CHAPTER 1

1.0 INTRODUCTION

Agriculture produces account about one third of the total gross domestic product of our country and employ

nearly two third of the work force in India. After the green revolution there has been a stiff increase in the use of

inorganic fertilizer and pesticides. But now-a-days consumers have become more aware to the food safety and

simultaneously to the environmental issues. Organic farming has emerged as a solution to this apprehension. In

fact organic farming has developed into one of the most dynamic agricultural sectors. There has been a

tremendous growth with regard to the growth of the organic farming. So the organic farming has to be

understood as part of a sustainable farming system and a viable alternative to the more traditional approaches to

agriculture without compromising the yield. The sustainability of both agriculture and the environment has

become central to the today's common agricultural policy and in the mind of human being.

The relative advantages that we get by doing organic farming are described as follows.

1.1 ORGANIC FARMING

1.1.1 Improves Soil Porosity

The organic fertilizer improves the microbial activity, which is essential for fertile soil. Microorganisms break

down the organic materials, which is present in the soil making the nutrients readily available to plants. In

Compacted soils water and air are not easily entered which are required by soil microorganisms. But compost is

porous in nature and it helps in the microbial activity.

1.1.2 Reduces the Rate of Nutrient Release

Compost binds the nutrients in the soil making them available for plants to utilize over a longer period of time.

The slow release of nutrients insures plant roots will not burn as can happen when chemical fertilizers are used.

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Organically derived plant nutrients are slow to leach from the soil making them less likely to contribute to water

pollution.

1.1.3 Improves Plant & Root Growth

When organic fertilizer is part of the growing medium the plants grow stronger and have a lush appearance. It

adds not only organic material to the soil but a full spectrum of essential nutrients including trace elements such

as iron, manganese, copper, zinc and boron which are required for plant growth.

1.1.4 Improves Water Holding Capacity

The presence of organic matter can soak up water thereby increasing the soil's water holding capacity. This

helps the soil absorb water during rain or watering, and hold it for the use of plants between rain and watering.

1.1.5 Improves Resistance to Wind & Water Erosion

Adding organic fertilizer helps prevent wind and water erosion by increasing the availability of water and

nutrients to plants resulting in rapid, strong plant growth in areas prone to disease.

1.1.6 Suppresses Plant Diseases

The presence of beneficial soil organisms in our organic fertilizer can inhibit the incidence of disease causing

organisms. In essence some good bugs are added to compete with bad bugs.

Organic farming includes a whole lot of practices including rhizobium culture, azatobacterium, vermicompost

etc. out of which organic compost is one part. The present study is concerned with organic compost.

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Definition of Compost: “Composting” and “compost” are two distinct terms. The former refers to the bio-

oxidation process and the latter refers to the resulting product: stabilized organic matter. The definition of

compost can be given as “A solid mature product resulting from composting, which is a managed process of

bio-oxidation of a solid heterogeneous organic substrate including a thermophillic phase.”

1.2 CONTEXT

As part of its Rural Women and Sustainable Agriculture (RWSA) project the women groups with the help of

AKRSP (I) started the manufacturing of organic compost in Surendranagar programme area in 1994. Initial

results were encouraging. This led to increase in the number of women groups and this activity was adopted as

Income Generating Activity (IGA) in all the three programme areas of AKRSP (I), viz. Surendranagar, Bharuch

and Junagadh. This programme was aimed at generating income for women as well as women empowerment.

Since then the technology has improved and the number of women groups making organic compost has

increased. Now only in the Surendranagar SHT total number of bags produced in the year 2002 was about 4866.

Each bag contains 50 kg. of organic compost. The AKRSP (I) provides facilities like composting loans, interim

composting guidelines, technical assistance, raw material procurement and marketing of the product.

