Coromandel‟s strategy over the years to reduce wholesaler dependencePost 2002, Coromandel initiated the task of removing t...
c. Project Cheyutha: Project Cheyutha (Helping Hand) was an innovative approach to selling                                ...
Some of the typical problems associated with farming in India are illustrated in Table 1                    Fertiliser    ...
Section: Concept & PositioningAs explained in previous section, there is a latent gap in the current agricultural practice...
b. Farmers are risk averse and lie at the lower end of risk-return spectrum and hence will avail of       such services on...
Section: ImplementationJourney of MGC rollout across Andhra PradeshIn FY 2007-08, as part of business strategy to provide ...
Rome wasn‟t built in a day!!! Project executionCoromandel organized eleven teams with internally available resources to ca...
 Field service associate (FSA) - Field personnel have mobikes covering 12 to 15 villages each.          They report to AM...
Business categories in Veterinary vertical: Feed, Feed supplements & MedicinesBusiness categories in Lifestyle Products ve...
Each of these Mana Gromor centers provides services in addition to the products. Services offered atMGCs include1. Soil te...
Field Visits and technical advice to the farmers3. Technical help and training at the MGCs – Every Mana Gromor Center has ...
Hello Gromor – Farmer Interaction center7. Veterinary Care -Cattle need to be reared in a more professional way to increas...
Paddy seeder used in nursery and Transplanter used in the main fieldServices provided by the MGCs are coordinated with the...
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Think group magazie

  1. 1. Coromandel‟s strategy over the years to reduce wholesaler dependencePost 2002, Coromandel initiated the task of removing the layers existing between the company and theend customer i.e. farmer. The long term goal was to sell directly to farmers. The advantages were 1. Reduce dependence on distributors, prevent underselling, protect margins 2. Timely availability of Agri inputs to farmers 3. Introduce price discipline 4. Improved brand loyaltyCoromandel brands „Gromor‟ and „Godavari‟ enjoy huge brand equity in Andhra Pradesh on account ofbetter product quality and derived usage benefit. Several strategies were implemented over the nextcouple of years to delayer the existing distribution channels and introduce market discipline. a. Expanding Channel: Coromandel steadily dismantled the wholesaler system and relayed on retailers who were more creditworthy and reliable. This resulted in decrease of business from wholesalers 45% in 2002-03 to 14% in 2006-07. Coromandel also worked on increasing the confidence of farmers on the quality of the product rather than competitive pricing. b. Plant Delivery Orders (PDO): PDOs were a first of its kind initiative implemented by Coromandel which enabled the company to deliver fertilizers required directly to the farmers at their door steps against their indents to the company. By 2006 almost 46% of deliveries were through PDO‟s.
  2. 2. c. Project Cheyutha: Project Cheyutha (Helping Hand) was an innovative approach to selling fertilizers through Self Help Groups (SHGs) of rural women, Rythu Mitra Groups (RMGs) and Farmers‟ clubs who were looking for business opportunities to generate additional income and improve their livelihood. Cheyutha dealers of Coromandel were either women or farmer groups formed through state government programmes and acted as brand ambassadors for Gromor products and promoted the product in their village as well as neighboring villages. Cheyutha received an overwhelming response from farmers and the Coromandel had direct reach to about 1,50,000 farmers through 700 Cheyutha dealers in Andhra Pradesh. The concept was leveraged to develop focus groups for market intelligence, new product introduction/promotion. Total turnover from Cheyutha dealers was Rs.25 crore, which is 2% of the Coromandel‟s total fertilizer turnover in Andhra Pradesh. Figure 1 illustrates Coromandel‟s journey over the years in improving the distribution channels.Coromandel‟s foray into Retail – Need vs Gap for Agri Inputs & servicesIn 2007, Coromandel decide to venture into selling Agri Inputs directly to farmers from its retail outlets asthere was a limitation to further increase the number of Cheyutha dealers because of unavailability ofmore number of financially viable farmer groupsAgriculture is a seasonal business and the seasonality of demand creates points of crests and troughs forselling of products. During peak agricultural months, when demand of agri inputs (especially fertilizers) ismuch higher than supply available, dealers resort to undercutting and blackmarketing which not justsqueezes the farmer but also tarnishes company‟s image among the customersThe yield from farm produce in India is significantly lower when compared to developed countries. Thisis mostly on account of lack of education about good farm management practices, knowledge ofintegrated pest & nutrition management practices.
