Godrej Consumer Product Limited “Rural Market Strategy” Guided by: Presented by: Mr. N.H. Mullick Siddharth Shanker Sharma ISMC 2006-08 Project

Indian Rural Market Some facts about Indian Rural markets are as following: India has 72% of the total population in the rural areas. The rural market is not fully developed and it has very low literacy rate. But it has very good potential keeping in mind the number of people residing there.

Some facts about Indian Rural markets are as following:

India has 72% of the total population in the rural areas.

The rural market is not fully developed and it has very low literacy rate.

But it has very good potential keeping in mind the number of people residing there.

Indian Rural Market As a result of the growing affluence, fuelled by good monsoons and the increase in agricultural output to rural India has a large consuming class with 41 per cent of India's middle-class and 58 per cent of the total disposable income. The importance of the rural market for some FMCG and durable marketers is underlined by the fact that the rural market accounts for close to 70 per cent of toilet-soap users and 38 per cent of all two-wheeler purchased.

As a result of the growing affluence, fuelled by good monsoons and the increase in agricultural output to rural India has a large consuming class with 41 per cent of India's middle-class and 58 per cent of the total disposable income.

The importance of the rural market for some FMCG and durable marketers is underlined by the fact that the rural market accounts for close to 70 per cent of toilet-soap users and 38 per cent of all two-wheeler purchased.

Indian Rural Market The rural market accounts for half the total market for TV sets, fans, pressure cookers, bicycles, washing soap, blades, tea, salt and toothpowder, What is more, the rural market for FMCG products is growing much faster than the urban counterpart. The rural market may be alluring but it is not without its problems: Low per capita disposable incomes that is half the urban disposable income; large number of daily wage earners, acute dependence on the vagaries of the monsoon; seasonal consumption linked to harvests and festivals and special occasions; poor roads; power problems; and inaccessibility to conventional advertising media.

The rural market accounts for half the total market for TV sets, fans, pressure cookers, bicycles, washing soap, blades, tea, salt and toothpowder, What is more, the rural market for FMCG products is growing much faster than the urban counterpart.

The rural market may be alluring but it is not without its problems: Low per capita disposable incomes that is half the urban disposable income; large number of daily wage earners, acute dependence on the vagaries of the monsoon; seasonal consumption linked to harvests and festivals and special occasions; poor roads; power problems; and inaccessibility to conventional advertising media.

Why Indian Rural Market is growing? The income level and the distribution of income is becoming equal and balanced. So the people in the rural areas have the same opportunity of growth as the people of urban areas have. Good support from the private as well as the government agencies is provided for the development of the rural area people. Institutions like: IFCI, SIDBI, ICICI etc. These introduced many schemes which are resulting into the development of rural area people.

The income level and the distribution of income is becoming equal and balanced. So the people in the rural areas have the same opportunity of growth as the people of urban areas have.

Good support from the private as well as the government agencies is provided for the development of the rural area people. Institutions like: IFCI, SIDBI, ICICI etc. These introduced many schemes which are resulting into the development of rural area people.

Why Indian Rural Market is growing? The scope in the urban area is restricted due to the dominance of the big and multinational company. So, many small scale industries came in the rural areas resulting into the development of the rural area. Increasing exposures to the outer world through the development of media result into the change in the mindset.

The scope in the urban area is restricted due to the dominance of the big and multinational company. So, many small scale industries came in the rural areas resulting into the development of the rural area.

Increasing exposures to the outer world through the development of media result into the change in the mindset.

Barriers of Growth in Rural Market The income level is still not matching to the urban market. The knowledge and education level is low. Less chances available for growth. Still here people prefer to go outside to the urban areas for the job and other things. The infrastructure is not so much available. Traditional way of thinking.

The income level is still not matching to the urban market.

The knowledge and education level is low.

Less chances available for growth. Still here people prefer to go outside to the urban areas for the job and other things.

The infrastructure is not so much available.

Traditional way of thinking.

What should keep in mind to get success in Rural market? The 4A Approach Availability Affordability Acceptability Awareness

The 4A Approach

Availability

Affordability

Acceptability

Awareness

Why companies are focusing towards rural market Due to the huge potential. Restriction in the urban markets. Future growth chances. Consumption rate or volume sales is high.

Due to the huge potential.

Restriction in the urban markets.

Future growth chances.

Consumption rate or volume sales is high.

