MARKETING INNOVATIVESTRATEGIES EFFECTS ON FMCGCOMPANIES IN RURAL MARKETSPresented By:-KIRAN RAMDAS SINALKAR10/366AKASH BALASAHEB SHELKE10/365
INTRODUCTION The scope for the FMCG in Rural market is fast growing. There are nearly 6,38,000 villages in INDIA. Of these only 0.5% have the population above 10,000. And 2% of the population between 5,000 to 10,000. 50% of the villages have a population below 200. At least 75 per cent of the male working population engaged in agriculture and allied activities would qualify as rural. 70% of the total population live in rural India. From this it becomes clear that the rural India is the best market ever for the FMCG in the country.
FMCG COMPANY’S FOCUS ON PRODUCT INNOVATION Many FMCG companies a large chunk of their revenues up to about 60 per cent comes from new product launches. Companies like Dabur, ITC, Britannia Industries, Nestle and Amul HUL, ITC, Nestle, Procter & Gamble and GlaxoSmithKline Healthcare account for almost 70 % of FMCG revenues in the country spend almost 10 % of their turnover on advertising and brand promotion. They market their brand through heavy expenditure on brand promotion, advertisement and a proper marketing channel. The promotion strategy includes tying up with Bollywood actors and other celebrities, brand ambassadors to advertise and promote their products.
Marketing and advertising differs from region to region, there cant be a single strategy for the whole of India, as one marketing strategy will not work in other region as there might be a total disconnect in terms of the whole concept or an ad or the strategy. And especially if one is placing a product targeted at the rural consumers, here also it is a different ball game altogether.
NIRMA PRODUCTS - A BREAKTHROUGH IN INDIAN RURAL MARKET
STRATEGIES OF NIRMA NIRMA is considered to be one of the leading brand which used various innovative techniques to capture the rural market. It introduced various small budget consumer goods to attract the rural consumers. They targeted mainly on the third class consumers to marker their products. They introduced toilet soaps, detergents and other consumer attractive goods at a low cost. They were considered one of the toughest competitor to Unilever India ltd.
HLL derived around 50% of its sales from rural areas. HLLs rural marketing initiatives began way back in 1988, when the company had launched Wheel for the rural and lower income urban consumer. As a competition to the NIRMA products they introduced Wheel to demolish the market of NIRMA and to capture the rural market.
HLL’S CLINIC PLUS SHAMPOO HLL introduced Clinic Plus. They made the rural people to understand the product by demonstrating its uses to the people in public. They made the people understand the effect of using shampoo and they demonstrated how it makes the hair smooth.
RETAILER AND DISTRIBUTION NETWORK AND WITH INNOVATIVE MARKETING STRATEGIES The two major Cola brands Coca-Cola and Pepsi apart from their usual battle over market share have been trying hard to enter into rural markets. They have come up with many marketing strategies such as pricing, distribution strategies etc, like providing ice boxes, refrigerators, credit facilities etc. They provided small bottles apart from 1 liter bottles to attract the low income groups. They both used a good effective distribution channel to make the product available in the rural consumer markets.
BRAND-BUILDING ACTIVITIES AND COST-REDUCTION SPUR SALES IN THE FMCG SPACE Almost 50 per cent of the FMCG companies cited earlier reported a double digit growth in sales. Companies like P&G, ITC, Tata Tea, Dabur, Marico, GlaxoSmithkline, Gillette and Godrej recorded good top line growth. This is because of the various techniques they used to develop their products according to the rural consumers needs. They adopted various new technologies to out run their competitors. They concentrated more on the product diversification.
COLGATE Colgate-Polmolive India Ltd, which makes oral care and personal care products kept expenses down by reducing its stock keeping units or SKU. They also diversified their products. Colgate herbal, Colgate Salt, Colgate white, Colgate gel and much more.
BRITANNIA INDUSTRIES LTD They increased their net profit by 10.0% after entering in to the rural markets. They increased the price of their products by 5% to 7%.
DABUR INDIA LTD AND NESTLE INDIA LTD OTHERS They focused to reduce their operational cost by reducing their cost they spend on the purchase of the raw materials. Godrej Consumer Products Ltd focused on reducing the cost by organizing a good supply chain management process and selecting a better and a cheaper mode of transport. Wipro Ltd provided the consumers with a reduction in the weight of the products at the same price thus improving their margin of profit.
CONCLUSION From all the above informations it is clear that the rural India can be one of the most feasible market for the development of the FMCG in INDIA. FMCG’s companies or marketers make consistent attempts to innovate tools and strategies to overcome the challenges the face in the business area. Corporate India and government bodies alike have made several efforts to bridge the gap between rural and urban India. Thus if planned properly and with the use of new strategies and technologies the rural India market can be captured and a great margin of profit can be earned by the FMCG companies.