzongkhags (districts) (Figure 2), administered by a body called the dzongkhag Tshogdu. In the vast majority of constituencies, rural gewogs (village blocks) are administered by bodies called the gewog Tshogde (Wikipedia, 2012).

Figure 2: Districts of Bhutan
Figure 2: Districts of Bhutan

Objectives of the Study

This paper is an ex post facto qualitative study of the 4Ps (Product, Place, Price and Promotion) and 4As (Awareness, Availability, Affordability and Acceptability) in rural marketing in Bhutan. The research tool used is a qualitative survey of the national distributors operating in Bhutan and of some wholesalers in each district of Bhutan, followed by a quantitative survey of 100 wholesalers on the factors identified through the qualitative survey. The survey is followed by a correlation analysis of the association between the factors with calculation of Pearson correlation coefficient and two-tailed measure of significance. This research paper is the first of its kind on rural marketing in Bhutan and is supposed to make the reader aware of the nuances of rural marketing in Bhutan.

Qualitative Analysis

Promotion/Awareness

Many of the conventional promotion methods followed in India are not even allowed by regulation in Bhutan. For example, the dealer boards and glow-sign-boards which are visible above almost every shop in India are not allowed in Bhutan. Rules there dictate that the dealer boards have to be green in color and sport only the details of the establishment and should not carry any promotional message. Hoardings, banners, posters, etc., which are the mainstay of Indian rural marketing, are not allowed in Bhutan to preserve the environment and the skyline. Hence, the major methods of localized rural promotions are out of consideration in Bhutan.

One important method of promoting one’s products is through a retailer and wholesaler meet which is fairly manageable in Bhutan owing to the low number of wholesalers and retailers: around 190 wholesalers and 4,000 retailers (research estimate from a survey of national distributors in Bhutan). So, on an average, meetings could be held in each district with 210 invitees each (20 districts). Often, the department of trade holds product exposition fairs in Paro and Thimpu and invites companies to demonstrate or sample their products to the wholesalers and retailers. The government provides this support since it wants its citizens to use good world-class products.

The media available in Bhutan is sparse and is mostly untapped by Indian companies operating in Bhutan or even by Bhutanese corporations. After a five- year spurt of dizzying growth, the question now is: What seems to be stifling the Bhutanese media? Ask around and you get one common response— ‘advertisements’ (Raj, 2011). Most media in Bhutan survive on government advertising. And 80 to 90% of the advertising comes from government. The private sector is not yet heavily into advertising and branding and is losing on a cheap advertising media. The government offices simply ‘distribute’ ads unmindful of whether they reach the intended target. Sonam Pelden (2011) says that announcements meant for the yak herders come to the English newspapers that do not go to Merak, Sekteng, Laya and Lingzhi; and Radio, which is popular among illiterate rural population, is not used as a channel. The public fund, in the process, is misplaced, or rather misused.

The print media in Bhutan includes: Kuensel, a newspaper of a government- owned corporation, circulating six days a week in dzongkha and English; Bhutan Times, Bhutan's first government-authorized privately-owned newspaper; Bhutan Observer, private newspaper; Bhutan Today, an English daily newspaper; Business Bhutan, the first financial newspaper of Bhutan; Drukpa, a monthly news magazine; and The Journalist, a weekly English newspaper.

The broadcast media includes: the Bhutan Broadcasting Service, a radio service broadcasting in short wave nationally, and on the FM band in Thimphu (BBS SW and FM)

reaching all of Bhutan; BBST TV (the national TV channel), reaching almost all 20 districts; and Global TV programming reaching people in 46 towns and urban settlements.

The online media includes: Kuensel Online, the first online newspaper; B-Mobile,

Bhutan’s telephone service on phone; Facebook, YouTube and Hi5 are Internet

sites with wide appeal in Bhutan; Kuzoo.net, website of a 24-hour radio station Kuzoo FM
sites with wide appeal in Bhutan; Kuzoo.net, website of a 24-hour radio station
Kuzoo FM (Figure 3).
Figure 3: Complete List of Media in Bhutan
Media in Bhutan
Print Media
Broadcast Media
• Kuensel
Online Media
(Newspaper)
• Bhutan Broadcasting
Service (Radio - SW
and FM)
• Bhutan Times
(Newspaper)
• Bhutan Observer
• Bhutan Broadcasting
Service
(TV channel)
(Newspaper)
• Cable TV
• Bhutan Today
(Newspaper)
• Business Bhutan
(Business
Newspaper)
• The Journalist
(Newspaper)
• Drukpa (Magazine)

The most popular media in rural Bhutan is the short wave radio channel of the Bhutan Broadcasting Service (Raj, 2011). This channel should be used by the Indian

companies operating in Bhutan to reach the rural population. Since the population

of Bhutan is low, demonstrations held in villages is also a good and cost-effective method. After all, only 4.38 lakh rural citizens have to be covered.