The organic compost made by women group in the programme areas of AKRSP (I) is of good quality. But due

to the lack of proper marketing effort as well as knowledge these groups are not able to sell their product

properly. For example, in year 2002 in Surendranagar SHT the total production of organic compost was 4866

bags while the total sale was only 3504 bags. These groups are capable of producing very high volume of

organic compost but lack of market and marketing knowledge hinder high sales. The organic compost sold

under the brand name VASUNDHARA is sold either by the women groups themselves or by the federation of

these groups. But the sales have remained stagnant or even declined. Here marketing strategies are limited to

word-of-mouth information by the collectors or core members of the federations. Moreover this brand is facing

very stiff competition from other brands of organic compost like Tractor, Maruti, Orgo, Nicast, Captain, Sardar

etc. Some other NGOs have also started producing organic compost in their respective programme areas. Apart

from organic compost the farmers in Gujarat use urea, DAP etc. extensively. The total amount of organic

compost consumption in Gujarat is quite limited compared to the total consumption of the chemical fertilizers.

The AKRSP (I) wants to increase the reach as well as the sales of the Vasundhara brand of organic compost. Till

3
now the reach is very limited and the marketing practices used are very rudimentary. The potential of urban

market has not been used at all. Only the nearby villages of the production centres have been targeted as market.

The distributors’ and dealers’ channel have not been utilized.

1.3 DECISION PROBLEM

The decision problems before the AKRSP (I) are

1. Whether to sale their product through dealers’ channel or use the existing method of marketing channel

i.e. the marketing done by the women groups themselves and by the federations or any other

alternatives.

2. Whether to launch the product in the urban market.

1.4 RESEARCH OBJECTIVES

1. To estimate the market demands in urban as well as rural areas.

2. To obtain the information about the organic compost market in rural as well as in urban area which

includes the information about the market structure, the competitors of the Vasundhara brand in the

market, their product, pricing strategy of the products, segmentation of the market, channels used and

their promotional strategy.

3. To obtain the information about consumers’ choice attributes while buying organic compost.

4. To suggest marketing plan for the Vasundhara brand of organic compost based on the above

informations.

1.5 SOURCES OF DATA/INFORMATION

1.5.1 Primary Sources

1. Special Estate Officer (Parks & Gardens), Ahmedabad Municipal Corporation (AMC).

2. Owners of parks and gardens.

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 3. Dealers and Agro centres in Ahmedabad, Rajkot, Surendranagar, Limbadi, Chotila, Sayla, Surat, Vyara,

Bardoli, Madhi, Rajpipla and Bharuch.

4. Nursery farm owners in Ahmedabad, Surat and Bharuch area.

5. Farmers in some of the villages of the above areas.

6. Manufacturers of organic compost as well as of Urea, DAP etc. e.g. Indian Potash Limited and Gujarat

Agro Industries Corporation Limited.

1.5.2 Secondary Sources

2 Literature from Ahmedabad Municipal Corporation (AMC).

3 Literatures from AKRSP (I) and other literatures.

4 Mamladar, Talluqa Office, Mandvi

5 Forest Department, Mandvi

1.6 SCOPE OF THE STUDY

1.6.1 Geographical scope

For all practical purposes the study was limited to the urban area of the city of Ahmedabad, Rajkot,

Surendranagar city, Sayla, Chotila, Limbadi, Surat, Vyara, Bardoli, Madhi, Rajpipla, Bharuch and Dhangadra.

1.6.2 Product Scope

The products covered under the organic compost were organic compost, farmyard manure (FYM) and bio-

fertilizers. For estimating the potential of market data regarding consumption of urea, DAP (Di-Ammonium

Phosphate), potash in Gujarat was also taken. This data was taken with the assumptions that as the farmers are

becoming more aware about the benefits of organic compost they are switching from chemical fertilizers to

organic compost.

