6 6

CHAPTER - 4

RURAL MARKET AND CORPORATE

STRATEGY
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INTRODUCTION

The rural market has changed drastically in the past one decade. A decade ago, the

rural market was more unstructured and was not a prioritized target location for corporates.

Very few companies, mainly the agro-based ones, were concentrating in these markets

There were no innovative strategies and promotional campaigns. A distribution system did

exist, but was feeble. Illiteracy and lack o f technology were the other factors leading to the

poor reach o f products and lower level o f awareness amongst villagers.

Gradually, corporates realised that there was saturation, stiff competition and clutter in

the urban market, and a demand was building up in rural areas. Seeing the vast potential o f

75 per cent Indians living in rural areas, they started focusing on these unexplored, high-

potential areas. As a result, retail outlets have sprung up in practically all the villages that

store products o f various brands and categories. Also, high congregation areas, like fairs,

haats, markets etc. are proving to be an important marketing tool since clusters o f target

audience can be tapped at the same time and place. Location plays a big role in marketing.

Therefore, if a product is for kids, anganwadis and schools are a good place to tap them and

their mothers. Similarly, mandis and village influencers act as a catalyst in pushing a

brand/produet.
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STRATEGIES IN RURAL M ARKETING IN THE MODERN SCENARIO

Dynamics o f rural markets differ from other market types, and similarly rural

marketing strategies are also significantly different from the marketing strategies aimed at

an urban or industrial consumer. The winning strategy is to focus on the core competency

such as technological expertise to design specific products for the rural economy. The most

remarkable example in this context is the launch o f sachets which has transformed the rural

market considerably as packaging in smaller units and lesser-priced packs increases the

product’s affordability. Also companies like HLL (now HUL) and Nestle who have adopted

this strategy have benefited tremendously. Another case is o f Britannia with its Tiger brand

of low priced and conveniently packaged biscuits becoming a great success story in rural

markets.

Along with the cultural dynamics, the needs and latent feelings o f the rural people

have to be well understood before launching products in rural segments. Marketers would

do well to first understand this and then designing products accordingly. For example,

Cadburys has launched Choco Bix, a chocolate flavored biscuit which is based on the

consumer insight that rural mothers opt for biscuits rather than chocolates for their children.

Spurious Products:

Another very important factor that needs to be looked at is the proliferation of

spurious products. Majority o f the rural masses are illiterate people and they identify a

product by its packaging (color, visuals, size etc.). So it becomes very easy for counterfeit
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products to eat into the market share o f established reputed brands. The retailer also gets a

larger profit on selling the counterfeits rather than the genuine products and hence is biased

towards the fakes. Spurious products are look-alike products with similarity in packaging

and minor alterations in name. They can be divided into two categories:

• Pass- off or me-too products - that use names, which sound similar in spelling to the

popular brand.

* Counterfeits- fake products, which bear the identical name, packaging, graphics,

colour scheme and even the genuine manufacturer’s address.

Some of the spurious products that came across during the field study are projected in

Table 4.1 below: •

Table: 4.1

Spurious Names o f Leading Brands

Original Brand Spurious Product

Lifebuoy Jifeboy
Fair & Lovely Cream Funny & Lovely Cream

Ponds Telcum Powder Bonds Talcum Powder

Nirma Neerbha
Dabur Amla Dabar Amla, Delux Amla
Tata Teta, Teja
Boroline Bonoline, Boniline
Clinic Plus Shampoo Clamic Shampoo
Source: Field Survey
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The spurious products are doing the rounds o f rural markets, which pose considerable

challenge to rural marketers.

Strategies to Curb down Spurious Products:

i) To adequately concentrate on educating the villagers on brand quality as well

as prime need for quality.

ii) Improve distribution and make the product available in the remotest part if

possible, including haats. The corporates also need to pay attention to the

importance o f haats, where the incidences o f fakes are the highest.

iii) Rural retail sales schemes can ensure trade support.

iv) Rural consumer can be targeted for the launch o f lower-end range products.

Franchisee units could be developed to manufacture these lower-end products

with a highly localised coverage.

The rural market remains quite price-sensitive and thus squeezing costs at every stage

is o f vital importance. Some FMCG giants like HUL are in process o f enhancing their

control on the rural supply chain through a network o f rural sub-stockists, who are based in

the villages only. Apart from this to acquire further edge in distribution HUL has started

Project Shakti in partnership with Self Help groups of rural women. A very significant step

for change could be an effort to directly tap the haats, mandis, melas and local bazaars

which provide an opportunity o f promoting the brand in front of a large congregation o f

rural consumers. '

Finally an effective rural strategy for FMCG companies must include the use of

traditional media for creating awareness about their products in the rural markets. The
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traditional media, with its effective reach, powerful input and personalized communication

system will help in realizing the goal. The advantages of traditional media which make it a

powerful marketing communication channel are that its accessibility is high, it involves

more than one sense, interest arousal capability is high and minimum cost. Brooke Bond

Lipton India Ltd (BBLIL) markets its rural brands through magic shows and skits.