  3. 3. Some of the typical problems associated with farming in India are illustrated in Table 1 Fertiliser Plant Protection• Lack of knowledge on soil nutrients • Lack of knowledge of right product.• Non availability of the fertilizers with • Misleading information from dealers. required nutrient combinations. • Lack of assurance on quality of pesticides available in• Imbalance application of secondary and dealer shops micro nutrients • No knowledge of proper application methods and implements Seed Irrigation• Lack of knowledge on suitable variety and • Lack of techniques to minimize water losses and water crop selection. conservation• Improper cultivation methods as required by • Insufficient water – leaving large tracks of the land the seed variety. vacant• Availability of the required seed • The cropping mix is based on habit, even if it needs water Farm Machinery Labour• Poor tillage methods which reduce land • Shortage of labor during peak season. productivity. • Low productivity of labor and increasing cost• Due to high investment and low availability • Laborers turning into tenant farmers. the use of machines is low • Children of laborers do not go for farm labor work Post Harvest Technology Veterinary Care• 20-30% losses are due to post harvest • Limited facilities for cattle and poultry health damages treatment• Lack of proper transport and storage • Imbalance in nutrition leading to low production facilities • Lack of availability of good quality products in feed &• Lack of knowledge and accessibility for feed supplements in cattle right markets and prices Table 1: Problems of farming in India
  4. 4. Section: Concept & PositioningAs explained in previous section, there is a latent gap in the current agricultural practices followed inIndia especially in areas of Integrated Pest & Nutrient management and Farm mechanization whichprovides scope of good business opportunity for organized players to step in. The farmers value suchservices and are willing to avail only if it is provided by a trustworthy source.In 2007, sensing the scope for business opportunity to provide end to end Agri solutions (products andservices) to farming community and to take a step further in selling Agri inputs directly to end customersi.e. farmers, Coromandel decided to enter into retailing of Agri Inputs through setting up of own Ruralretail outlets.These outlets are set up in rural Andhra Pradesh (a Coromandel stronghold market) and operate onCompany Owned, Company Operated (COCO) model. Boost to the business plan came in the form ofapproval from government of Andhra Pradesh to sell fertilizers through our retail storesThe outlets are called “Mana Gromor Centres” (MGC) which means „My Gromor Centre‟ to bank onthe brand recall „Gromor‟ has within the farming community of the state. “Gromor” is Coromandel‟sfertiliser brand and has huge brand equity in AP.Conceiving the Retail Business modelOriginally Coromandel developed the pilot stores around the existing businesses of fertilisers, micronutrients and pesticides with the focus on Farmer as a buying unit but during the journey of operating thepilot stores, Coromandel re-evaluated the business potential available in the rural markets and revisitedthe base strategy to extend the business model to incorporate the below mentioned business verticals.Thereafter the final business blueprint was prepared which focused on Rural Family as a buying unit i.e.the MGC‟s were setup as a „Destination Store‟ catering to the needs of entire rural household – Farmneeds, Home needs, Livestock needs.Farm needs – build lock-in through provide complete range of products (manufactured / traded) cateringto all stages of crop cultivation and services such as soil testing, field visits, field & productdemonstrations etc.Livestock needs – The cattle population in Andhra Pradesh is concentrated in rural areas. However, thereare limited organized player selling cattlefeed in rural markets as the concept of nutrient based feed forcattle has to be established. Customers are willing to spend on quality feed and feed supplements forcattle subject to availability and cost benefit advantages.Home Needs – aspirations in rural markets and rural customer‟s preference for urban lifestyles are on therise (refer Annexure C, Changing pattern & Trends in Rural consumption). Customers are willing tospend and demand wider range of quality products at reasonable prices.The gestation period for bringing about the change in rural consumer behavior to adapt to organizedretailing is relatively high and requires a lot of effort at grass root level when compared to urban retailing.Some of the factors impacting customer behavior include: a. Low literacy levels among farmers and therefore resistance to change from deep-rooted beliefs in traditional methods and practices of agriculture which have outlived their utility