In rural India, folk art forms are used as a means to promote products. The same can be applied to rural Bhutan. The most dominant folk music forms in Bhutan are

Zhungdra, Boedra, Zhey and Zhem, Tsangmo, Lozey and Rigsar (Wikipedia, 2012). A

popular performing art in rural Bhutan is the Cham dance. A short promotional message delivered by the artiste or by a promoter during the performance of these

art forms in rural markets would be instrumental in spreading awareness about the

products. This is something akin to promotional messages in rural India during performance of the various folk art forms like baul, kirtan, katha, nautanki, etc. (Table 2).

Table 2: Promotion/Awareness Factors Some Guiding Promotion/Awareness Factors Factors Dzongkhag Folk Performing Art
Table 2: Promotion/Awareness Factors
Some Guiding
Promotion/Awareness Factors
Factors
Dzongkhag
Folk Performing Art
Forms for Promotion
No. of Art Kuensel Newspaper
(District)
Forms
Circulation
Bumthang
0
360
Chhukha
Miritsemoi Zhey
1
1578
Dagana
0
0
Gasa
Zhungdra, Kabney,
Goen Zhey and zhem
4
0
Ha
Bonghur Zhey
1
0
Lhuentse
0
112
Monggar
0
259
Paro
Zhungdra, Boedra,
4
1082
Woochupai Zhey
and zhem
Pemagatshel
0
55
Punakha
Zhungdra
1
343
Samdrupjongkhar
0
418
Samtse
0
329
Sarpang
0
417
Thimphu
Zhungdra, Wang
Zhey and zhem
3
3457
Trashigang
0
465
Trashiyangtse
0
0
Trongsa
Nub Zhey
1
0
Tsirang
0
170
Wangdue
0
0
Zhemgang
0
90
All Dzongkhags
9,135
Source: Wikipedia (2012); Newspaper Circulation from Rapten (2012)

Place/Availability

Rural distribution in India generally follows a hub and spoke model which helps in breaking bulk and increasing penetration into interior villages through a network of spokes which are located in the rural areas. Many companies in India also try to reach villages through direct distributors or through van routes but the more successful Indian companies operating in rural markets use the hub and spoke model (Figure 4).

Figure 4: Standard Rural Distribution Structure in India Factory CFA Superstockist/Hub Rural Consumer Retailer
Figure 4: Standard Rural Distribution Structure in India
Factory
CFA
Superstockist/Hub
Rural
Consumer
Retailer
Substockist/Spoke

Bhutan is a highly regulated market and every establishment has to acquire unique licenses for each kind of activity in the supply chain for rural markets (Bhutan Micro Retail, Wholesale Trade Regulations, 2006). Moreover, there are only three entities authorized by the government as National Wholesalers, to distribute goods into rural Bhutan: Food Corporation of Bhutan (FCB), Tashi Commercial Corporation (TCC) and Damchen Agency (DA). All these entities have headquarters based in Phuentsholing (in Chhukha district) in Bhutan which is just across the border from Jaigaon in West Bengal. No other entity is available in Bhutan for official distribution of FMCG (or any other products) in the small country. Unlike in many other countries, the same entity cannot sell to wholesalers as well as retailers. The licenses for the two activities are kept separate by the government. An entity authorized to sell to licensed wholesalers can only do that while the licensed wholesalers further sell stocks to retailers. Many would feel that the rural distribution structure is very similar to the hub and spoke model which is operated by many FMCG companies in rural India. But the biggest difference is that some of the spoke depots (branches) in Bhutan are also owned by the national distributors and managed by their employees, often designated as branch managers. Other third party wholesalers are also used as spokes for intensive rural distribution and the most unique feature is that these spokes are common between all the three national distributors.

In very rare occasions, a licensed wholesaler visits India (across the porous

border) and buys stocks directly from a distributor or a CFA in India. An example

of one such entity is Gelephu Grocery which is based in Gelephu, Bhutan (just

across the border from Bongaigaon in Assam). For most practical purposes, Bhutan

rural distribution has only one modality, the one shown in Figure 5. The total

wholesale and retail trade in Bhutan is Nu 3,752.6 million (Statistical Yearbook of

Bhutan, 2011).

The officiating Director General of the Department of Trade (DoT), Dophu Tshering,

said that DoT conducted a study which showed that the three main national

distributors supply adequate essential items to retailers across the country, from

Phuntsholing to all dzongkhags: Tashi Commercial Corporation (TCC), Damchen wholesale agencies and Food Corporation of Bhutan (FCB) (Dorji, 2012).