CORPORATE STRATEGY IN THE RURAL MARKET VIS- A- VIS FMCG

In several categories, rural India already accounts for the lion's share. According to

the National Council o f Applied Economic Research (NCAER), an independent, non-profit

research institution, rural households form 71.7% of the total households in the country.

Spending in this segment is growing rapidly and consumption patterns are closing in on

those o f urban India. Jagmohan Singh Raju, a professor o f marketing at Wharton, says: "No

consumer goods company today can afford to forget that the rural market is a very big part

o f the Indian consumer market. You can't build a presence for a brand in India unless you

have a strategy for reaching the villages." Several European multinational firms — and a

few U.S. firms -- have been making inroads into rural India for years. Companies such as

Unilever, Phillips and Nestle have long been known to India's rustic dukaandaars, or

merchants. Among U.S. firms, companies such as Colgate and Gillette have made

considerable headway. According to Raju, marketing to rural customers often involves

building categories by persuading them to try and adopt products they may not have used

before. "A company like Colgate has to build toothpaste as a category, which means

convincing people to change to toothpaste instead o f using mem twigs to clean their teeth,

which was the traditional practice." This is difficult to do and requires patience and

investment someone to switch brands. Companies that have figured this out are doing better
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in the villages than in the cities. Soft drinks giant Coca-Cola is growing at 37% in rural

markets, compared with 24% in urban areas. According to Hansa Research, a market

research firm that has published a Guide to Indian Markets 2006, the penetration of

consumer durables has risen sharply in India's villages between 2000 and 2005. In color

TVs, sales are up 200%; in motorcycles, 77%. In absolute numbers, however, the

penetration is still low. Coke, for instance, reaches barely 25% of the rural market.

This means the upside potential is huge for companies that develop effective rural

marketing strategies. According to NCAER, the low penetration rates can be attributed to

three major factors: low income levels, inadequate infrastructure facilities and different

lifestyles. But income levels are going up, infrastructure is improving and lifestyles are

changing. Almost a third of the rural population now uses shampoo compared with 13% in

2000, according to Hansa Research. FMCG and consumer durables companies have in the

past tried tinkering with all the four 'P's — product, pricing, promotion and place-- of the

marketing mix. Hindustan Lever —which changed its name to Hindustan Unilever to reflect

the fact that it is the Indian subsidiary o f the Dutch conglomerate -- is among India's largest

FMCG companies. It has been highly successful in marketing in rural India and has been a

pioneer in reaching out to the smallest o f villages with innovative products such as single­

use packets o f shampoo that sell for a penny.1

It becomes amply clear that rural India has to be the hot target in future for FMCG

companies as it presents a plethora of opportunities, all waiting to be harnessed. Many o f

the FMCG companies are already busy formulating their rural marketing strategy to tap the

potential before competition catches up. With extensive competition not only from MNCs

but also from the numerous regional players viz., Cavin Kare (Chik Shampoo, Meera

Herbal Powder, Fairever Cream and so on), Anchor (100 per cent vegetarian toothpaste),
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Ghadi detergent powder and Power soap are proof that regional brands can become brands

to reckon with. And not to forget Nirma, the most enduring example o f a brand that began

as a regional player and is now a giant. Companies all biggies in the industry be it HLL,

Marico, Colgate-Palmolive or Britannia, are showing deep interest in rural India. However

not everything is all rosy and there exist some gray areas in the rural strategies also. To

increase sales, growing the consumer pie rather than sharing it, has emerged as one of the

key strategies being used by FMCG majors. Offering more product variants, categories,

price points, sizes and different marketing and distribution channels, all form part o f a

FMCG corporate strategy. Currently, rural markets account for below 10 per cent o f the

food major’s revenues.

The following discussion on select companies will help in gauging the extent o f shift

in focus o f the FMCG giants towards rural market.