Introduction to Godrej Consumer Product Ltd. Godrej Consumer Products Ltd. (GCPL) is a major player in the Indian FMCG market with leadership in personal, hair, household, and fabric care segments. The company employs 950 people and has three state-of-the-art manufacturing facilities at Malanpur (M.P.) Guwahati (Assam) and Baddi (H.P.).

Godrej Consumer Products Ltd. (GCPL) is a major player in the Indian FMCG market with leadership in personal, hair, household, and fabric care segments.

The company employs 950 people and has three state-of-the-art manufacturing facilities at Malanpur (M.P.) Guwahati (Assam) and Baddi (H.P.).

GCPL Product Portfolio Their product portfolio: Soap Cinthol Evita Godrej No. 1 Fair Glow Toiletries Cinthol Talc Godrej No. 1 Talc Fair Glow cream Godrej shaving cream Cinthol perfumes

Their product portfolio:

Soap

Cinthol

Evita

Godrej No. 1

Fair Glow

Toiletries

Cinthol Talc

Godrej No. 1 Talc

Fair Glow cream

Godrej shaving cream

Cinthol perfumes

GCPL Product Portfolio Hair care Godrej hair color dye Renew woman hair dye Nupur hair dye Color soft hair color Household care Godrej Dish wash liquid Godrej Glossy Fabric care Godrej Ezee

Hair care

Godrej hair color dye

Renew woman hair dye

Nupur hair dye

Color soft hair color

Household care

Godrej Dish wash liquid

Godrej Glossy

Fabric care

Godrej Ezee

GCPL’s Brands

Godrej No.1 Soap Godrej No.1 soap was launched in 1922. This 86-year-old brand enjoys a volume market share of 6 per cent. It is the 5th largest selling soap in the country and tops in Punjab/Haryana with a 20 per cent market share. Godrej No. 1 soap rely on below-the-line promotions, and for the past 5 years it has been selling at a 3+1 free offer in the market. In 86 years, the brand has spent less than what a major soap brand would spend in a month of heavy promotions (Rs 12-13 crore), according to the company.

Godrej No.1 soap was launched in 1922.

This 86-year-old brand enjoys a volume market share of 6 per cent. It is the 5th largest selling soap in the country and tops in Punjab/Haryana with a 20 per cent market share.

Godrej No. 1 soap rely on below-the-line promotions, and for the past 5 years it has been selling at a 3+1 free offer in the market.

In 86 years, the brand has spent less than what a major soap brand would spend in a month of heavy promotions (Rs 12-13 crore), according to the company.

Godrej Rural Marketing Strategy (Godrej No. 1 Soap) Godrej introduced Godrej No.1 soap enriched with natural ingredients trusted by millions, the flagship brand of Godrej Consumer Products Ltd, is now the largest selling Grade 1 Soap.

Godrej introduced Godrej No.1 soap enriched with natural ingredients trusted by millions, the flagship brand of Godrej Consumer Products Ltd, is now the largest selling Grade 1 Soap.

Godrej Rural Marketing Strategy (Godrej No. 1 Soap) Grade 1 is the highest standard laid down by the Bureau of Indian Standards (BIS). Godrej introduced it in competition with the Santoor, Breeze. Godrej in the initial stage introduced it as a mid segment soap but after sometime it’s price was reduced and targeted to the rural area. Variation strategy: Godrej introduced many variants to extend the product line of soap. It introduced 6 variants in the soap category. it also introduced different product category like talc, shampoo under the name of Godrej No. 1.

Grade 1 is the highest standard laid down by the Bureau of Indian Standards (BIS). Godrej introduced it in competition with the Santoor, Breeze. Godrej in the initial stage introduced it as a mid segment soap but after sometime it’s price was reduced and targeted to the rural area.

Variation strategy: Godrej introduced many variants to extend the product line of soap. It introduced 6 variants in the soap category. it also introduced different product category like talc, shampoo under the name of Godrej No. 1.

Consumer behavior of rural customers Price conscious people. People having Less knowledge. Less quality conscious people. People looking value for money product. Indulge in less Pre-purchase analysis.

Price conscious people.

People having Less knowledge.

Less quality conscious people.

People looking value for money product.

Indulge in less Pre-purchase analysis.