Figure 5: Rural Distribution Structure in Bhutan Manufacturing Plant in India CFA in India (Mostly
Figure 5: Rural Distribution Structure in Bhutan
Manufacturing Plant
in India
CFA in India
(Mostly in Siliguri)
Co-Packing Plant
Bhutan National
in Bhutan
Distributor’s Depot
Other Common
Authorized Wholesalers
Acting as Spokes (B2B)
Spoke Depots
Owned by National
Distributors
Government Licensed Wholesale Shops
and Establishments
Rural Retailers
Rural Consumers
Note: CFA: Carrying and Forwarding Agent; B2B: Business to Business; Bhutan National
Distributor: Tashi Commercial, Damchen and Food Corporation of Bhutan (only
3 exist).

The Tashi Commercial Corporation (TCC), part of the Tashi Group, Tashi Consumer division is the largest distributor of consumer products in Bhutan under the umbrella of Tashi Group of Companies with a turnover of more than Nu.1000 million (Ngultrum 1 = 1) dealing with distributorship of more then 77 multinational companies. Initially, Tashi had a monopoly in the distribution business. TCC has a fleet of 44 vehicles for distribution of consumer goods. Van marketing is conducted regularly to reach the essential commodities to the remotest part of the country for the convenience and benefit of the consumers (Tashi website, 2012). TCC imports only from India and the supply has been consistent (Dorji, 2012). The imports are mainly done from the Indian multinational companies like: Hindustan Lever Limited, Amul, Nestle India Ltd., Henkle SPIC India Ltd., Eveready Industries (I) Ltd., Johnsons & Johnsons Ltd., Parle Products Ltd., Britannia Products, Colgate-Palmolive India Ltd., Joyco India Pvt. Ltd., Marico Industries Ltd., Perfetti Van Melle India Pvt. Ltd., Cadbury India Ltd., Godrej Consumers Products, Dabur India Ltd., Reckitt Benckiser India Ltd., Bisk Farm, Glaxo SmithKline Consumer Healthcare and United Breweries.

The Damchen Agency (DA) is the second largest distribution entity in Bhutan owned by Yab Ugyen Dorji. Damchen distributes products from the following FMCG companies in Bhutan: Sula Vineyards, Nestle India Ltd., Britannia New Zealand, PepsiCo India, Shree Parag Edible Oil, S K Industries, Joyco India Ltd., Parakh Food Ltd., and Amul.

Food Corporation of Bhutan (FCB) is the only government agency involved in distribution of FMCG products. FCB operates wholesale distributorship of consumer goods under dealership arrangement with principal companies in India/3 rd countries. FCB manages the distribution through a network of centrally and strategically located infrastructures throughout the country and with a team of experienced staff (Food Corporation of Bhutan, 2010). FCB distributes products from the following FMCG companies: HUL, Nestle India, Glaxo SmithKline Healthcare Ltd., Agro Tech Foods Ltd., Colgate Palmolive India Ltd., Nippo Batteries Ltd. (Indo National Ltd.), Henkel SPIC India Ltd., Amul, Marketing Feder. Ltd., Aza Tea Packaging Company, Shubham Industries Ltd., Herbal & Hygiene Products and Parle Products (P) Ltd.

As seen from the above examples, there is no concept of exclusivity in distribution in Bhutan. Most notably, Nestle and Amul products are distributed by all the three entities. Every FMCG company has contracted at least two of the three entities for distribution in Bhutan. The no exclusivity concept extends to the common wholesalers which act as spokes.

Price/Affordability

Bhutan figures on the United Nations list of 41 least developed countries and is one of the world’s most vulnerable economies (Wangchuk, 2011). This list is based on certain criteria which include per capita income, standards of living and human resources, and economic capacity and resilience. Agriculture and forestry provide the main means of livelihood for over 60% of the population. The economy, although aligned with India through trade links, is still underdeveloped due to the country’s rugged terrain and other geographical constraints. The industrial sector is largely dependent on cottage industries and other small scale ventures. The UNDP HDI (UNDP, 2011) also indicates the relative poverty in a predominantly rural country. Hence, the rural marketing challenge of affordability (against the marketing tool of price) is of primary importance to the marketer interested in this country.

Most companies operating in Bhutan through their Indian offices maintain price parity with Indian rural markets. Though Bhutan presents a great opportunity for geographical pricing (higher prices in the captive geography to recoup the higher costs of distribution), most companies choose to keep the prices same owing to the considerable difficulty in manufacturing a separate batch for Bhutan with a special price. For example, HUL, P&G, Nestle and Dabur have all kept the prices exactly the same as in Indian markets. Also, most companies want to penetrate the rural markets in Bhutan before they start fishing for higher profits. Another considerable challenge in implementing a differential pricing would be the fairly porous border between Bhutan and India which would cause an infiltration of stocks illegally from India into Bhutan if any company tries to implement a differential pricing (Figure 6).