Hindustan Unilever Lim ited:

Hindustan Unilever Ltd, previously Hindustan lever Ltd is a 51 per cent owned

subsidiary o f the Anglo-Dutch giant Unilever, which began operations in India in 1933 as a

wholly- owned subsidiary o f the Unilever group. It set up manufacturing facilities in

various parts o f India like Trichy (in Tamil Nadu), Ghaziabad, Haldia (in West Bengal),

Taloja (in Maharashtra) and Jammu (in Jammu and Kashmir). The product portfolio o f the

company includes household and personal care products like eible oil ((Dalda), soaps,

(Lifebuoy, Lux, Liril) shampoos (Sun silk, Clinic) and oral care products (Close-up and

Pepsodent) detergents, skin care products, colour cosmetics, deodorants and fragrances. It is
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also the market leader in tea, processed coffee, branded wheat flour, tomato products, ice

cream, jams and squashes.

HLL identified 30 power brands to help to drive growth. The company focused on

rural markets, where the penetration levels o f its brands could be increased significantly.

HLL enjoys a formidable distribution network covering over 3,400 distributors and 16

million outlets. In the fixture, the company plans to concentrate on its herbal health care

portfolio (Ayush) and confectionary business (Max). Its strategy to grow includes focusing

on the power brands' growth through consumer relevant information, cross category

extensions, leveraging channel opportunities and increased focus on rural growth.

H industan Unilever Limited Strategies for the R ural M arkets:

By 1990s, FMCG growth in the urban markets had slowed down, and the rural market

had become a significant destination for FMCG marketers like never before. Some o f the

significant strategies adopted by the company are noted below:

i) Project Stream line:

In 1998, HLL conceptualized “Project streamline” to enhance control o f the rural

distribution and increase rural retail penetration from 50,000 to 100,000 retail outlets by

1999.The project aimed at covering 50 per cent o f the rural population by 2003.HLL

appointed Rural Distributors (RD),under who were attached 15-20 sub- stockists These

sub-stockists, who were located in the villages, were expected to drive distribution in the

neighboring villages through unconventional modes like tractors, bullock carts etc. The

project was rolled out in select states where the terrain was very bad or the market was
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under-developed, making any form o f distribution unviable. This project helped HLL in

extending its rural reach to about 37 per cent in 1998 from 25 per cent in 1995.

ii) Project Bharat:

In 1998, the Personal Products Division of HLL initiated a massive rural home-to-

home exercise, a customer centric approach through a direct marketing program named

‘Project Bharat’ on realization that consumption o f personal products among rural

consumers was very low. It saw 30 per cent o f its total personal products growing to

contribute 50 per cent five years down the line. In the first phase, they covered 11.5 million

rural households and increased awareness by 41 per cent.

During the course o f the project, company visited villages across the country and

distributed samples of low-unit price packs o f shampoos, toothpaste, talcum powder and

skin cream at Rs. 15.To build on the success o f this initiative, HLL used the ‘Integrated

Rural Promotion Van’ program to ensure that its products reached even villages where the

population was over 2000 people. The ‘Project Bharat’ program enabled HLL to reach out

to 13 million rural households by the end o f the year 1999. It enabled higher growth rates of

its products in rural areas compared to urban areas. In August 1999, it associated with the

Indian Medical Association (IMA) to launch a nationwide Community Dental Health

Campaign to enable its Pepsodent toothpaste to be a market leader in the oral health

category. About 200 health fairs were organized especially in rural areas and public health

centers were targeted for demonstrations on brushing habits and other aspects of dental

care.

iii) Project Millennium:

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It was launched in 2000, aimed at increasing its share in the tea market. The tea-

vendors(small tea shops) that dotted the rural country side were targeted with a specially

developed soluble ball (called ‘chak-ki-goli ’). There were priced at four for a rupee and

helped create a strong tea that was preferred by the rural people.

iv) Project Shakti:

In 2001, HLL embarked on the ‘Project Shakti’ program that has received a lot o f

media attention, as its objective was to empower underprivileged rural women. The Shakti

program covered 50,000 villages in 12 states, including Andhra Pradesh, Karnataka,

Gujarat, Madhya Pradesh, Tamil Nadu, Chattisgarh, U ttar Pradesh, Orissa, Punjab

Rajasthan, M aharashtra and W est Bengal.

HLL has endeavored to use IT for furthering its rural marketing efforts in the late

2003. It launched the i-shakti (an internet based rural information service) in Andhra

Pradesh that provided solutions to key requirements o f the rural people in areas o f

education, vocational training, agriculture, health and hygiene. In addition, HLL also

launched a social communication program called ‘Shakti Vani’ under which women are

trained in health and hygiene issues. HLL embarked upon a similar objective called

‘Lifebuoy Swasthya Chetana’ that, it claims, is the single largest rural health and hygiene

educational program, this was started in 2002 and covered about 15,000 villages in eight

states. HLL has just launched a green variant of Lifebuoy soap, which, it hopes will be a winner in

the rural areas.