Value for Money product Godrej No.1, the flagship brand of Godrej Consumer Products Ltd, is the largest selling Grade 1 soap. Grade 1 is the highest category laid down by the Bureau of Indian Standards (BIS). Standard minimum of 76 per cent with the least number of additives, making it a pure soap and a quality product. They want to create awareness among consumers of the importance of using a Grade 1 soap and the benefits attached to it so that people get value for their money.

Godrej No.1, the flagship brand of Godrej Consumer Products Ltd, is the largest selling Grade 1 soap.

Grade 1 is the highest category laid down by the Bureau of Indian Standards (BIS).

Standard minimum of 76 per cent with the least number of additives, making it a pure soap and a quality product.

They want to create awareness among consumers of the importance of using a Grade 1 soap and the benefits attached to it so that people get value for their money.

Godrej No. 1 Soap Godrej No.1 soap is available in the following variants Sandal, Jasmine, Natural, Rose, Ayurvedic and Lavender.

Godrej No. Talc It is available in two variants: Jasmine Sandal

It is available in two variants:

Jasmine

Sandal

Godrej No. 1 Shampoo Godrej No.1 presents, for the first time in India, Aloe-Almond combination in a Shampoo. It was presented keeping in mind the rural areas so the pricing was according to it.

Pricing Differentiation Strategy

Godrej No. 1 Soap *Quantity 4 piece (buy one get 1 free offer) 45 27 Papaya Lotus 42 27 Lavender 42 27 Ayurvedic 45 27 Rose 45 27 Natural 42 27 Jasmine 45 27 Sandal Price 125gms* Price 75gms* Soap variety

Godrej No. 1Talc 100 Gms at Rs. 19/- 300 Gms at Rs. 39 /- Godrej No. 1Talc 0.50Rs. - 3.5 ml. 1Rs. - 7 ml. - 25Rs. 100 ml. Sachet Bottle Quantity Type

100 Gms at Rs. 19/- 300 Gms at Rs. 39 /-

Distribution Strategy Godrej distribution strategy: Godrej Soaps has set up a committee to improve and leverage distribution in the rural markets of less than 5,000 population strata. The company has put in place three experiments which will enable it to draw up a plan to tap this relatively new market which holds a high growth potential for the future. "Based on the success of these experiments, they will roll it out within the next 12 months. they believe that will add significantly to their rural sales growth," according to Godrej Soaps chairman Adi Godrej. The company had also carried out certain experiments in the below 10,000 population strata rural markets to leverage distribution. The company has already set up a system of stockists and super stockists in small towns with population of 10,000 plus.

Godrej distribution strategy:

Godrej Soaps has set up a committee to improve and leverage distribution in the rural markets of less than 5,000 population strata. The company has put in place three experiments which will enable it to draw up a plan to tap this relatively new market which holds a high growth potential for the future.

"Based on the success of these experiments, they will roll it out within the next 12 months. they believe that will add significantly to their rural sales growth," according to Godrej Soaps chairman Adi Godrej. The company had also carried out certain experiments in the below 10,000 population strata rural markets to leverage distribution. The company has already set up a system of stockists and super stockists in small towns with population of 10,000 plus.

Distribution Strategy "First, we will improve our distribution in small towns before we take on the new experiments in the rural market of less than 5,000 populations. These experiments are being conducted in particular districts," Mr Godrej said. At present, rural sales contribute one-third to the company's sales with the balance coming from the urban market. Godrej Soaps' total income was Rs 787 Crore in the fiscal 1999-2000.

"First, we will improve our distribution in small towns before we take on the new experiments in the rural market of less than 5,000 populations. These experiments are being conducted in particular districts," Mr Godrej said.

At present, rural sales contribute one-third to the company's sales with the balance coming from the urban market. Godrej Soaps' total income was Rs 787 Crore in the fiscal 1999-2000.

Distribution and Supply Chain Virtual platform between company and distributors Comprehensive Business Intelligence enables in depth primary and secondary sales analysis Intensified rural approach: presence in all locations with over 10,000 population 130 Super Stockists, 2,450 sub stockists Focus on availability of all products at all 600,000 outlets Focus on modern retailing Increased penetration Project Sampark Retail thrust

Virtual platform between company and distributors

Comprehensive Business Intelligence enables

in depth primary and secondary sales

analysis

Intensified rural approach: presence in all

locations with over 10,000 population

130 Super Stockists, 2,450 sub stockists

Focus on availability of all products at all 600,000

outlets

Focus on modern retailing

How did they beat the competition? There main competitors are Breeze (HLL product), Santoor (Wipro Product). Godrej differentiated from these on the base of the following factors: They differentiated themselves on the base of the low price soap but having the good quality. They created the flagship of the no. 1 quality and they were able to succeed in it. They had a very vast network of distributions in the rural area. So, they were able to reach to the customer in the rural area. They also had the bond with the rural people as they were producing many agricultural and household products.