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1.6.3 Users

The consumers included in the surveys and interviews were bulk users of organic compost. The urban household

consumers who generally use compost for decorative plants in their houses were not surveyed, as it was very

difficult to find consumers in this segment. In the exploratory survey the non-response was very high regarding

the use of organic compost in the households, which prompted us to drop the idea of surveying urban

households. Nevertheless the consumption of organic compost by the urban households was estimated based on

the information provided by the nursery and farm owners as the urban households buy decorative plants as well

as organic compost from these nurseries and farms only.

1.6.4 Dealers

The dealers included in the study were those who are already dealing in organic compost. The possibility of

converting a chemical fertilizer dealer into an organic compost dealer was not examined due to paucity of time.

1.7 METHODS

The following methods were adopted for the study.

1.7.1 Farmers’ Survey and Interview

A semi-structured interview and a small survey were conducted to know what do the farmers search for while

buying organic compost. The survey questionnaire is attached as Annexure I. For the survey purpose a random

sample of 90 farmers was taken in different study areas. These farmers were divided into three groups namely

large farmers (having land more than 10 bigha), medium farmers (having land between 5 and 10 bigha) and

small farmers (having land less than 5 bigha). In each group there were 30 farmers. Same questionnaire was

6
administered to each group. The assumption is that this was a representative sample. The graphical result of the

survey is attached as Annexure III.

1.7.2 Dealers’ and Retailers’ Survey

Informations regarding market structure, competition, pricing policy etc. were collected from dealers and

retailers of the organic compost through a checklist. The checklist is attached as Annexure II. For choosing

dealers snowball sampling procedure was used.

1.8 LIMITATIONS

2 The study was conducted by taking samples. This sample might not be the total representative of the

working areas of the AKRSP (I).

3 There was reluctance on part of many dealers, manufacturers and nursery farm owners in giving adequate

information. But after much deliberation we were able to generate requisite information.

4 Due to the Monsoon season most of the farmers were busy in their own cultivation so they hardly

bothered to find time for us. Same case was with the retailers and dealers who were busy due to the on

season business.

5 Due to lack of knowledge of Gujarati language communication with people was hindered. It was also

difficult to read the other competitors literature and other necessary information.

6 Last one is the time factor. To cover such a large area it needs much time than this. So that a better

understanding could have been achieved.

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CHAPTER 2

2.0 FINDINGS OF THE STUDY (PRESENT MARKET SCENARIO)

As per the requirements of the research objectives, the data and informations were gathered according to the

methodology mentioned above. These data and information throw light on the present market scenario and

different marketing practices being used by different players. We present the findings using the marketing mix

framework of 4 Ps i.e. Product, Price, Place and Promotion.

2.1 PRODUCT

2.1.1 Segments

The product organic compost is mainly used by the farmers. But with changing times its use has increased and

many other user groups have emerged. Thus to satisfy the need of different user groups many producers are

producing different products. So to identify the product segment we have first tried to identify the market

segments. The whole market for organic compost can be divided in following manner

Market

Urban Market Rural Market

Institutional Buyers Retail Buyers

Thus the main user segments are

1. Farmers

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 2. Households (for decorative plants and flowers, lawns)

3. Institutional buyers like Municipal Corporations, Public and private gardens, Public and private

enterprises like companies, hospitals, schools, banks etc.

So the product segments as per the requirement of the users are

Table 1: User Groups wise products

User Groups Products

Farmers Bio fertilizers, Farm yard manure, Vermi compost, Organic compost, Castor

cake, Neem cake, Press mud cake

Urban households Granulated Bio fertilizers and organic compost
Institutions Sewage, River silt, Cow dung
Source: Different user groups

2.1.2 Vasundhara Sendriya Khatar

The organic compost manufactured by the women groups in the programme areas of the AKRSP (I) is sold

under the brand name of VASUNDHARA. This product is made by both the anaerobic and aerobic processes.

The raw materials used are neem cake, castor cake, cow dung, poultry dung, tobacco dust etc. But at different

places different raw materials are used as per the availability of the raw material.

