Rural Marketing in Pakistan
i am
Why  Rural Pakistan    IsImportant   ???
68% Population   32% Population
Thanks to TV               Awareness in Rural                     Has                  Increased
Exponential Growth30% plusOrganic Growth (2o10)
Around35%            S         …of major companies         comes from Rural Pakistan
Changing Market Place                         Modern Trade                           Wholesale   Wholesale                ...
In the world 2.5 Billion peopleearn 1500$ plus per year                             …and remaining                        ...
Majority of these4 Billion people  Lives in Rural
Key Factors      InRural Marketing
1. Awareness
2. Availability
Vast Geographical Spread                       Trade Off Between                           Distribution Cost              ...
3. Affordability
Low Disposable Income                       Avg. Monthly                   Consumption Rs.8945/-                          ...
Dependent UponVagaries Of Monsoon
4. Acceptability
Customization      Vs.Standardization                   Low Price                      &                  Low Margins
Shopkeepers At Rural                 Divided into                 Wholesalers                      &                   Ret...
Assortments Carried                                         Karyana Items                      Smaller SKU’s of           ...
Ideas For Effective Rural Marketing
1. Product Offering
Smaller SKUs    Single Serving(per capita or per time period)
DistinctivePackaging           Brands are          identified &         differentiated           on basis of              ...
2. Price
Attractive Price Points                          Rs.10 sachet contributes                          around 50% in surf sale...
Per Gram Costing        Brand             Large SKU        Sachet        Surf Excel           0.20           0.17  Everyda...
Attractive Retail Margins                            For Retail Penetration                                       &       ...
Retail Margins        Brand             Large SKU    Sachet        Surf Excel          4.7%        5.5%      Supreme Tea  ...
Credit to Retailers improves    Trade Relationship             &   Product Penetration
3. Promotion
Connect in More Understandable Way                         Use local dialects to engage                                 co...
Use Customized     Media
Trade Engagement Activities                                                P&G Golden Stores                              ...
Contribute Towards the Society                           CSR Activities creates a                        positive brand/co...
4. Distribution
Wholesale ChannelPlaying Dominant Role      Distributor     Wholesellers                    These wholesalers supplies pro...
Direct Distribution to   Rural Retailers      Distributor     Wholesellers       Retailers    Product directly distributed...
Major Hurdle inDirect Distribution             Cost of Distribution
…which is overcome bysubsidizing rural distributions               Subsidy varies from 50% t0 100%                        ...
Rural Sales Van Costing          Heads                      Unilever          Unilever (Retail Extension                  ...
Through Subsidy…        …make distribution infrastructure               Self Sustaining
But…       Major Challenge
201021%                            Shrinking consumer disposable                            income                        ...
Attractive Price Points                                 Surf Excel                                 promoting              ...
Pressure on Purchasing        Power
So Companies Need to be       very ….
In Short…                         Smaller                                    Affordable     Inflationary                  ...
SoRural Marketing      Is…
ProvidedYou Move  With
Sources www.statpak.gov.pk   www.flickr.com  www.google.comwww.research.nestle.comHUL CDM Sanjiv Kakkar
Rural marketing in pakistan  mirza shakeel
Rural marketing in pakistan  mirza shakeel
Rural marketing in pakistan  mirza shakeel
Rural marketing in pakistan  mirza shakeel
Rural marketing in pakistan  mirza shakeel
Rural marketing in pakistan  mirza shakeel
Rural marketing in pakistan  mirza shakeel
Rural marketing in pakistan  mirza shakeel
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Rural marketing in pakistan mirza shakeel

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Rural marketing in pakistan mirza shakeel

  1. 1. Rural Marketing in Pakistan
  2. 2. i am
  3. 3. Why Rural Pakistan IsImportant ???
