Case study 2: Maruti Suzuki

Maruti Suzuki India Limited (MSIL) has been strategically targeting the rural market since 2008. It has
been one of the most effective players in the passenger car industry in tapping the opportunities
offered by the rural markets. The company aims to sell 250,000 cars per annum in rural areas. It has
launched a pan-India campaign— “Mera Sapna Meri Maruti”— to tap the rural market.
Targeting the Opinion Makers: Maruti Suzuki launched a Panchayat scheme for opinion makers,
covering the village Sarpanch (head of local governing body), doctors and teachers in government
institutions, rural bank officers, etc. wherein an extra discount is given to make a sale.

Engaging Customers: To communicate to and attract potential customers, various types of melas
(mass events) are organized wherein local flavour is added by organizing traditional social activities or
by leveraging local festivals. While some events such as the Gramin Mahotsava are conducted round
the year, others are organized near the harvesting season to utilize the cash generated from farm
sales. These are in addition to the service camps and used-car melas the company organizes on a
routine basis.

Innovative Distribution: The Company launched non-traditional distribution networks for maximizing
coverage with cost-effective approaches.

Extension Counters: These are stripped-down dealerships that operate as satellite outlets for a main
dealership in a nearby town. All the enquiries generated from the extension counters are channelized
to the parent dealer and deliveries are made at pre-specified dates. Because of its cost-effective sales
network, Maruti has been able to cover more than 200 cities. The company has also embarked on
various plans to double its sales outlets in rural areas to around 450 in the next two years. The
extension counters are connected to the main dealership in a nearby town.

Resident Dealer Sales Executives (RDSE): A local resident of the village is appointed as a salesman.
The resident dealer sales executive (RDSE) tries to generate sales enquiries from local government
offices, banks, schools, hospitals, etc. MSIL has announced its plans to appoint 10,000 resident
dealer sales executives in rural areas.

Tie-ups: Maruti has tied up with lTC’s agri-business division, e-choupal, to market its products in rural
areas. e-Choupals will provide display demonstration and customer engagement services and
facilitate meetings with prospective clients.

Credit Financing: Maruti has associated with commercial banks and non-banking finance companies
(NBFCs) to extend credit financing facility to rural consumers. It has tied up with public-sector banks
that have branches in rural areas such as State Bank of India (SBI) and regional rural banks (RRBs)
and local non-banking financial companies (NBFCs) that can provide local “intelligence” to judge the
credit worthiness of a rural customer more effectively.

Case study 3: Nagarjuna Fertilizers AN ALL-WEATHER FRIENDSHIP

Nagarjuna Fertilizers and Chemicals Limited (NFCL), the flagship company, is the first gas-based
fertilizer factory in South India. Construction began in 1988 in Kakinada in Andhra Pradesh and
commercial production commenced from 1 August 1992. The new logo of the group symbolizes a
dynamic and value-based organization actuating the concept of trusteeship. The logo exemplifies the
group’s inner strength through the core values of organizational concern, commitment, quality and
integrity towards its stockholders and customers. The central circle symbolizes the sun, the source of
prime energy of the solar system. The five circles also symbolize the five elements of the universe
and spirit of continuity. The triangle represents the planet Mars, which from time immemorial has
symbolized prosperity, success and an abundance of energy. Therefore, it represents the upward flow
of perennial energy towards the mission of the group.
The Company’s Mission: The Company visualizes itself as a highly trusted business partner of Indian
farmers and seeks to serve society through its business. It aims at becoming the leading Agri– input
supplier in the country meeting the farmers’ need of quality inputs for improving their productivity
through latest technologies and services of committed and knowledgeable team of people. Marketing
Organization The marketing head office of the company is located at Hyderabad. With more than
3,000 dealers over 11 states across the country, the department handles a turnover above Rs 8 billion
for its product range comprising 25– 30 products. It has six marketing zones across the country— two
in Andhra Pradesh (one at Vishakhapatnam and the other at Hyderabad) and one each in West
Bengal, Orissa, Maharashtra and Karnataka.

Market Share: NFCL is the leader with a share of 50 per cent in the 4 million tonne urea market, which
is growing at a rate of 10 per cent. The primary competitors in the urea market.