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Colgate-Palmolive India:

Colgate Palmolive India is a 51 per cent subsidiary o f Colgate Palmolive Company,

USA. It is the market leader in the Indian oral care market, with a 51 per cent market share

in the toothpaste segment, 48 per cent market share in the toothpowder market and a 30 per

cent share in the toothbrush market. The company also has a presence in the premium toilet

soap segment and in shaving products, which are sold under the Palmolive brand. Other

well- known consumer brands include Charmis skin cream and Axion dish wash.

The company’s strategy is to focus on growing volumes by improving penetration

through aggressive campaigning and consumer promotions. The company plans to launch

new products in oral and personal care segments and is prepared to continue spending on

advertising and marketing to gain market share. Margin gains are being targeted through

efficient supply chain management and bringing down cost o f operations.

Colgate Palmolive Rural Marketing Strategy:

Colgate-Palmolive marketing strategy ‘Super Shako’ for rural India is one of the

distinct rural marketing initiatives o f the company. It selects villages for its promotion

efforts. The strategy follows the value pouch route for toothpowder and non-conventional

media (road shows, contests, sampling, posters, wall paintings and screening o f popular

films).the implementation o f this strategy is by the selection o f two villages within a radius

o f 5 km o f every town for the promotional activities.

 The company has planned developing the market for its toothpowder because o f its

potential. Over 66 per cent o f rural households still use non-dentifrice products like ash,

charcoal, neem sticks, salt, husks and tobacco. Following the lowering o f excise duties for

toothpowder, Colgate has reduced prices even further to reach a wider cross-section of

people. Colgate toothpowder is being retailed at Rs.33.75, rs. 18.75 and Rs.9.80 for 200 gm,

150 gm and the 50 gm pouch retails at Rs.6.00.The modem dentifrices are perceived as

expensive and beyond the reach o f everyone in the family. By offering Colgate

toothpowder in more affordable pouch packs which cost 40 per cent less for the same

quantity, the company aims to encourage the conversion o f the entire family to modem

dentifrices

Project Jagruti in the second phase by Colgate Palmolive India was a village

consumer contact programme in 2001. It increased penetration o f Colgate Dental Cream by

doubling the villages from 33,000 to 55,000, reaching to a million houses. Such projects

lead to increased penetration o f products in rural areas.

Coca- Cola India:

Coca-Cola resumed its India operations in 1993. The Coca-Cola system in India

comprises 27 wholly company-owned bottling operations and another 17 franchisee-owned

bottling operations. A network o f 29 contract-packers also manufactures a range o f

products for the company. Leading Indian brands Thums Up, Limca, Maaza, Citra and

Gold Spot exist in the Company's international family o f brands along with Coca-Cola, Diet

Coke, Kinley, Sprite and Fanta, plus the Schweppes product range.
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Coca Cola Strategy for the R ural Sector:

Coca Cola returned to India in 1993 after a gap o f 16 years, and has made significant

investments for budding its business. CCIs rural marketing strategy was based on three As

-Availability, Affordability and Acceptability.

Availability: emphasized on the availability o f the product to the customer;

Affordability: emphasized on the product pricing and

Acceptability: focused on convincing the customers to buy the product.

Availability: Once CCI entered the rural market, it focused on strengthening its

distribution network there. The company did not go for centralized distribution system, but

instead opted for a hub and spoke distribution system. Under the hub and spoke

distribution system, stock was transported from the bottling plants to hubs and then from

hubs, the stock was transported to spokes which were situated in small towns. These

spokes fed the retailers catering to the demand in rural areas. CCI not only changed its

distribution model, it also changed the type o f vehicles used for transportation. The

company used large trucks for transporting stock from bottling plants to hubs and medium

commercial vehicles transported the stock from bottling plants to spokes. For transporting

stock from spokes to village retailers the company utilized auto rickshaws and cycles.

Affordability:

In 2002, CCI launched 200 ml bottles (Chota Coke) priced at Rs 5.which was

strategized afresh after the earlier less popular 300 ml for Rs. 10 failed to make its mark. It
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was widely felt that the 200 ml bottles priced at Rs. 5 would increase the rate of

consumption in rural India. CCI also targeted the rural consumer aggressively in its

marketing campaigns, which were aimed at increasing awareness o f its brands in rural

areas.

Acceptability:

The initiatives o f CCI in distribution and pricing were supported by extensive

marketing in the mass media as well as through outdoor advertising. The company put up

hoardings in villages and painted the name Coca Cola on the compounds o f the residences

in the villages. Further CCI also participated in the weekly mandies, by setting up

temporary retail outlets, and also took part in the annual haats and fairs-major sources o f

business activity and entertainment in rural India. CCI also launched television

commercials (TVCs) targeted at rural consumers. In order to reach more rural consumers,

CCI increased its ad-spend on Doordarshan.