Another factor influencing pricing in Bhutan is the recent western influence owing to the introduction of cable television. Even rural citizens aspire for global brands

Figure 6: Factors Behind Price Parity with Indian Rural Markets Difficulty in Producing Small Quantity
Figure 6: Factors Behind Price Parity with Indian Rural Markets
Difficulty in Producing Small
Quantity of Differential Pack
Need to
Free Trade
Price Parity in Bhutan Rural
Penetrate
Agreement
Threat of Infiltration from India
Through Non-Official Channel
and prefer occasional use of a global brand rather than the more regular use of a
watered-down brand or product.

Another perspective of affordability is the Bhutan Consumer Price Index which reflects changes in the cost to the average consumer of acquiring a basket of goods and services that may be fixed or changed at specified intervals, such as yearly. This index shows rapidly rising prices in a 90% rural market and it is the responsibility of the consumer goods companies to introduce smaller priced packs which is lacking in Bhutan. Most companies are selling larger sized packs in Bhutan (as per qualitative survey) and need to introduce smaller packs to keep the products affordable (Figure 7).

Figure 7: Bhutan Consumer Price Index 131.6 105.3 78.9 52.6 26.3 0.0 1980 1984 1989
Figure 7: Bhutan Consumer Price Index
131.6
105.3
78.9
52.6
26.3
0.0
1980
1984
1989
1993
1997
2001
2006
2010
Source: International Monetary Fund, International Financial Statistics and data files

Product/Acceptability

Not long ago, the Buddhist kingdom of Bhutan was a simple nation suspended in medieval ways of life and consumerism was an unknown word. Few tourists were permitted and television was not allowed. And then, a decade ago, Bhutan’s king allowed television and then the Internet, which introduced a passion among the people for a different way of life, and for new products. Consumerism was born in Bhutan and companies based in India rushed in to satiate the hunger for branded goods. Most products available today in rural Bhutan are exactly the same as those available in rural India. Moreover, the rural Bhutanese today aspire for global brands.

The value of FMCG products sold by the three national distributors in Bhutan is kept confidential by Tashi and Damchen but FCB had declared the value and mix from 2006 to 2009 in its booklet published during the 16 th SAARC Summit (Food Corporation of Bhutan, 2010). That tabulation gives us a good idea of the kind of FMCG products which dominate the Bhutan rural markets (90% of Bhutan is rural). Packaged food appears to be the largest FMCG category and this fact has been supported by the qualitative survey (on-depth interviews) conducted by the researcher at Tashi and Damchen also. No wonder that Nestle and Amul products are being distributed in Bhutan by all three national distributors and Nestle is a more prestigious company to distribute than even HUL in Bhutan. This is also owing to the fact that Bhutan is still not self-sufficient in food products and the citizens need packaged food products to tide over food shortages.

No FMCG company has yet focused on specific products for Bhutan and are probably not wanting to customize for a market comprising of only 0.67 million citizens (smaller than most small towns in India like Howrah). However, many Bhutanese companies are introducing homegrown products and appealing to the national pride of citizens to start using national products rather than imported ones e.g., Tai Industries Limited sells Druk 10000 beer, Druk squashes and other packaged food products.

The government of Bhutan discourages tobacco products and hence, the second largest FMCG in India, ITC, is all but absent from Bhutan rural markets. Realizing the grave dangers and damaging effects of tobacco use on health, longevity and quality of life, Bhutan has actively promoted antitobacco campaigns at both the national and international levels. The country has won numerous commendations and awards for its efforts and was among the first to sign the global framework convention on tobacco control. On December 17, 2004, Bhutan became the world’s first nation to national assembly. Smoking also is now restricted to private areas.

Quantitative Analysis

The research tool used is a qualitative survey of the national distributors operating in Bhutan (General managers of Damchen and Tashi were interviewed) and of some wholesalers in each district of Bhutan followed by a quantitative survey of

100 wholesalers on the factors identified through the qualitative survey. The survey

is followed by an analysis of the associations between the factors. Data on the

4P’s/4A’s is given in Appendix (Tables A1 to A4) and an analysis of the correlations

was requested from SPSS Statistics Desktop 20.0 software and the output has

been analyzed for factors determining which districts have the highest potential

for FMCG marketers. A ranking of potentials of the 20 districts have also been

enumerated using the various factors (Appendix Table A5).

Correlation Between Place and Price Factors and Within Themselves

• Retail intensity is highly correlated with the total number of spokes in each district (total of national distributor branches and the wholesalers acting as spokes).

• Retail intensity is highly correlated with UNDP HDI (Table 3). Table 3: Correlation Between
• Retail intensity is highly correlated with UNDP HDI (Table 3).
Table 3: Correlation Between Place and Price Factors
and Within Themselves
Correlation Total Retail Intensity Employed UNDP Human
Spokes (Retailers ÷ per ‘000 Development
Households
Index
in ‘000)
Total Spokes
Pearson
1
0.787**
–0.216
0.394
Correlation
Sig.
0.000
0.361
0.085
(2-tailed)
N
20
20
20
20
Retail Intensity Pearson
0.787**
1
–0.293
0.606**
(Retailers ÷
Correlation
Households Sig.
in ‘000)
(2-tailed)
0.000
0.210
0.005
N
20
20
20
20
Note: ** Correlation is significant at the 0.01 level (2-tailed).