Product Portfolio: The Company has a range of products that include:

Fertilizers Manufactured urea (1.4 million MTs p.a.)
Traded fertilizers (0.2 million MTs p.a.) (MOP, DAP, Urea, AS, ZSSP).
Pesticides
Seeds
Speciality fertilizers
Other plant nutrients

Pricing: The government controls the prices. There is an excise levy of about 8 per cent on urea. The
MRP of a 50 kg urea bag is Rs 238.50. However, competition has induced price wars and most of the
companies are selling 50 kg bags at Rs 220. The Government of India fixes the kharif season and
provides 100 per cent transport subsidy. The monthly movement is monitored by the Ministry of
Fertilizers, Government of India, under the Essential Commodities Act, and the quantity is supplied
based on that.

Distribution: The Company’s distribution network of dealers and consignees is spread over three
states: AP, Orissa and WB. About 80 per cent of its distribution is concentrated in AP.

The company made its decision regarding location based on a survey finding that AP is among the
first three states of the country in terms of consumption of fertilizers and East Godavari is among the
top five districts in terms of fertilizer consumption in AP. Its other strengths are:
 Well planned internal siding and loading facilities
 Incoming wagon availability and proximity of traction line
 Operations streamlined by ISO 9002 systems and procedures

Promotion: The design of promotional activities depends primarily on two factors— (1) understanding
of consumers and (2) choice of push or pull strategy. The company has also undertaken a study of its
market and consumers.

Consumer Profile: The main characteristics of farmers are:

 Agriculture is more a way of life than a profession for the Indian farmer.
 Farmers generally feel insecure because of the overdependence of Indian agriculture on the
monsoons.
 Though uneducated, many of the farmers exhibit good crop knowledge and common sense.
They are shrewd decision makers.
 They show eagerness to acquaint themselves with new technology. However, they may not
adopt readily due to financial reasons.
 Farmers are influenced more by the success of other farmers than by extension activities or
advertisements and the sales-promotional efforts of the Government or commercial
organizations.
 Farmers are dependent on revolving credit with high interest and often pay in kind to their
financiers. They show high degree of loyalty to such financiers who are mostly traders and
commission agents.
 Farmers are highly price sensitive due to the low margins involved in agriculture. Also, the
returns are doubtful because of the dependence on the monsoons and other factors beyond
their control.
Promotional Activities: The promotional activities in the rural markets require a strong focus on
developmental activities and fostering of relationships with dealers.
1. Dealer Front
a. Rebates: Quantity rebates of 1– 2 bags are given to dealers when they cross the
target.
b. Credit: Credit facility is extended to dealers with an interest of 1.5 per cent. However,
collection of credit payments poses a problem for the company.
c. Dealer’s meets: Whenever a product is introduced, a meeting of dealers and sub-
dealers is organized.

2. Customer Front

The promotion is development oriented and takes the educational route. The company spends about
Rs 0.45 billion towards development and Rs 0.01 billion on advertising.

Farm Management Services:

(FMS) NFCL has set up the Nagarjuna Agricultural Research and Development Institute (NARDI) to
provide R& D support and initiated a uniquely beneficial programme— FMS. FMS provides a gamut of
services, which include:
 Situation-specific technology transfer
 Providing feedback for site-specific consultancy
 Total involvement from the soil testing and land preparation stage to the post-harvest stage
 Involvement of eminent scientists from NARDI in the exercise
 Ensuring recording of farm practices
 Helping in risk mitigation

Advertising: Advertising is done in farmer’s magazines like “Annadata” and prime time shows on TV.
Outdoor advertising includes wall paintings, hoardings and shandy centres. An audio-visual van
makes rounds covering 3– 4 villages in a day. During the night, the van provides entertainment— film
songs or cinema shows.

Field Promotion: The field promotion becomes intense just before the kharif and rabi seasons, i.e.,
between August and October and December and February. The activity is multi-pronged and inclusive
of:
 Growers meetings: For landlords of 10 acres and above, orchard growers, etc.
 Crop seminars: This involves about 50– 60 farmers based on the pests and diseases
prevalent in the local area. Research scientists of the local government Agricultural
Department are invited.
 Scientists’ visit to the field: Technical assistants of the company, retired or in-service research
scientists of the Agricultural Departments visit the farm and advise the farmers.
 KVK training: Krishi Vignan Kendra at Kakinada organizes training classes for three days for
about 900 farmers in a year. The annual expenditure may be anywhere between Rs 2.5– 2.5–
3 million.
 Big farmer meetings: Every year 10– 15 meetings of the big farmers are conducted in which
30– 40 members take part.
 Spot demonstrations: Farmers are educated by showing them photos of different farming
practices. 15– 20 farmers take part in each batch.