2.1.3 Competition

The competitor brands of VASUNDHARA in market are many. The following brands command a good market

share. i)Sardar ii) Orgo iii) Captain iv) Ratan v) Celrich vi) Tiger

Jatan viii) Tractor

Apart from these brands there are several other brands available in the market e.g. Ravi, Uttam, Nicast, Jai,

Everest etc. Also available in the market are many unbranded products manufactured by some other NGOs and

by the Municipal Sewage Treatment Plant in Ahmedabad. Most of these products are sold in loose. But they

command a good market share. Most of these products are sold in and around the area of production. But many

products are simple mixture of organic matters like semi decomposed vegetable waste, animal dung and soil.

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The raw materials used are sewage, vegetable waste from hotels, tobacco dust, castor cake, fish manure etc. The

products are not always consistent through out.

Thus we can see that the competition is tough. All brands are trying to capture each other’s market share of the

existing market. There is little or no effort on manufacturers and dealers part on developing new market while

new players are entering into the same market.

2.1.4 Pack Size

To cater to different market segments different brands are selling their products in different pack sizes. The

following table gives brief information about different types of pack sizes available in the market for different

consumer segments and their main manufacturers.

Table 2: Different Pack Sizes Available for Different Segments

Segment Pack Size Available Manufacturers

Farmers 50 Kg. All the above mentioned
Households 5kg, 2 kg, 1kg, 500g, 200g Celrich, Tulsi, Supergrow
Institutional Buyers Mainly Loose Sewage Treatment Plant

Source: Dealers and Manufacturers

2.2 PRICE

2.2.1 Farmers’ Segment

The farmers are the largest users of the organic compost. There are many players operating in this segment. The

following table shows the operating margin per bag for dealers for different brands. For dealers it is the margin

per bag that is important.

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Table 3: Purchase price, selling price, and operating margin for dealers in farmers’ segment

Brand Purchase Price/Bag Selling Price/Bag Margin/Bag

Vasundhara1 140 180 40
Sardar2 120 150 30
Orgo2 145 170 25
Captain2 140 160-170 20-30
1
Ratan 140 170 30
Celrich2 145-260 175-300 30-40
Tiger1 115 130-140 15-25
Jatan1 110 150 40
Tractor1 115 140 25
Dharti1 105 120-125 15-20
Ami Sendriya1 115 130-140 15-25
Nicast1 145 165 20
Jeevan1 120 145 25
Nirma1 125 140 15
Everest1 125 150 25
Uttam1 130 150 20
* Depending on the composition Source: 1-Dealers, 2- Manufacturers of respective brands

The above table also depicts the purchasing price that farmers pay for different brands of products. From the

above table we can see that generally the purchase price per bag for dealers ranges from Rs.105 to Rs. 145 while

the selling price per bag varies from Rs. 120 to Rs.180. The market works in margin range of Rs. 15 to Rs. 40

per bag.

This table gives us an idea about the prevailing prices in market at which farmers purchase organic compost

from dealers. It will help us in deciding the price of Vasundhara brand of organic compost in farmers’ segment

sold through dealers.

2.2.3 Urban Households Segment

Table 4: Prices of Different Brands of Product for dealers in the urban households segment

Brand Pack Size Purchase Price/Pack Selling Price/Pack Margin

Supergrow1 200g 13-15 20 5-7
Tulsi1 500g 15 25 10
Celrich2 1Kg. 15 25 10
2Kg. 30 40 10
5Kg 45 75 30
Source: 1.Dealers and 2.Manufacturers of respective brands

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From the above table we can see that smaller packs give better per unit margin. But according to the dealers per

pack margin plays an important role in keeping any particular brand. This will help in deciding the prices and

pack sizes in the urban house holds segment.

2.2.4 Institutional Buyers

Institutional buyers buy mainly through contractors. These contractors get the product from sewage treatment

plants and from the nearby villages of Ahmedabad. The cost of one tractor of this product ranges from Rs. 400

to Rs. 800. Such a huge range is due to the style of filling the tractor. A tractor carries anything between 400 Kg.

to 800Kg. resulting in such a large range of price.