Correlation Between Place and Product Factors and Within Themselves

Total spokes as well as the retail intensity is highly correlated to the per-household annual consumption. It is to be expected that the household consumption should influence the number of retailers since demand influences supply (Table 4).

Correlation Between Place and Promotion Factors and Within Themselves

Total spokes as well as retail intensity is highly correlated with the circulation of

Kuensel (the largest circulated newspaper by a wide margin). No doubt media is

Table 4: Correlation Between Place and Product Factors and Within Themselves Correlation Total Retail Intensity
Table 4: Correlation Between Place and Product Factors
and Within Themselves
Correlation
Total
Retail Intensity
Per Household
Spokes
(Retailers ÷
Consumption
Households
(Nu)
in ‘000)
Total Spokes
Pearson
1
0.787**
0.583**
Correlation
Sig. (2-tailed)
0.000
0.007
N
20
20
20
Retail Intensity
Pearson
0.787**
1
0.722**
(Retailers ÷
Correlation
Households
in ‘000)
Sig. (2-tailed)
0.000
0.000
N
20
20
20
Per Household
Pearson
0.583**
0.722**
1
Consumption
Correlation
(Nu)
Sig. (2-tailed)
0.007
0.000
N
20
20
20
Note: ** Correlation is significant at the 0.01 level (2-tailed).

driving consumerism, and retail intensity is following consumerism in the districts

of Bhutan. Folk art forms naturally have no correlation with anything else since

there has never been any attempt to tap them for rural awareness activities. The

researcher intends to try it out in Bhutan like numerous companies have successfully

tapped Indian folk arts for rural awareness programs in India (Table 5).

Correlation Between Product and Promotion Factors and Within Themselves

Per household consumption is highly correlated with newspaper circulation

(represented by the circulation of Bhutan’s dominating newspaper, Kuensel). Media

seems to drive consumerism (Table 6).

Correlation Between Price and Promotion Factors and Within Themselves

No significant correlation found between price and promotion factors. But newspaper

circulation and HDI seem to be correlated. Hence, both of these can be used to develop

a factorial grid of which would indicate potential rankings of a district (Table 7).

Correlation Between Price and Product Factors and Within Themselves

Household consumption is highly correlated to UNDP HDI. This is expected and simply

means that a more developed district will have a higher consumption (Table 8).

Table 5: Correlation Between Place and Promotion Factors and Within Themselves Correlation Total Retail Intensity
Table 5: Correlation Between Place and Promotion Factors
and Within Themselves
Correlation
Total
Retail Intensity
Kuensel
Spokes
(Retailers ÷
Newspaper
No. of Art
Forms
Households
Circulation
in ‘000)
Total Spokes
Pearson
1
0.787**
0.935**
0.372
Correlation
Sig. (2-tailed)
0.000
0.000
0.107
N
20
20
20
20
Retail Intensity
Pearson
0.787**
1
0.729**
0.438
(Retailers ÷
Correlation
Households
in ‘000)
Sig. (2-tailed) 0.000
0.000
0.054
N
20
20
20
20
Kuensel
Pearson
0.935**
0.729**
1
0.476*
Newspaper
Correlation
Circulation
Sig. (2-tailed)
0.000
0.000
0.034
N
20
20
20
20
No. of Art
Forms
Pearson
0.372
0.438
0.476*
1
Correlation
Sig. (2-tailed)
0.107
0.054
0.034
N
20
20
20
20
Note: * Correlation is significant at the 0.05 level (2-tailed); ** Correlation is significant
at the 0.01 level (2-tailed).
Table 6: Correlation Between Product and Promotion Factors and Within Themselves Correlation Kuensel No. of
Table 6: Correlation Between Product and Promotion Factors
and Within Themselves
Correlation
Kuensel
No. of Art
Forms
Per Household
Newspaper
Consumption
Circulation
(Nu)
Kuensel
Pearson
1
0.476*
0.675**
Newspaper
Correlation
Circulation
Sig. (2-tailed)
0.034
0.001
N
20
20
20
No. of Art
Forms
Pearson
0.476*
1
0.771**
Correlation
Sig. (2-tailed)
0.034
0.000
N
20
20
20
Per Household Pearson
0.675**
0.771**
1
Consumption Correlation
(Nu)
Sig. (2-tailed)
0.001
0.000
N
20
20
20
Note: * Correlation is significant at the 0.05 level (2-tailed); ** Correlation is significant
at the 0.01 level (2-tailed).
Table 7: Correlation Between Price and Promotion Factors and Within Themselves Correlation Kuensel No. of
Table 7: Correlation Between Price and Promotion Factors
and Within Themselves
Correlation
Kuensel
No. of Art
Forms
Employed
UNDP Human
Newspaper
per ‘000
Development
Circulation
Index
Kuensel Pearson
Newspaper Correlation
Circulation Sig. (2-tailed)
1
0.476*
–0.145
0.523*
0.034
0.541
0.018
N
20
20
20
20
Note: * Correlation is significant at the 0.05 level (2-tailed).
Table 8: Correlation Between Price and Product Factors and Within Themselves Correlation Employed UNDP Human
Table 8: Correlation Between Price and Product Factors
and Within Themselves
Correlation
Employed
UNDP Human
Per Household
per ‘000
Development
Consumption
Index
(Nu)
Employed
Pearson
1
–0.171
0.046
Per ‘000
Correlation
Sig. (2-tailed)
0.470
0.846
N
20
20
20
UNDP Human
Pearson
–0.171
1
0.682**
Development
Correlation
Index
Sig. (2-tailed)
0.470
0.001
N
20
20
20
Per Household Pearson
Consumption Correlation
(Nu)
0.046
0.682**
1
Sig. (2-tailed)
0.846
0.001
N
20
20
20
Note: ** Correlation is significant at the 0.01 level (2-tailed).