For its distribution, it adopted ‘hub and spoke’ distribution system. The spoke is

typically closest to the retail outlets and is serviced by a hub distributor who is supplied

from the plant or company’s warehouse. This format allows for large loads traveling

longer distances and short loads doing short distances which are cost effective.
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Fig: 4.1 CCIs Rural Distribution Network

Source; ICFAI Centerfo r Management Research

PepsiCo India:

PepsiCo is a world leader in convenient foods and beverages, with revenues of about

US$ 27 billion. PepsiCo brands are available in nearly 200 markets across the world. The

company has an extremely positive outlook for India. "Outside North America two of our

largest and fastest growing businesses are in India and China, which include more than a

third o f the world's population" (PepsiCo’s annual report). PepsiCo entered India in 1989

and is concentrating on three focus areas - soft drink concentrate, snack foods and
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vegetable and food processing. PepsiCo's success is the result o f superior products, high

standards o f performance and distinctive competitive strategies.

PepsiCo India Rural Market Initiative:

The company was able to establish itself in the Indian market in a relatively short

period, Pepsi was able to create a strong brand identity and recall among consumers. In

order to boost its sagging bottom-line, from its stagnating urban sales and low growth, it

decided to focus on the rural market. The company was also focused on three principles-

availability, affordability and acceptability as followed by Coca Cola India (CCI) as

discussed in the previous case. The company felt that availability was the key to the rural

markets. In a nation wide exercise in early 2000s, Pepsi moved towards doubling the

number o f its distributors, providing compact refrigerators and it also invested in vehicles

suitable for transporting stock along the long and rough routes in rural areas.

In 2002, Pepsi undertook a rural activation program to increase its presence in the

rural markets. For its distribution, it adopted ‘hub and spoke’ distribution system similar to

the one adopted by CCI

Apart from the distribution set up, Pepsi also looked at the pricing aspect. The

introduction o f 200 ml coke bottles for Rs.5 literally forced Pepsi to decrease price o f its

300 ml bottles, to as low as Rs. 6 for a bottle o f 300 ml in some regions. Though the price

cut would have an adverse impact on the company’s bottom line, it helped the company to

increase volumes.

Moreover, in the rural areas with the penetration o f cable television, consumers were

aspiring urban lifestyles, particularly on social occasions when they felt their prestige was

on display. This is why many wealthy rural consumers had started offering cool drinks
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rather than traditional drinks such as lassi and lemon juice, particularly at wedding

receptions. This offered a great market for the company.

Britannia India Ltd (BEL):

Britannia India Ltd was incorporated in 1918 as Britannia Biscuit Co Ltd and

currently the Groupe Danone (GD) o f France (a global major in the food processing

business) and the Nusli Wadia Group hold a 45.3 per cent equity stake in BIL through

AIBH Ltd (a 50:50 joint venture). The company manufactures biscuits, bread, and cakes

and has entered into dairy products like whitener, cheese and mineral water. BIL is a

dominant player in the Indian biscuit industry, with major brands such as Tiger glucose,

Marie gold, Pure Magic, Bourbon Little Hearts, Good Day, Milk Bikis and 50~50etc. The

company holds a 40 per cent market share in the overall organized biscuit market and has a

capacity o f 300,000 tonne per annum. Currently, the bakery product business accounts for

99.1 per cent of BDL's turnover. Britannia Industries Ltd (BEL) plans to increase its

manufacturing capacity through outsourced contract manufacturing and a greenfield plant

in Uttaranchal to expand its share in the domestic biscuit and confectionery market.

Britannia India Ltd (BEL) Rural Marketing Initiative:

Britannia has traditionally been an up market brand with products priced much higher

than what the purse o f the common man could afford. The branding o f earlier products was

also not in tune with the mass market, until the company set up a multi-functional task force

drawing talent from various departments such as Marketing, R&D and distribution to
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develop a product that delivers promise. The entire exercise was named “Operation

Storming” with the objective o f flooding the mass market. Britannia Tiger was launched

with the key promise o f providing health and energy. It was aimed at villages with a

population o f over 5,000 people because the company did not have distribution network set

up in villages below 5,000.

The primary target for Tiger was predominantly mothers in semi-urban towns and

villages. Consumer research revealed that good health is the overwhelming concern o f

mothers who choose snack options for their children. They identified their target mothers as

those who were keen on ensuring their children ‘become’ something in life and provide all

that is necessary towards that end.