  5. 5. b. Farmers are risk averse and lie at the lower end of risk-return spectrum and hence will avail of such services only if it is offered by a trusted player. This works as a huge competitive advantage in Coromandel‟s favour as our brands are four decades old c. Traditional channel are credit oriented where the dealer extends credit to farmers for the purchased products. The orientation has to shift to cash and carry modelThe base strategy was to capture the major share of farmer‟s wallet spent on Farm needs (Agri Inputs, land preparation, crop harvesting etc) and Livestock needs (Veterinary feed) by providing the right products and services resulting in increased crop yield and livestock productivity and thereby enhancing his income levels. Further provide avenues through assortment of Home needs (FMCG, Apparels, footwear, home appliances etc) to spend the additional income to meet their aspirations of a better lifestyle. Figure 2 illustrates Coromandel‟s Retail strategyObjectives of Coromandel‟s Rural retailing venture  Develop viable alternative distribution channel for Coromandel‟s products so as to reduce dependence on dealer network  Supply products and solutions in order to improve the earning capabilities of the farmers and thereby improve their lifestyles  Lock the customers for obtaining competitive edge  Capture the emerging opportunities in rural areas for providing emerging lifestyle products at the nearest locations  Provide marketing solutions for the farm producePositioning of Mana Gromor Centres  Convenience, Reliability and Experience as the core value propositions  Marginally high prices with high level of services and knowledge  Training and education to the customers on products and services  Field visits, new product introduction and special discounts for loyalty members  Better buying ambience. Bridging infrastructure gaps between urban and rural areas  Relationship based marketing
  6. 6. Section: ImplementationJourney of MGC rollout across Andhra PradeshIn FY 2007-08, as part of business strategy to provide Agri solution and reach farmers directly,Coromandel opened 20 pilot retail stores in rural Andhra Pradesh. Free soil testing within the MGC lab,technical advice on crops, training programmes in exclusive training room at MGC and field visits bytechnically trained Field Sales Associates (FSAs) were provided through the outlets in addition to sellingfertilizers, pesticides and specialty nutrients.During its journey of operating the pilot stores, Coromandel re-evaluated the business potential availablein the rural markets, as explained in the previous section, and came out with the redefined business model.The roll-out was planned to cover all potential locations in Andhra Pradesh and then expand to otherstates where Coromandel‟s products enjoy high brand equity.Subsequently, 426 potential locations covering the entire length and breadth of state were identified. Thelocations were screened using various filters of crop acreage, per capita income, catchment population,access to transportation etc. 403 retail stores were launched within 1 year in 2008-09 making it one ofthe fastest retail launch in the country. The speedy implementation was done with a view to create ahuge entry barrier for the competition planning to enter AP markets and to leverage on the relationshipand goodwill created with farmers to create a strong base for other businesses. The total number of storeswill be increased to 1000 by expansion into Tamil Nadu, Karnataka, Maharastra and Orissa.Mana Gromor Centres are located in tier 3 & tier 4 towns having local population of 20,000 – 40,000. Thecustomer segment targeted is farmer and non farming community in the village/town. Each MGC has acatchment of about 20-30 villages with a population of about 50,000. Each village has an average of 1000households and acreage of 1500 acres.Mana Gromor Centre Layouts (Figure 3) a. MGC is present in the marketplace which is frequented by farmers and local population like b. The floor space ranges from 2500 to 4000 sft area and have two sections physically separated by glass partition. 40% of floor area is a designated Agri section containing products catering to Farm and Livestock needs and 60% of floor area is designated LSP (Life Style Products) section containing products catering to Home needs. c. Each MGC has a separate training enclosure equipped with LCD projectors, DVD players etc where all farmer meetings, crop seminars, farmer trainings are imparted. This is a unique concept implemented in our Retail model. d. 1 Soil test lab is present between 20 MGC‟s where all soil samples are analysed and nutrient recommendations are provided to farmers based on soil analysis report.