2.3 PLACE

Place is about distribution of the product i.e. placing right product at right time in right place in right condition.

So it mainly deals with the sales and distribution channel. At present the distribution practice being undertaken

by the women groups, Mahila Vikas Mandal (MVM), Gram Vikas Mandal (GVM) and Federations in the

working areas of the AKRSP (I) are as given below. The primary channel is through Federations. The MVM

members sell directly to the farmers in their villages and members of others Vis, such as GVMs, SHGs or to

their own members for application on their fields.

On the other hand the competitors are mainly selling their products through a systematic network of distributors.

These distributors are present in urban as well as rural markets. For farmers following networks are used.

Distributors/
Manufacturer
Figure 1: Distribution Networks Prevalent in Market for Farmers’ Segment Farmers
Retailers

Distributors/ Sub- Farmers

Manufacturer
Retailers Dealers

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In urban areas of Ahmedabad the nurseries and farms are the most important link between the manufacturers

and the households. This channel can be shown by the following figure.

Figure 2: Distribution Network for Households’ Segment in Urban Area

Manufacturer Nurseries & Farms Urban Households

The dealers’/distributors channel is proving to be very effective in increasing the reach of the product to

different areas and it ensures a sort of security for the manufacturer as well. After selling to the dealers the

manufacturer gets his money and then it is the responsibility of the dealer/distributor to sell the product.

For institutional buyers the contracting system is most prevalent and most of the orders are put to the contractors

who take care of the supply of the organic compost as well as taking care of their property (parks, gardens,

forests, traffic islands etc.). The prevalent channels are

Figure 3:Manufacturer Contractor

Distribution Channel for Institutional Buyers Parks & Gardens

Nursery Parks &

Manufacturer Contractor Farms Gardens

PROMOTION

At present, the promotional strategies for the organic compost are not much in use either for the consumers or

for the dealers. The manufacture of the Orgo brand of organic compost gives one bag free on the purchase of

every ten bags to some big and old dealers while the manufacturer of the Captain brand waives the

transportation cost for all those dealers who buy five tones or more. For consumers we could not come against

any sales promotion activities, though almost all the producers give leaflets with every bag to the consumer.

These leaflets contain information like how much compost should be used in which crop.

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Promotion is about communicating requisite information about your product to the consumers. But barring few

attempts by some manufacturers mainly the women’s groups communication channels are heavily underutilized.

Some women’s groups go to the rural haat and they advertise about their product from public address system.

Some time some demonstrations of the benefits of using organic compost are also made to farmers.

CHAPTER 3

3.0 SUGGESTIONS

The information given in Chapter-2 was gathered from the farmers, dealers and manufacturers through farmers’

survey and interviews and dealers’ survey and interviews. This information throws light on the current market

scenario. Based on these, the following suggestions are being made to increase the sales of Vasundhara brand of

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organic compost. The suggestions are again being made on the basis of the 4P concept of the marketing, which

looks into the Product, Price, Place and Promotional strategies of the marketing.

3.1 PRODUCT

The present product manufactured by women’s groups in AKRSP (I)’s programme areas has good nutrient

content. The N-P-K content of the organic compost sold under Vasundhara brand as per the testing done by the

Gujarat Agricultural University (GAU) in 1996.

Table 5: N-P-K content of Vasundhara brand as per GAU study in 1996.

N (in %) P (in %) K (in %)

Fresh Product 1.76 2.67 1.29

After 6 months 1.54 2.37 2.04
Source: AKRSP (I) literature

Most of the competitors’ products are less nutritional their products’ NPK ratio being in the range of 1.0 to1.5%

for each. But still there is a lot of scope in improving product quality. Some suggestions regarding the same have

been mentioned below.