Price:

The basic Tiger biscuit pack came in two sizes o f 75 gms and 100 gms priced

competitively at Rs.3 and Rs.4 respectively. The company adopted a number o f cost cutting

measures to keep the price competitive. Their supply chain was carefully scrutinized and

only those suppliers who could offer competitive prices were selected.

Promotion:

The product “Tiger biscuit” was promoted hugely during the World Cup Cricket

Matches. Village Mela was utilized as another alternative and also invested in the

Doordarshan sports. Point o f Purchase (POP) promotion material was used during the peak

seasons and metal plates also hung at shops stocking and selling Tiger biscuits. Van

promotion was also extensively used in rural areas. Special attention was paid to school

children.
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Distribution:

The tiger brand popularity in the rural market has paved way for the other up-market

brands like Marie-Gold and 50-50 to go to rural areas. Since, the rural market held the key

to this brand’s success. Britannia appointed new distributors who were holding FMCG

products such as detergents, batteries and tea. Tiger Oro heralded the entry o f Britannia into

paan shops. The brand is now being sold from about four lakhs outlets. In order to

strengthen their presence in the rural areas, Britannia has developed the concept of Rural

Preferred Distributors (RPDs). These are selected distributors in feeder towns who would

have the responsibility o f a finite rural area. There would be six smaller distributors

working under the main RPD, each having the sole responsibility for a particular village or

set o f villages depending on the size. The six smaller distributors would not be on Britannia

rolls, but would be responsible to the RPDs. The RPDs would get support from Britannia in

terms o f subsidized transport and promotion materials. The distributors get a margin o f five

per cent and the retailers get a margin o f twelve to fourteen per cent. The distributor passes

on a margin o f four per cent to the RPDs. The distributors have to generate volumes in rural

sales to get adequate profits.

Britannia followed a strategy o f first introducing and developing Tiger in regions

where the competitors was weak and then having consolidated their positions in these

markets, closing in on the competitor’s strongholds. In regions where the competitor was

strong, Britannia developed an intensive reach. It is estimated that the penetration rate o f

Britannia is 60 per cent in urban areas, while it is only 20 per cent in rural areas.
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F ig : 4 .2 S e g m e n ta tio n o f B is c u it M a rk e t o f B rita n n ia

F ig : 4 3 D is tr ib u tio n s y s te m o f B rita n n ia
 87

AMUL India:

The AMUL pattern o f cooperative farming represented a system that was collectively

owned, operated and controlled by the farmers. It was an integrated, three-tier structure that

procured, processed and marketed the produce. The tiers involved in the AMUL model o f

dairy farming included the village societies (responsible for primary produce and collection

o f milk), the district milk union (responsible for procurement, chilling and supply of

technical inputs) and the milk federation (responsible for processing and marketing o f the

final products.

The village cooperative society o f milk producers was the smallest and the basic unit

under the AMUL pattern. The Village Dairy Cooperative Society (DCS) was a voluntary

association o f milk producers wished to market their milk collectively. Any producer could

be a member o f the DCS by paying an entrance fee and buying a share o f the society. In

addition, every member was committed to sell surplus milk only to the cooperative after

meeting their family requirements.

As early as 1953,the cooperative realized that the assured milk market was inadequate

to absorb the additional milk produced in winter, which on an average was 2.5 times more

than production levels in summer. The farmers were therefore forced to sell the large

surplus at very low rates to middlemen. As a remedy to the situation, a Rs.0.5 million plant

to manufacture milk powder and butter was completed in 1955.The federation slowly

diversified to include other milk products and as o f 2004, its product portfolio included a

wide range o f products: milk powders, liquid milk, butter, ghee, cheese, chocolate, ice

cream, pizza, flavored milk etc.

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The essence o f the AMUL saga was not in the success it achieved in the

implementation o f modern technologies, or its wide range of products or the scientific

processes o f animal husbandry but the success lies in its rapid inroads it made to free rural

society o f its economic and social vices.

ITC Ltd:

Indian Tobacco Corporation Ltd is an associate of British American Tobacco with a

37 per cent stake. In 1910 the company's operations were restricted to trading in imported

cigarettes. The company changed its name to ITC Limited in the mid seventies when it

diversified into other businesses, While ITC is an outstanding market leader in its

traditional businesses of cigarettes, hotels, paperboards, packaging and agri- exports, it is

rapidly gaining market share even in its nascent businesses o f branded apparel, greeting

cards and packaged foods and confectionary.