There main competitors are Breeze (HLL product), Santoor (Wipro Product). Godrej differentiated from these on the base of the following factors:

They differentiated themselves on the base of the low price soap but having the good quality. They created the flagship of the no. 1 quality and they were able to succeed in it.

They had a very vast network of distributions in the rural area. So, they were able to reach to the customer in the rural area.

They also had the bond with the rural people as they were producing many agricultural and household products.

Competitive Edge Quality policy Value for money product Distribution network Brand image Promotional edge Innovation strategy Strong product line

Quality policy

Value for money product

Distribution network

Brand image

Promotional edge

Innovation strategy

Strong product line

How did they beat the competition? They also introduced many variant under Godrej No. 1 so; they were able to catch the mass market keeping in mind the different need of them. They have the retail network of the Godrej Aadhar which is their retail chain for the rural market. They availed its benefit to the maximum to promote their products. They rely heavily on the mass advertising and they conducted some special events in which rural people have the interest. (Mentioned later). Their pricing was bang on. They priced the shampoo at the minimum price which is 50 Paise.

They also introduced many variant under Godrej No. 1 so; they were able to catch the mass market keeping in mind the different need of them.

They have the retail network of the Godrej Aadhar which is their retail chain for the rural market. They availed its benefit to the maximum to promote their products.

They rely heavily on the mass advertising and they conducted some special events in which rural people have the interest. (Mentioned later).

Their pricing was bang on. They priced the shampoo at the minimum price which is 50 Paise.

Promotional tools used by GCPL Events. Advertising. Billboard Hoarding Wall painting Electronic media. Print media Sales promotion (B3G1F).

Events.

Advertising.

Billboard

Hoarding

Wall painting

Electronic media.

Print media

Sales promotion (B3G1F).

Promotional Strategy Promotion strategy: They relied heavily on the mass advertising like on the TV, radio, and newspaper. They also in the rural areas used the wall painting, hoardings etc.

Promotion strategy:

They relied heavily on the mass advertising like on the TV, radio, and newspaper.

They also in the rural areas used the wall painting, hoardings etc.

Promotional Strategy They conducted the events in which the rural people have the interest. Some of the events mentioned below:

They conducted the events in which the rural people have the interest. Some of the events mentioned below:

Promotional strategy GODREJ Consumer Products Ltd (GCPL), has roped in Mona Singh of Jassi Jaissi Koi Nahin (a popular serial on the Sony channel) to be the brand ambassador for Godrej No.1 soaps. Godrej No.1 soap is the largest selling brand of Grade I Soap in the country and Jassi will be conveying the importance of using Grade I quality soaps to the viewers. The new Godrej No. 1 ad takes a typical situation inside any Indian home. The theme of the campaign revolves around the proverbial statement, "All that Glitters is not Gold... All soaps are not Grade I quality soaps."

GODREJ Consumer Products Ltd (GCPL), has roped in Mona Singh of Jassi Jaissi Koi Nahin (a popular serial on the Sony channel) to be the brand ambassador for Godrej No.1 soaps.

Godrej No.1 soap is the largest selling brand of Grade I Soap in the country and Jassi will be conveying the importance of using Grade I quality soaps to the viewers.

The new Godrej No. 1 ad takes a typical situation inside any Indian home. The theme of the campaign revolves around the proverbial statement, "All that Glitters is not Gold... All soaps are not Grade I quality soaps."

Promotional strategy The campaign educates people the advantages of using Grade I quality soaps that produce more lather, last longer and thus is a great value-for-money proposition. (75 gm bar of Grade III toilet soap would last for 28 baths compared to Grade I soap which lasts much longer .) Godrej Soaps and Jassi both stand for the Sachchi prakritik sundarta proposition, according to the company.

The campaign educates people the advantages of using Grade I quality soaps that produce more lather, last longer and thus is a great value-for-money proposition. (75 gm bar of Grade III toilet soap would last for 28 baths compared to Grade I soap which lasts much longer .)

Godrej Soaps and Jassi both stand for the Sachchi prakritik sundarta proposition, according to the company.