3.1.1 Make consistent product keeping different crops and regional disparity in mind.

In some villages the product is made by using either different proportions of raw materials or some times using

different raw materials according to the availability of the raw material. So the possibility of making different

products of different nutrient content suitable to different crops should be found out. Also the regional disparity

should be kept in mind, as soil type and availability of water in different areas are different. Getting your

product tested for suitability for different soil type and different crops could do this. For this expert help should

be sought who can recommend about use of raw materials, production process etc. to meet the requirements of

different crops and different regions. In the farmers’ survey also, the inconsistency of the product was the

number one concern of the farmers across the groups in using organic compost. Also the farmers of all the

groups put “results” as the number one reason for buying one product over the other. They were of the opinion

that different organic compost suitable for different crops should be available in the market.

3.1.2 Reduce the presence of weed seeds in the organic compost.

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According to the farmers’ survey, the presence of weed seeds in the organic compost is at the second number in

the concerns of using the organic compost. This happens due to the use of goat dung, poultry manure etc. Some

of the contractors in Ahmedabad also stressed that they would use only those compost in which only cow dung

or buffalo dung has been used. In goat dung or poultry manure the weed seeds remain intact and when this

compost is applied in the field weeds start coming up.

This may be a misperception of the users because in other countries poultry manure and goat dung are widely

used. So a thorough scientific analysis of the poultry manure and goat dung should be done and the facts must

be shared with the users. So the use of the goat dung, poultry manure should be discontinued if they are really

promoting weeds in the fields and farmers should be provided with a product, which are weed seeds free.

3.1.3 Do away with the odor of the product.

Though very rich in nutrient content, the quality of the Vasundhara brand of organic compost is still not up to

the standard. One of the main problems is the bad odor of the product. According to the farmers’ survey the odor

of the product is at the third number in the concerns of using the organic compost. Due to the bad odor, farmers

do not want to keep it in their houses. The dealers do not want to store it. The farmers in the programme areas of

Anandi, an NGO, who used the Vasundhara brand of organic compost last year, are reluctant in using the same

this year due to the odor of the product. So stress must be given on gaining the technical knowledge about how

to reduce this odor problem.

3.2 PRICE

For determining price of the product, the following steps should be taken

3.2.1 Set Definite Pricing objective

The Vasundhara brand is facing stiff competition from the other brands of organic compost. The market is

flooded with different branded and unbranded products with many brands selling their product in the price range

16
of Rs. 150-160. In this scenario the pricing strategy in rural market for the short term should be that of survival

i.e. in the short run the product can be sold at a price where all the variable costs are recovered. But in the long

run, the producers must try to set a price that will maximize their market share as well as profitability. Higher

sales volume will lead to lower unit costs and higher long run profit. The present scenario with the Vasundhara

brand is that though the profit on each bag sold is about 15-20% (production cost range is Rs. 120-145 per bag

and the selling price is Rs. 150-170 per bag) it has a very less market share. So the AKRSP (I) should try to

increase its market share while maintaining the profitability. According to the survey results of farmers price is

the second placed reason, which encourages buyers to buy one product over another. Thus the market seems to

be price sensitive. But at the same time farmers want a product, which can give them the best result and results

was the first preference for buying one product over another. Accordingly the price of the product should be set.

The focus should be a two-tiered focus: costs and return on sales. Implement cost/plus pricing when market

share is the objectives. Establish a markup for each unit to be sold. The markup must be large enough to provide

a sufficient profit, but should not exceed what customers are willing to pay.

Table 6: Pricing Strategy for Rural Market

Competition Entry Price Economies of Goal Strategy

Barriers Sensitivity Scale

Many Low Medium Medium Market Share, Protect Cost/Plus

existing market pricing

Source: www.muextension.missouri.edu/explore/agguides/agecon/g00649.htm

For urban market the strategy should be to set a price that will maximize profit. The quantity sold in the urban is

very less compared to the rural areas but per unit price is very high due to seemingly higher paying capacity of

urbanites. Small packs of organic compost are sold for Rs. 15 to Rs. 75 per kilogram. Thus higher profit margin

makes up for the lower volume sale and gives higher per unit profit.