  7. 7. Rome wasn‟t built in a day!!! Project executionCoromandel organized eleven teams with internally available resources to carry out the task of setting upof MGCs across the state. The teams functioned parallelly to make MGC ready for business. Manpowerfor these teams was drawn from various functions of the company like Plant engineers, Zonal managers,Marketing officers, HO marketing team, HR, Training, Admin, IT, Finance, Secretarial and Legal etc.The eleven teams anchored the various stages for NSO launch. 1. Site identification team 2. Site finalization and negotiations team 3. Legal appraisal team 4. Site handover team 5. Civil works team 6. Govt approvals & licensing team 7. Interior renovation team 8. Startup utilities team 9. IT infrastructure & ERP installation team 10. Recruitment and Training team 11. Store startup teamResult - 403 MGC‟s setup and made operational as part of business plan for 2008-09Some of the highlights of teams working on the project were: a. Evaluated 1500 sites to zero-in on the final 426. All sites were located in tier 3 & tier 4 towns b. Negotiated lowest rentals in the industry – average rental @ Rs 7/- per sft c. More than 1000 agreements screened with owners for legal appraisal d. Total 2200 different statutory licenses obtained e. Lowest cost of interiors across industry @ Rs 6 lakhs per store f. Hired and trained 2000+ employees to work in outletsand many such more !!!!!Challenges along the wayDoing business through MGCs was not a smooth sailing. It had its share of challenges along the way. Dealers across the state played spoilsport as the supplies to them were restricted thereby impacting their margins Since fertiliser is an essential commodity, the allocation for distribution is done through state agriculture department. Unnecessary intervention of state government officials especially Agriculture Officers and political leaders while allocating fertiliser stocks to MGC Huge crowds outside stores for fertiliser demand which tends to become violent and unmanageable at times when fertiliser stocks are not available Unavailability of basic infrastructure facilities like banks, power, net connectivity at various location Misinterpretation of MGC as an Agri inputs only store due to limited awarenessCompetitive advantage through field organization structureThere are two unique positions in Coromandel‟s retail setup which are critical in driving the concept oforganized retailing in Rural markets  Area Manager Marketing (AMM) – covers catchment area of 10 -12 MGC and responsible for demand generation and establishing the retail concept. Anchors brand promotion at field level, farmer trainings, field visits, field demonstrations, Agri technical training to retail outlet staff
  8. 8.  Field service associate (FSA) - Field personnel have mobikes covering 12 to 15 villages each. They report to AMM and carry the brand promotion work at village/field level and are responsible for generating store walk-ins Customer Relations  Complete data collection for all big famers – 130,000 data collected  Loyalty cards issued for paid membership services - 70,000 enrolled already  Field visits, new product introductions and special discounts for members  Field clinics, soil tests and product demonstration for member farmers  Attending to customers queries through toll-free helpline „Hello Gromor‟  Product specific meetings in villages MGC Business categories Currently Coromandel is operating 16 business verticals across Agri, Veterinary & Lifestyle segments with each of them having various product categories. Business categories in Agriculture vertical Specialty Farm New Fertiliser Pesticides Seeds Services Nutrients Equipment Technology• Own • Compost • Own • Cotton • Sprayers • Magik Bag • Ploughing• Traded • WSF • Traded • Maize • Implements • Tarpaulins • Nursery• Customized • G-Sulphur • Household • Vegetables Raising • Zinc pesticides • Transplanting • Boron • Membership • New PGRs Display of Agri category Mana Gromor has tie ups have been made with Indian companies like RCF, MCF, KHRIBHCO, Zuari, Nuziveedu, Pioneer, Raasi etc and MNCs like Bayer, Syngenta, DuPont, Monsanto for the supply of entire range of agri-inputs.