ITC Rural Marketing Strategy through e-Choupai:

In 2002, one o f the ITC’s ongoing endeavor to help the rural market ecosystem,

initiated the e-Choupal, an innovative application o f new technology by ITC, one o f India’s

leading agri-business and consumer product companies. The e-Choupal platform has helped

farmers from being exploited by giving them customized information regarding their

products and prices. ITC has placed computers in the houses o f sanchalaks (lead farmers).

The company then fed daily market prices, weather forecasts and information on best

fanning practices through the Internet. This way all the farmers were aware o f the actual

prices for their products. The next step was to use this Internet channel to reverse-market

farm inputs (e.g., seeds, fertilizers, etc) to farmers.

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In December 2000, the company set up a web-site “Plantersnet”

(www.plantersnet.com), aimed at coffee planters in Karnataka. ITC set up 75 kiosks to

cover 6,000 coffee planters in 125 villages. The company launched “Aqua choupal”

(www.aquachoupal.com) in Andhra Pradesh in February 2001. Under this program, ITC

operated 55 kiosks covering 10000 shrimp farmers in more than 300 villages. In November

2001, ITC started its e-Choupal program (www.echoupal.com) in Uttar Pradesh eying at the

size of the wheat market in U.P. ITC’s cigarette distributors proved to be very useful while

setting up the wheat choupals. Since cigarette volume had reached a saturation point,

distributors were willing to try new revenue streams, and readily agreed to become

samyojaks. ITC was able to save up to Rs. 55-65 per tonne o f wheat and up to 10 per cent

o f the procurement cost through this program.

Dabur India Limited:

Established in 1884, Dabur India Ltd is the largest Indian FMCG and ayurvedic

products company. The group comprises Dabur Finance, Dabur Nepal Pvt Ltd, Dabur

Egypt Ltd, Dabur Overseas Ltd and Dabur International Ltd. The product portfolio of the

company includes health care, food products, natural gums & allied chemicals, pharma, and

veterinary products. Some o f its leading brands are Dabur Amla, Dabur Chyawanprash,

Yatika, Hajmola, Lai Dant Manjan, Pudin Hara and the Real range o f fruit juices.

Dabur has firmed up plans to restructure its sales and distribution structure and focus

on its core businesses o f fast-moving consumer good products and over-the-counter drugs.

Under the restructured set-up, the company plans to increase direct coverage to gap outlets
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and gap towns where Dabur is not present A roadmap is also being prepared to rationalise

the stockists' network in different regions between various products and divisions.

Marico industries Limited:

Marieo is a leading Indian Group incorporated in 1990 and operating in consumer

products, aesthetics services and global ayurvedic businesses. The company also markets

food products and distributes third party products. Marico owns well-known brands such as

Parachute, Saffola, Sweekar, Shanti Amla, Hair & Care, Revive, Mediker, Oil o f Malabar

and the Sil range o f processed foods. It has six factories, and sub contract facilities for

production. The overseas sales franchise o f Marico’s branded FMCG products is one o f the

largest amongst Indian companies. It is also the largest Indian FMCG company in

Bangladesh, The company plans to capture growth through constant realignment of

portfolio along higher margin lines and focus on volume growth, consolidation of market

shares, strengthening flagship brands and new product offerings (2-3 new product launches

are expected in 2004-05). It also plans to expand its international business to Pakistan.

Nirma Limited;

Nirma Ltd, promoted by Karsanbhai Patel, is a homegrown FMCG major with a

presence in the detergent and soap markets. It was incorporated in 1980 as a private

company and was listed in fiscal 1994. Associate companies’ Nirma Detergents, Shiva

Soaps and Detergents, Nirma Soaps and Detergents and Nilnita Chemicals were merged

with Nirma in 1996-1997. The company has also set up a wholly owned subsidiary Nirma
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Consumer Care Ltd, which is the sole marketing licensee o f the Nirma brand in India.

Nirma also makes alfa olefin, fatty acid and glycerine.

Nirma is one o f the most successful brands in the rural markets with extremely low

priced offerings. Nirma has plants located in Gujarat, Madhya Pradesh and Uttar Pradesh.

Its new LAB plant is located in Baroda and the soda ash complex is located in Gujarat.

Nirma has strong distributor strength o f 400 and a retail reach o f over 1 million outlets. It

plans to continue to target the mid and mass segments for future growth.