Conclusion

A good potentiality hierarchy of districts can be obtained by assigning equal weights to the identified factors which appear to influence consumerism in the preceding analysis. The weights are applied after normalizing all measures between 0 and 100. The factors used for ranking the districts are as follows:

1. Retail intensity (Availability Factor)

2. Spoke availability (Availability Factor)

3. Newspaper circulation (Awareness Factor)

4. Per capita household consumption (Acceptability Factor)

5. UNDP HDI (Affordability Factor)

Any marketer who wants to tap the rural markets of Bhutan should penetrate the district with higher ranking before going on to the next highest ranked district. This is owing to the potential for sales as well as the ease of reach, the ease of promotions and the latent consumption patterns in each district.@

References

1.

“Bhutan Living Standard Survey” (2007), Bhutan National Statistics Bureau,

Royal Government of Bhutan (RGOB), December.

2.

“Bhutan Micro Retail, Wholesale Trade Regulations” (2006), available at

www.trade.gov.bt, Last Updated July 30, 2010.

3.

Dorji M (2012), “Shops Across Bhutan Say Consumer Goods are Running Out

of Stock”, The Bhutanese, May 19, available at http://www.thebhutanese.bt/

shops-across-bhutan-say-consumer-goods-are-running-out-of-stock/

4.

Dorji P S S (2012), “Opening the Gates in Bhutan: Media Gatekeepers and the

Agenda of Change”, in Towards Global Transformation: Proceedings of the Third

International Conference on Gross National Happiness, The Centre for Bhutan

Studies, Thimphu, pp. 88-109, available at http://archiv.ub.uni-heidelberg.de/

savifadok/1387/

5.

Food Corporation of Bhutan (2010), “Domestic Marketing” Sixteenth SAARC

Summit, April 28-29, Thimpu, Bhutan.

6.

Jha M (1988), “Rural Marketing: Some Conceptual Issues”, Economic and Political

Weekly, Vol. 23, No. 9, pp. 8-16.

7.

Kashyap P R S (2005), The Rural Marketing, 1 st Edition, Dreamtech Press, New

Delhi.

8.

Kuenselonline (2012), http://www.kuenselonline.com/circulation/. Accessed

on July 24, 2012.

9.

PHCB (2005), “Population & Housing Census of Bhutan”, available at

http://www.bhutancensus.gov.bt/. Accessed on July 9, 2012.

10.

Raj M (2011), “Advertise This”, Drukpa, January 1.

11.

Rapten P (2012), “Mass Media: Its Consumption and Impact on Residents of

Thimphu and Rural Areas”, available at http://www.bhutanstudies.org.bt/

pubFiles/6.media.pdf. Accessed on July 31.

12.

Sonam Pelden (2011), “Where the Government Ad Money Goes”, Bhutan

Obserrver, March 25, available at http://bhutanobserver.bt/3907-bo-news-

about-where_the_government_ad_money_goes aspx

13. Statistical Yearbook of Bhutan (2011), National Statistics Bureau, Royal Government of Bhutan.

14. Tashi Website (2012), http://www.tashigroup.bt/?page_id=39, as viewed on July 11, 2012.

15. UNDP (2011), “Bhutan National Human Development Report”, United Nations Development Program.

16. Wangchuk DT (2011), “Per Capita in Bhutan Grows But it has not Translated into Development”, Business Bhutan, May 07, 2011.

17. Wikipedia (2012), Kuensel, http://en.wikipedia.org/wiki/Kuensel. Accessed on July 30, 2012.

18. Wikipedia (2012), “Music of Bhutan”, available at http://en.wikipedia.org/wiki/ Music_of_Bhutan. Accessed on July 24, 2012.