The field activity at villages hinges on field assistants. The company ensures that qualified persons
who can fluently speak the local languages and mix with farmers are selected. Young farmers are
roped into service and trained. They organize meetings. The field assistants are given a fixed
coverage plan— a cluster of 12– 15 villages. They have to cover 2 or 3 villages in a day. Field
assistants are advised not to sell products directly. The marketing mantra is— “Friendship with
Farmers finds you customers.”

Forging New Friendships

Globalization has opened up new cultural windows and unforeseen business doors. NFCL has
ushered in the new revolution with a vision. “Rural prosperity through enhanced knowledge and
technology” and a mission “to enable continual enhancement of agricultural production and rural
prosperity to make Indian farmers globally competitive” are the goals. The new revolution at NFCL
has been ushered in by its new Agri-portal called ikisan.com. The new Agri-portal will speak to every
farmer in his language, no matter which part of the country he may be in. It tells him about the best
farming practices, the latest technology, soil conditions, anything and everything that he might want to
know. In fact, to begin with, it will bring all the benefits of FMS. It brings the world to the farmer
because everything the farmer needs to know is just a click away.

Staying Together

The winds of change are here. It is an opportune time to forge friendships. Also, it is a testing time for
farmer relationships. A strategy for retaining friends and winning their favours need be developed. R.
L. N. Murthy, senior manager (marketing development) suggests the following tips:
 A rupee in hand is better than two on paper. Motivate farmers to buy in cash by offering
attractive incentives at the beginning of the season.
 Aim for high-volume and high-value margins. Market concentration should be on commercial
crops. These farmers can offer to pay more for quality products.
 Buy the distributor’s loyalty. Consumer loyalty often flows through the distributor. Make
special favours to him.
 Sell usage more than a product. Educate about the usefulness of the product and its usage.
Do not persuade people to buy your brand.
 It is often said that seeing is believing. Instead of focusing on company sponsored
demonstrations, it is preferable to showcase the fields of farmers who have voluntarily used
the company’s brand.
 Develop trust.
 Many agents and traders resort to cheating the farmers in connivance with government
officials. Win the farmer. Be a reliable friend. Help in the marketing of produce. By helping
farmers in disposing off their produce, you not only win their goodwill but also ensure
clearance of their debts to the company.
 Offer technical services to meet competition. Provide services to improve farming practices,
such as technology transfer and co-operative farming with an understanding of the farmers’
competitive needs.
 Focus on integrated farm development. The Agri-input marketing programme should envisage
an integrated development approach for the benefit of the farmer community than a narrow
area/ crop or season-based plan.

The following development programme can be considered for this purpose

 Formation of farmers’ clubs to discuss their problems and possible solutions.
 Interaction with scientists, experts and successful farmers to learn and solve problems.
 Training on the proper use of inputs and farm equipment, particularly that of spraying.
 Participation in exchange programmes like field days, farmers’ meets and TV/ Video
programmes.

CASE 4 Horlicks - ASHA— NOURISHING NEW HOPE

“We continuously identify and cater to the needs of various consumer segments. With Asha from
Horlicks, we are looking at offering a health drink for the emerging consumer class,” says Shubhajit
Sen, Executive Vice-President (Marketing), GlaxoSmithKline Consumer Healthcare. GlaxoSmithKline
has rolled out another health drink, Asha, under the Horlicks umbrella targeting the low-income
groups in the urban markets and rural consumers. Asha evolved from Horlicks as a result of research
conducted by the company, which reflected a need to extend a low-cost product for the hitherto
neglected segments.

Previous Moves

Research conducted by the company in the 1990s indicated that though considered nourishing,
Horlicks was perceived as a boring drink. While consumers were moving towards flavours, Horlicks
had not changed its old look and feel. Thus, the company re-launched the brand and positioned it as
a pleasurable nourishment drink aimed at children in the age group of 8– 14. Three new flavours
were introduced— vanilla, honey and chocolate— and a new look and design was given to the packs.
Things began to move fast when Zubair Ahmed took over as the managing director of the company.
The company has plugged most markets with new products— Horlicks Lite for the elderly, Junior
Horlicks for young kids, Women’s Horlicks for women, Mother’s Horlicks for lactating mothers and
Horlicks Nutribar for young adults. “Over the years, what essentially was a malt-based drink has
evolved into a wholesome brand catering to various age groups and geographies,” adds Sen.