Cadbury India Ltd (CIL1:

Cadbury Indian Ltd is a 93.5 per cent subsidiary o f Cadbury Schweppes Pic, UK, a

global major in the chocolate and sugar confectionery industry. CIL was set up as a trading

concern in 1947 and subsequently began its operations with the small scale processing of

imported chocolates and food drinks. CIL is currently the largest player in the chocolate

industry in India with a 70 per cent market share. The company is also a key player in the

malted foods, cocoa powder, drinking chocolate, malt extract food and sugar confectionery

segment. The company had also entered the soft drinks market with brands like 'Canada

Dry’ and 'Crush', which were subsequently sold to Coca Cola in 1999. Established brands

include Dairy Milk, Perk, Crackle, 5 Star, Eclairs, Gems, Fructus, Boumvita etc. The

company plans to increase the number o f retail outlets for future growth and market

expansion.
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H J Heinz Co:

A US$ 8.4 billion American food major, H J Heinz Co comprises 4,000 strong brand

buffets in infant food, sauces and condiments. The company was the first to commence

manufacturing and bottling of tomato ketchup in 1876. In India, Heinz has a presence

through its 100 per cent subsidiary Heinz India Pvt Ltd. Heinz acquired the consumer

products division o f pharmaceutical major Glaxo in 1994. Heinz’s product range in India

consists o f Complan milk beverage, health drink Glucon-D, infant food Farex and Nycil

prickly heat powder, besides the Heinz ketchup range.

Nestle India Ltd (N ILI:

Nestle India Ltd a 59.8 per cent subsidiary o f Nestle SA, Switzerland, is a leading

manufacturer o f food products in India. Its products include soluble coffee, coffee blends

and teas, condensed milk, noodles (81 per cent market share), infant milk powders (75 per

cent market share) and cereals (80 per cent market share). Nestle has also established its

presence in chocolates, confectioneries and other processed foods. Soluble beverages and

milk products are the major contributors to Nestle’s total sales. Some o f Nestle’s popular

brands are Nescafe, Milkmaid, Maggi and Cerelac. The company has entered the chilled

dairy segment with the launch o f Nestle Dahi and Nestle Butter. Nestle has also made a

foray in non-carbonated cold beverages segment through placement o f Nestea iced tea and

Nescafe Frappe vending machines.

Carlo Donati, Chairman and Managing Director, Nestle India, observed that

generalizing the rural market can be dangerous’. “It is true that in today’s congested and
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difficult markets, both local and global, all FMCG as well as other companies or

corporations look and search for new opportunities, consumers and markets. Going rural is

a question any marketing person must have reflected on many times,” he said.

Nestle’s rural initiatives have largely been based on price-led initiatives. Brands such

as Maggi noodles and KitKat chocolates have been priced at Rs 5, and few other candy and

chocolate brands are priced at Rs 2 per unit. These price points not only help Nestle reach

more retail formats in urban markets, but also help in making inroads into rural markets.

Procter & Gamble Hygiene and Health Care Limited:

Richardson Hindustan Limited (RHL), manufacturer of the Vicks range o f products,

was rechristened 'Procter & Gamble India' in October 1985, following its affiliation to the

'Procter & Gamble Company', USA. Procter & Gamble Hygiene and Health Care Limited

(PGHHCL) acquired its current name in 1998, reflecting the two key segments o f its

business. P&G, USA has a 65 per cent stake in PGHHCL.

The parent also has a 100 per cent subsidiary, Procter & Gamble Home Products

(PGHP). The overall portfolio o f the company includes healthcare; feminine-care; hair care

and fabric care businesses. PGHH operates in just two business segments - Vicks range of

cough & cold remedies and Whisper range o f feminine hygiene. The detergent and

shampoo business has been relocated globally to Vietnam. The company imports and

markets most o f the products from South East Asian countries and China, while

manufacturing, marketing and export of Vicks and sanitary napkins has been retained in

India. The parent company has announced its plan to explore further external collaborations

in India to meet its global innovation and knowledge needs. Recently Godrej Consumer
 94

Products Ltd (GCPL) did something that it hadn't done before; it introduced smaller pack sizes of

some of its soaps and put them on the market for Rs 5.

Chennai-based CavinKare Products which makes hair dyes organizes live demonstrations in

remote areas where villagers get a free tinge of jet black or blonde or red - free of cost. Brooke

Bond Lipton India markets its rural brands through magic shows and skits. Reckitt and Coleman

uses NGOs in rural areas to educate customers about product benefits. Companies came up with

special rural products, like Chic Shampoo sachets @ Re I, Parle G Tikki Packs @ Rs 2,

customized TVs by LG, Shanti Amla oil by Marico. All these brought positive results for

them.
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REFERENCES

1. Marketing to Rural India: Making the Ends Meet: India Knowledge @ Wharton
(http ://knowledge. wharton.upenn.edu/india/article.cfm?articleid=4172, accessed on
07-02-2009).

2. http://www.wharton.upenn.edu/faculty/rajuj/html.