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Strategies

of FMCG
Companies
in Rural
Market
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Members

Saket Agarwal (01)


Hitesh Bajari (02)
Mohini Bramhbhatt (04)
Deepika Harpalani (12)
Pranav Kapasi (15)
Neha Prasad (39)

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

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Also, the rural market has been growing steadily over the years
and is now bigger than the urban market for FMCGs (53%
share of the total market) with an annual size in value terms
currently estimated at around 50,000 crores.
THE Indian FMCG is realizing the that most of the India lies
in the rural India so rural marketing has become the latest
mantra of major FMCGS like
HLL, COLGATE PAMOLIVE, BRITANNIA,MARICO
INDUSTRIES.
The FMCG companies are understanding the needs and
latent feelings of rural people i.e. being very well aware of
rural scenario Before Launching their products and create a
winning strategy. 4
All biggies in the industry be it HLL, Marico, Colgate-
Palmolive or Britannia, are showing deep interest in rural
India Inspite of the major hurdles in tapping the rural
markets like lack of infrastructure, Physical distribution
,problem of channel management, sales force management.
Rural India has to be the hottest target in future for major
FMCG Players who are now learning to play well in rural
India.

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4PS OF NIRMA

Packaging
Price
Planning
Promotion

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

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

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NIRMA - SWOT ANALYSIS

Strengths
Weakness
Opportunities
Threats
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THE BRITANNIA TIGER LAGAAN MATCH

You needed to purchase a 100 gm. Pack of TIGER biscuits for


which you will get a special "Britannia Lagaan Booklet". 10000
early birds will win a prize. There is also the possibility of
being selected in the team that will play against the "Lagaan
XI" team.

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

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

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

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Packaging

The products are packed in airtight plastic wrappers in an


attractive bright red and yellow colour, which catches the
eye and is an important feature to market a product in rural
areas

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Place
The distribution network is very strong.
Manufacturing Plant
Location
C & F Agent: At district level in various states of India
Wholesaler: At taluka levels in various states
Retailer: Retailers in villages are supplied by the wholesaler
at the taluka level
Final Customer
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Positioning
Positioned mainly for the rural segment and with a new
slogan "Eat healthy, think better", as a brand of premium
quality with factors pertaining to health and needs of the
consumer being the main factor.

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Competition

From local players in many states who infringe with low


quality products and similar packaging. Since the rural
customer depends mainly on the packaging available, it is easy
for competitors to sneak in the market affecting the market
share of TIGER.

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ROLEPLAY
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INTRODUCTION
HLL's Nihar coconut oil achieved a
market leadership in the rural coconut
oil market in October 2000.
Nihar's market share stood at 25.4 per
cent in volumes, while that of
Parachute was at 23.6 per cent. The
total volume of the rural coconut oil
market is around 54,000 tonne,
growing at 6-7 per cent annually.
HLL believes that low-unit price packs
will lead to substantial conversions of
the loose oil consumers to packaged and
branded oils.
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INTRODUCTION
While Parachute's growth rate fell from
14 to 6 percent in the first half of 2000-
01, nihar Perfumed Coconut Oil
continued to grow well, while Clinic All
Clear Dandruff Oil registered substantial
growth of more than 50%.
Nihar Amla Oil was also launched
around the end of the year, to exploit
opportunities in this segment of hair oil.

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MARKETING MIX
Product: Packaging innovations
Nihar, India's only double filtered
coconut oil has made a change in
packaging and logo.
Nihar has consistently been bringing
innovations to its consumers.
It was the first to introduce the wide
mouth jar and pouches packaging.
The essence of the new packaging is to
bring about practicality in daily usage of
the Nihar coconut oil.
HLL believes that low-unit price packs
will lead to substantial conversions of
the loose oil consumers to packaged and
branded oils.
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Process
The double Filtration process involves
the production of filtered coconut oil
from copra.
The copra is then crushed at a higher
pressure.
The filtered coconut oil is mixed with
special quality silica and recirculated,
this continues until the required clarity
is achieved.
HLL believes that low-unit price packs
will lead to substantial conversions of
the loose oil consumers to packaged and
branded oils.
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Pricing
To tackle the pricing issue, HLL has
launched Nihar and Cococare in
various price points in pouches.
HLL believes that the low-unit price
packs will result in upgradation of the
loose oil consumer to this brand.

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Place ( Distribution)
HLL has a very good distribution
network.
Leveraging the micro-credit model to
expand its rural market, it is piloting
`Project Shakti, involving women.
This will help the company to expand
its rural market from its existing 40 per
cent penetration in villages with
population of over 2000.
AP was chosen for the pilot project as
20% of its rural population is covered
by the micro-credit model.
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The micro-credit concept, that impacts
45 lakhs women belonging to 3.33
SHGs in the State, creates wealth for
the members of the groups.
The micro-finance collected in the
State, through savings as well as
institutional loans, is around Rs 800
crore.

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

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PROBLEMS & STRENGTH
PROBLEMS FACED BY NIHAR
Strong competition from other players
in the market.
Pricing is a critical issue in the branded
coconut hair oil market.

STRENGTH OF NIHAR
Nihar can gain market share from
conversion of loose oil consumers.
Nihar has a very strong distribution
network.

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

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

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Medimix soap
5 plants of manufacturing in
different states.
Soap made from 18 herbs in a
coconut oil base
One-stop-cure for a range of health-
related problems.
Offers total health protection and
addresses each of your individual
needs.
Widened the strategy by placing
the soap on a value-for-money
platform
It got an ORG rating of number
nine
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Competitors-Mysore
sandal,Nirma,Jai Cinthol
fresh,Pears,Lux
international,Liril,etc.
6th highest seller in south zone
with 1,873 tonnes.
financial targets would be to build
their organisation to a Rs 1,000-
crore entity in the next five years.
This will be done by growing in the
categories they are present in and
eventually by getting into new areas
of growth

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

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

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Targeted hotels- aggressively market
to over 3,000 small hotels all over
India, even in small towns.
Impressed Indian people and even
foreign tourist by the medicated
quality of Medimix.
No compromise on the packaging
or appearance or the perfume or
colour of the soap
Brand extension Vrinda tulisi
Soap
Conducted an ayurveda Congress
in Hyderabad and got an
impressive response.
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MARKETING MIX FOR COLGATE
PALMOLIVE INDIA LTD
Products
CP would come up with another
strong brand name other than
Colgate and Cibaca
In toothpowder, it would endorse
the development of Colgate
Ayurvedic Toothpowder' focused
toward rural rich and consuming
class
It would also launch a special
toothpaste and toothbrush for kids
in the age group from 4-10 years.
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Packaging
It will work to improve the
environmental compatibility of all
our packaging materials.

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

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

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

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

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

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COLGATE'S BRIGHT SMILES, BRIGHT FUTURES

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COLGATE IMPROVES MARKET SHARE

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CONCLUSION

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

Colgate and Britannia now derive 35% and 30% respectively


of their turnover from rural markets

Britannia and Colgate, apart from Hindustan Lever, are the


only FMCG companies in India that derive over 30% of their
revenues from rural markets
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The success of these companies has as much to do with
understanding the psyche of the rural family as it have to do
with a rural distribution network.
In the end that FMCG companies will have to really gain
inroads in the rural markets in order to achieve double digit
growth targets in future
Ultimately the winner would be the one with the required
resources like time and money and also with the much needed
innovative ideas to tap the rural markets

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