Affordable Product

GlaxoSmithKline Consumer Healthcare discovered that people in rural areas were not regular users
of Horlicks because they were short of cash. They could afford to buy it rarely and would make it last
for months. The company needed a product that could be used on a regular basis. Consequently,
Asha, the new drink from Horlicks was priced at Rs 85 for a 500 g pouch pack— way below the price
tag of Rs 135 on a Horlicks pack of a similar size.

Acceptability

In-house research carried out by GlaxoSmith-Kline and published health data showed that a
significant proportion of Indian consumers in rural areas have different nutritional needs because of
their dietary habits and work patterns. Typically, these consumers meet these nutritional needs
through unbranded products such as finger millet and broken wheat. However, the quality of these
products varies and they are often nutritionally inadequate. Direct interaction with consumers also
revealed that many people from rural areas had moved to urban centres in large numbers. With
both members of the family working and no support system, people were worried about falling sick.

They needed a health drink that could safeguard them against illnesses. After taking all these factors
into account, GlaxoSmithKline Consumer Healthcare’s team of researchers decided to make a
product that was nutritionally superior but, easy on the pocket. Thus, was born Asha from Horlicks.
“The name Asha stands for hope, and the brand believes in supporting the hopes of the emerging
consumer class to access a better life,” adds Sen. Of course, the company has added its flagship
brand, Horlicks, to the name.

Competition and Strategy

Horlicks is the largest brand in the Rs 23 billion health food drinks market (it is growing at a rate of
20 per cent per annum) in the country with a share of over 50 per cent. Cadbury’s Bournvita and
Heinz’s Complan have 15 per cent share each. Such is the brand equity of Horlicks that Nestlé has
withdrawn its brand called Milo from the market. Dabur has entered the market with Chyawan
Junior as a rival to GlaxoSmithKline’s other brand, Boost, and has stayed clear of Horlicks. The
introduction of Asha is a strategic move.

This is the first time the company is trying to split the market into income groups. Sector experts say
there’s more to Asha’s launch than meets the eye. Complan has gained market share of late, which
has caused sufficient concern to GlaxoSmithKline Consumer Healthcare. Both the brands have been
fighting tooth and nail in the advertising space. In 2008, Horlicks came out with a campaign that
made a dig at Complan’s theme of 23 vital nutrients. This resulted in Heinz filing a case in the
Bombay High Court. It then came out with its own advertisement that compared its virtues against
those of Horlicks. The television ad campaign claimed that Complan provides nutrients to children
and enables them to grow twice as much as others. Obviously, GlaxoSmithKline Consumer
Healthcare filed a counter in the Delhi High Court. Meanwhile, the competitors moved fast and
launched products to arrest the growth of Junior Horlicks. While Heinz India has launched muesli as
a breakfast meal, Cadbury has introduced Bournvita Li’l Champs. In addition to the intense rivalry in
the urban markets, another significant factor influenced the introduction of Asha. The rural markets
make up about 30 per cent of the revenues of GlaxoSmithKline Consumer Healthcare. This figure is
well below other fast-moving consumer goods companies like Hindustan Unilever and Marico. These
companies and others active in the rural markets obtain 40– 50 per cent of their sales revenues from
rural markets. Glaxo decided on new initiatives such as the launch of Asha after it recognized the
untapped opportunities and the power of innovation in making rural markets an engine for growth.
It strengthened its distribution infrastructure to make sure that its products are available across
markets. It added 4,000 sub-distributors to its existing 500 distributors in smaller towns. With these
initiatives, the company hopes that the share of rural regions in its sales will go up by about 10 per
cent over the next two years.

Cannibalization Problem

However, will Asha not eat into Horlicks’s market? “Horlicks has been expanding and we want to
make sure that we don’t hurt the baseline equity of Horlicks,” says Sen. Hence, the new product will
be sold as Asha from Horlicks. It will be a separate brand. The company is also working on a brand-
building exercise. The marketing team has developed a series of street plays to introduce the
product. It has also tied up with a micro-finance group to promote the product. The ultimate
objective is to gain an entry into schools and spread the brand’s message.