  4. 4. 68% Population 32% Population
  5. 5. Thanks to TV Awareness in Rural Has Increased
  6. 6. Exponential Growth30% plusOrganic Growth (2o10)
  7. 7. Around35% S …of major companies comes from Rural Pakistan
  8. 8. Changing Market Place Modern Trade Wholesale Wholesale Family Grocers Retail Pharmacy/Mass Retail Rural
  9. 9. In the world 2.5 Billion peopleearn 1500$ plus per year …and remaining 4 Billion people Earn less than 1500$
  10. 10. Majority of these4 Billion people Lives in Rural
  11. 11. Key Factors InRural Marketing
  12. 12. 1. Awareness
  13. 13. 2. Availability
  14. 14. Vast Geographical Spread Trade Off Between Distribution Cost & Incremental Penetration
  15. 15. 3. Affordability
  16. 16. Low Disposable Income Avg. Monthly Consumption Rs.8945/- Vs. Income Rs.10,929/-
  17. 17. Dependent UponVagaries Of Monsoon
  18. 18. 4. Acceptability
  19. 19. Customization Vs.Standardization Low Price & Low Margins
  20. 20. Shopkeepers At Rural Divided into Wholesalers & Retailer
  21. 21. Assortments Carried Karyana Items Smaller SKU’s of Branded Items Unrelated ItemsVegetables, Ice etc
  22. 22. Ideas For Effective Rural Marketing
  23. 23. 1. Product Offering
  24. 24. Smaller SKUs Single Serving(per capita or per time period)
  25. 25. DistinctivePackaging Brands are identified & differentiated on basis of color Mainly due to illiteracy
  26. 26. 2. Price
  27. 27. Attractive Price Points Rs.10 sachet contributes around 50% in surf sales Rs.10 sachet major growth driver for powder creamer Rs.10 sachet rapidly growing despite challenges from smuggled tea
  28. 28. Per Gram Costing Brand Large SKU Sachet Surf Excel 0.20 0.17 Everyday Tea Whitener 0.43 0.40 Sunsilk Shampoo 0.78 0.60 Cheaper Small SKUs enhances consumer acceptance
  29. 29. Attractive Retail Margins For Retail Penetration & Advocacy
  30. 30. Retail Margins Brand Large SKU Sachet Surf Excel 4.7% 5.5% Supreme Tea 5.1% 11.1% Everyday Tea Whitener 8% 8% Sunsilk Shampoo 9.7% 9.7% Better Retail Margins on Small SKUs improves retail penetration
  31. 31. Credit to Retailers improves Trade Relationship & Product Penetration
  32. 32. 3. Promotion
  33. 33. Connect in More Understandable Way Use local dialects to engage consumers
  34. 34. Use Customized Media
  35. 35. Trade Engagement Activities P&G Golden Stores 2% for Displays Sachet Display Drives Unilever ProjectInterface paying 6-7% & Perfect Shops for small stores
  36. 36. Contribute Towards the Society CSR Activities creates a positive brand/company image
  37. 37. 4. Distribution
  38. 38. Wholesale ChannelPlaying Dominant Role Distributor Wholesellers These wholesalers supplies product to rural Retailers retailers. Products supplied included branded & loose (unbranded items) Traditional Rural Distribution System
  39. 39. Direct Distribution to Rural Retailers Distributor Wholesellers Retailers Product directly distributed to rural retailers ensuing product availability & minimizing the influence of wholesale Direct Rural Distribution System
  40. 40. Major Hurdle inDirect Distribution Cost of Distribution
  41. 41. …which is overcome bysubsidizing rural distributions Subsidy varies from 50% t0 100% of expenses
  42. 42. Rural Sales Van Costing Heads Unilever Unilever (Retail Extension (50% sharing) program 100% sharing) Rentals (Rs. 700/day @ 25 17,500 17,500 days) Unilever Subsidizing its rural distributorsFuel (Rs. 5/km cost & avg. 50 6,250 6,250 km/day) Salesman Salary 7,500 7,500 This subsidy varies from 50% to 100% in Loader Salary 4,500 4,500 (Retail Extension Program) Total Cost 35,750 35,750Breakeven Sales (assuming 1,021,428 1,021,428 3.5% avg. dist. margin) Estimated sub-dist margin 35,000 35,000 This subsidy helps in ( at 3.5% net margin ) (assuming Rs.40,000 (assuming Rs.45,000 sales/day) improving distributors ROI sales/day) & numeric expansion Company Sharing 17,875 (50% cost 35,750 (100% cost sharing) resulting in overall rural sharing) stronghold Net Dist Margin 17,125 (1.7%) 35,000 (3.4%) An Example Of How Subsidy Helps
  43. 43. Through Subsidy… …make distribution infrastructure Self Sustaining
  44. 44. But… Major Challenge
  45. 45. 201021% Shrinking consumer disposable income Maintaing price points becoming difficult for companies 2009 24% 2008 8% Increasing Distribution cost & struggling ROIs of distributors Consumer Price Index Inflation
  46. 46. Attractive Price Points Surf Excel promoting Rs. 15 SKU Rs.10 sachet contributes 50% plus in surf sales Decreasing weight Rs.10 sachet major growth driver for powder creamer Decreasing weight Rs.10 sachet rapidly growing despite challenges from smuggled tea
  47. 47. Pressure on Purchasing Power
  48. 48. So Companies Need to be very ….
  49. 49. In Short… Smaller Affordable Inflationary SKUs pressures Customized Media Right Price Points Rural Marketing Collaborative … Distribution Better Retail Margins
  50. 50. SoRural Marketing Is…
  51. 51. ProvidedYou Move With
  52. 52. Sources www.statpak.gov.pk www.flickr.com www.google.comwww.research.nestle.comHUL CDM Sanjiv Kakkar
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