Appendix

Table A1: Demographics and Place/Availability Factors Some Guiding Demographics Place/Availability Factors Factors
Table A1: Demographics and Place/Availability Factors
Some Guiding
Demographics
Place/Availability Factors
Factors
Bumthang
16,116
2,870
1
6
7
118
41.1
Chhukha
74,387
14,482
3
25
28
481
33.2
Dagana
18,222
3,485
0
6
6
111
31.9
Gasa
3,116
727
0
1
1
14
19.3
Ha
11,648
2,290
0
4
4
71
31.0
Lhuentse
15,395
3,001
0
3
3
56
18.7
Monggar
37,069
7,348
0
9
9
173
23.5
Paro
36,433
7,118
2
17
19
339
47.6
Pemagatshel
13,864
2,937
0
4
4
83
28.3
Punakha
17,715
3,387
1
7
8
90
26.6
Samdrupjongkhar
39,961
8,363
3
11
14
223
26.7
Samtse
60,100
11,634
0
10
10
204
17.5
Sarpang
41,549
8,211
1
17
18
347
42.3
Thimphu
98,676
19,689
2
40
42
1282
65.1
Trashigang
51,134
10,813
0
8
8
164
15.2
Trashiyangtse
17,740
3,764
0
2
2
31
8.2
Trongsa
13,419
2,739
0
3
3
62
22.6
Tsirang
18,667
3,651
0
4
4
73
20.0
Wangdue
31,135
6,227
1
11
12
225
36.1
Zhemgang
18,636
3,379
0
3
3
69
20.4
All
634,982
126,115
14
191
205
4,216
33.00
Dzongkhags
Source: Statistical Yearbook of Bhutan (2011)
Dzongkhag
(District)
Population
Households
Total National
Distributor
Branches
(Spokes)
Common
Wholesalers
(acting as
Spokes)
Total Spokes
Retailers
Retail
Intensity
(Retailers ÷
Households in
'000)

24

The IUP Journal of Management Research, Vol. XII, No. 3, 2013

Appendix (Cont.)

Table A2: Price/Affordability Factors Some Guiding Price/Affordability Factors Factors Dzongkhag Employed Employed
Table A2: Price/Affordability Factors
Some Guiding
Price/Affordability Factors
Factors
Dzongkhag
Employed
Employed
Per Household
UNDP Human
(District)
Persons
per ‘000
Annual Income
Development
(Nu)
Index
Bumthang
5300
329
176516
0.707
Chhukha
41400
557
328741
0.668
Dagana
11400
626
503638
0.589
Gasa
1800
578
66396
0.631
Ha
6000
515
213763
0.686
Lhuentse
7200
468
696348
0.637
Monggar
19200
518
719019
0.629
Paro
19400
532
63157
0.681
Pemagatshel
5600
404
424286
0.676
Punakha
14200
802
252628
0.650
Samdrupjongkhar
8100
203
615377
0.610
Samtse
37200
619
757885
0.585
Sarpang
16200
390
314166
0.626
Thimphu
43500
441
38866
0.727
Trashigang
27000
528
474488
0.649
Trashiyangtse
9400
530
231576
0.616
Trongsa
6700
499
359510
0.673
Tsirang
13400
718
225098
0.658
Wangdue
17100
549
255867
0.656
Zhemgang
10900
585
856670
0.651
All Dzongkhags
321,000
506
372465
Note: Household incomes are as per Wikipedia (2012) and converted to Nu using
exchange rate 56Nu=$1
Source: UNDP (2011), Statistical Yearbook of Bhutan (2011)

Rural Marketing Mix in Bhutan: An FMCG Perspective

25

Appendix (Cont.)

Table A3: Products Sold by Food Corporation of Bhutan AGENCY Business of FCB (in Million
Table A3: Products Sold by Food Corporation of Bhutan
AGENCY
Business of FCB
(in Million Nu)
2006 2007 2008 2009 Total Contri-
bution
(%)
Highest
Selling
Product
of the
Company
A S Herbal & Hygiene
Products
0.7
0.8
0.9
1.1
3.5
0.5
Phenyl and
Bleaching
Powder
Agro Tech Food Ltd.
2.4
3.1
4.3
2.7
12.4
1.9
Cooking Oil
Aza Tea Packaging
Company
5.1
6.0
7.1
9.4
27.5
4.3
Tea
Bhutan Diary and
Agro Industries Ltd.
3.3
3.8
1.2
4.7
13.0
2.0
Milk Products
and
Packaged Food
Colgate Palmolive
0.9
0.9
0.7
0.6
3.0
0.5
Dental Care
India Ltd.
Products
Druk Agro Enterprise
1.8
0.6
0.4
0.8
3.7
0.6
Beer and Juices
Glaxo SmithKline
5.2
4.2
4.3
4.8
18.4
2.9
Packaged Food
Healthcare Ltd.
and
Supplements
Gujarat Cooperative
Marketing Federation
Ltd.
20.5
29.8
24.8
24.5
99.6
15.5
Milk Products
and
Packaged Food
Henkel SPIC India Ltd.
9.4
10.9
14.0
16.8
51.2
8.0
Personal Wash
Products
Hindustan Lever Ltd.
26.4
17.8
17.4
18.1
79.7
12.4
Personal Care
Products
Indo National Ltd.
1.1
1.1
0.6
1.2
4.0
0.6
Nippo Batteries
Nestle India Ltd.
60.4
47.2
73.2 100.5 281.3
43.8
Packaged Food
Products
Parle Product Private
Ltd.
4.5
4.1
4.5
5.4
18.4
2.9
Biscuits
Reckitt Benckiser (I)
Ltd.
1.6
0.6
0.7
0.9
3.8
0.6
Homecare
Products
Shubham Industries
Ltd.
6.7
5.3
6.1
4.8
22.9
3.6
Electrical and
Auto Parts
Total
149.9 136.1 160.0 196.3 642.4
100.0