  9. 9. Business categories in Veterinary vertical: Feed, Feed supplements & MedicinesBusiness categories in Lifestyle Products verticalLifestyle products are sold through our outlets under the brand name „Mitra.‟ 100 „Mitra‟ outlets areopened across Andhra. Mitra store – Exclusive outlets for Lifestyle producta Apparel division of „Mitra‟ outlet showcasing „Bhumika Chawla‟ as the brand ambassodor General Home CDIT Apparels Footwear Services Merchandise furnishing • Home • Men • Men • Plastics • Bed Linen • Life & Health • Kitchen • Women • Women • Steel • Bath linen Insurance • General • Kids • Kids • Gifts & Toys • Education electrical • Accessories • Stationary • Telecom • Luggage
  10. 10. Each of these Mana Gromor centers provides services in addition to the products. Services offered atMGCs include1. Soil testing for 5 nutrients (NPKS&Zn) - Soil testing is the foremost important tool for thefarmer to know about the fertility status and deficiency of nutrients of their field. Coromandel operates 22stationary soil test labs in Andhra Pradesh. All the labs are located at 22 different locations spreadthroughout the state for easy access to the farmers.Major Nutrients like Nitrogen, Phosphorus, Potassium and secondary nutrient Sulphur is analyzed in allthe 21 labs located in Managromor retail centers. All major and micronutrients are analyzed inVishakapatnam Factory lab. Leaf analysis is also done in Vizag lab. All soil testing services are done freeof cost for the farmers starting from collection of samples, analysis, generating recommendations usingcustomized software and handing over the soil test result report to the farmer at his doorstep.All equipments, chemicals and procedures adopted/practiced in the soil test labs are as per therecommended technical guidelines. Spectrophotometer for Phosphorus, Flame Photometer for Potassium,Nephlometer for Sulphur and Atomic Absorption Spectrophotometer (AAS) for all micronutrients isbeing used to give the best service to farmers. Soil Testing in Progress at Coromandel MGC labsApart from testing soils in the labs coromandel extension team is involved in field testing (qualitative) of soil forOrganic Carbon and Sulphur. Trained personnel with field kits do the testing in the farmers field and results areinstantly given to the farmers.Coromandel operates three soil test labs apart from the above 22 labs using „Alternate Analytical Technology‟ forsoil testing. This technology is developed after three year intensive research by Shri AMM Murugappa ChettiarResearch Centre (MCRC) and IIT, Chennai. The project is promoted by Department of Science and Technology,Govt of India and by Murugappa Group. The technology works on chromatogram technique and is cost effective.Using this technology all soil macro and micro nutrients can be tested in the lab at low cost and results can be giventhe next day to farmers. But this testing method is yet to be fully established.2. Crop diagnosis visits - FSAs visit 2-3 villages everyday and make field visits to diagnose any symptoms ofpests and diseases and recommend required control measures. FSAs are thoroughly trained through a dedicatedtraining team and Hello Gromor personnel.
  11. 11. Field Visits and technical advice to the farmers3. Technical help and training at the MGCs – Every Mana Gromor Center has a farmer training room ofabout 100-200 sft. Regular training programmes are held in the MGC as well as in villages to keep the farmersupdate about the latest trends in agriculture. A bi-monthly technical Newsletter which gives details about seasonalagricultural practices and recommendations, specific nutrient schedules and pest management solutions is circulatedamong the farmers. MGCs are also equipped with a miniature agricultural library as well as „interactive Kiosks‟which give problem specific solutions to the farmers. In-store Farmer Training Programmes4. Resolution of farmer‟s queries through Hello Gromor – It is a Toll Free information servicescenter with 365 days of operation which resolves queries with the help of technically sound graduates. HelloGromor disseminates Agriculture related information to the farmers in order to reduce technology gaps between Labto field. It also resolves the queries and complaints of farmers with respect to farming. Special calls are also made toMGC farmers to provide Technical advice during season, and provide online information to farmers on weather,commodity prices to customers pertaining to specific market and crop.
  12. 12. Hello Gromor – Farmer Interaction center7. Veterinary Care -Cattle need to be reared in a more professional way to increase the income to the farmersby increasing the milk productivity. Recognizing this, MGCs have conducted dedicated Veterinary camps incollaboration with local Veterinary doctors. Camps enabled the farmers to understand the need for balancednutrition and quality feed to their cattle. Veterinary Camp in progress 5. Farm Mechanization Services- Recognizing the difficulties faced by the farmers to hire labor during the peak crop season like – Paddy transplantation and harvesting, Coromandel introduced „Farm Mechanization Services‟ on pilot basis. Coromandel operates its own tractors, rotovators and Transplanters to do ploughing, puddling toi raise the nursery and transplant in the farmer‟s fields. This has given good response as it tackles the existing problem.
  13. 13. Paddy seeder used in nursery and Transplanter used in the main fieldServices provided by the MGCs are coordinated with the products offered to the farmers. Thisgives the farmers advantage to understand the right usage of the product at the right time in rightdosage.„Affects of „Mana Gromor‟Coromandel has emerged as no.1 in Fertilizer sales with a Market share of 50% (26% Retail), andSpecialities with market share of 65% Andhra pradesh. The company is no.2 in Pesticide sales with 12%market share ( 7% retail). Godavari Gold, Veterniary Feed and farm mechanization services are soldexclusively through mana gromor centers.Recognition to „Mana Gromor‟ FAI award Nominated for ET retail awards 2009-10 in „Rural Retail Categorty.‟

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