26

The IUP Journal of Management Research, Vol. XII, No. 3, 2013

Appendix (Cont.) Table A4: Product/Acceptability Factors Some Guiding Product/Acceptability Factors Factors Dzongkhag
Appendix (Cont.)
Table A4: Product/Acceptability Factors
Some Guiding
Product/Acceptability Factors
Factors
Dzongkhag
Per
Per
Per
Per Capita
(District)
Household
Household
Household
Consumption
Consumption
Food
non-Food
(Nu)
(Nu)
Consumption
Consumption
(Nu)
(Nu)
Bumthang
17814
7498
10316
3172
Chhukha
14922
5398
9524
2905
Dagana
11162
6147
5015
2135
Gasa
18890
9242
9648
4407
Ha
14375
5177
9198
2826
Lhuentse
8539
4596
3943
1665
Monggar
9633
4397
5236
1910
Paro
20954
6096
14858
4094
Pemagatshel
10013
5016
4997
2121
Punakha
17019
6364
10655
3254
Samdrupjongkhar
10662
4154
6508
2231
Samtse
8407
3873
4534
1627
Sarpang
11339
4797
6542
2241
Thimphu
27271
7899
19372
5441
Trashigang
9864
4739
5125
2086
Trashiyangtse
12241
6207
6034
2597
Trongsa
14138
6116
8022
2886
Tsirang
14003
5521
8482
2739
Wangdue
16264
7426
8838
3253
Zhemgang
10298
4394
5904
1867
All Dzongkhags
13,823
5,423
8,400
2745
Source: Bhutan Living Standard Survey (2007)

Rural Marketing Mix in Bhutan: An FMCG Perspective

27

Appendix (Cont.)

Table A5: Ranking of District Potentials Weight (out of 100) 20 20 20 20 20
Table A5: Ranking of District Potentials
Weight
(out of 100)
20
20
20
20
20
100
Dzongkhag
Total
Retail
Kuensel
Per
UNDP
Rating
(District)
Spokes
Intensity
Newspaper Household
Human
of
(Retailers ÷ Circulation
Consum-
Develop- District
Households
ption
ment
in ‘000)
(Nu)
Index
Thimphu
25.6
13.9
48.0
11.7
6.6
21.2
Chhukha
17.1
7.1
21.9
6.4
6.1
11.7
Paro
11.6
10.2
15.0
9.0
6.2
10.4
Sarpang
11.0
9.0
5.8
4.8
5.7
7.3
Bumthang
4.3
8.8
5.0
7.6
6.4
6.4
Samdrup-
jongkhar
8.5
5.7
5.8
4.6
5.5
6.0
Punakha
4.9
5.7
4.8
7.3
5.9
5.7
Wangdue
7.3
7.7
0.0
7.0
5.9
5.6
Trashigang
4.9
3.2
6.5
4.2
5.9
4.9
Monggar
5.5
5.0
3.6
4.1
5.7
4.8
Samtse
6.1
3.7
4.6
3.6
5.3
4.7
Ha
2.4
6.6
0.0
6.1
6.2
4.3
Tsirang
2.4
4.3
2.4
6.0
6.0
4.2
Dagana
3.7
6.8
0.0
4.8
5.3
4.1
Pemagatshel
2.4
6.0
0.8
4.3
6.1
3.9
Trongsa
1.8
4.8
0.0
6.0
6.1
3.8
Gasa
0.6
4.1
0.0
8.1
5.7
3.7
Zhemgang
1.8
4.4
1.3
4.4
5.9
3.5
Lhuentse
1.8
4.0
1.6
3.7
5.8
3.4
Trashiyangtse
1.2
1.8
0.0
5.2
5.6
2.8

28

Reference # 02J-2013-07-01-01

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