Table 7: Pricing Strategy for Urban Market

Competition Entry Price Economies of Goal Strategy

Barriers Sensitivity Scale

17
 Moderate Low Medium/ Medium/ Maximize Profit Value pricing

Low Low
Source: www.muextension.missouri.edu/explore/agguides/agecon/g00649.htm

3.2.2 Estimate Demand or Requirements

There are many branded and unbranded product in the market. Apart from the manufacturers of branded organic

compost there are many villagers who produce compost mostly in groups. These groups supply mainly in their

own village or in the nearby villages. The number of bags produced, address, and production capacity of these

groups are difficult to determine. So it is a very difficult task to estimate what is the demand of organic compost

in the study areas. But still some conservative estimates can be made to serve as a benchmark.

Box 1: Estimated Demand in Surendranagar, Rajkot Area

If we go by the dealers’ list we can easily see that average number of bags sold by each dealer is

approximately 550 bags per year. The list consists the names of 20 dealers. If we assume that there are

about 40 dealers then total demand stands at 22000 bags. Apart from that there are many villages where

some groups make compost and sell in and around their villages. So we can set the conservative

estimated demand at around 23000 bags in these areas.

Box 2: Estimated Demand in Ahmedabad

AMC has 120 acres of land under parks and garden and about 40 acres under traffic islands. The AMC’s

requirement of compost is 5 m3 of compost per 100 m2 of land. So the total requirement runs into hundreds

of tons.

For households segment, there are at least 20 nurseries & farms in and around Ahmedabad. On average each

farm’s average annual sale is Rs. 30000/-. Average price of compost is Rs. 15per kg. So estimated demand in

Ahmedabad is (30000/15)*20= 40000 kg. (Approximately 800 bags).

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3.2.3 Reduce Cost of Production

At present the cost of production of organic compost of Vasundhara brand ranges between Rs.116/- to Rs. 146/-.

Such a large variation is unacceptable. Standardize the production process. Procure raw materials for all the

groups at the federation level. Do all the marketing through the federations and allocate marketing cost in

proportion to the number of bags produced. Try to bring the cost of production below Rs. 100/-. This will make

pricing easy and more margin/profit can be gained at the prevalent market price.

3.2.4 Set Region/Area specific Price (Geographical Pricing)

In the areas where farmers/consumers are well off and can pay more, put higher price tag on the same product

and the areas where farmers/consumers have low purchasing power keep the price a bit lower. As we saw in

Surendranagar, the dealer in the Surendranagar city was selling the Vasundhara brand for Rs. 180 per bag while

in the nearby Dhangadra it was being sold for Rs. 155 per bag.

3.3 PLACE

Defining Sales and Channel strategies is a key element for the success of any product. The strategic use of

physical distribution may enable a company to strengthen its competitive position by providing more customer

satisfaction, by reducing operating costs and creating time and place utilities.

3.3.1 Use Federations as the marketing unit for organic compost.

The federations of women group should be used as sales and marketing unit for the organic compost. Till now

the federation has been keeping accounts of the sales made by various women groups. They are not engaged in

any extension work like procurement of raw materials, procuring orders, finding new customers, targeting new

markets, advertisements, promotions of the organic compost. The women groups themselves do all these work.

But their reach as well as their expertise is limited. The federations should consist of at least one person trained

19
in sales and marketing job and representatives of women groups. The women groups should be engaged in

producing organic compost only.

3.3.2 Distribution Channels

To make the product available to the consumers in different areas and to the different segments, the following

distribution channels should be used.

3.3.2.1 Direct Sales

Till now the women groups have been procuring orders from the customers and supplying them the product.

This is really a very effective way of getting high margin. In direct selling, the producer’s share in final price

paid by the customer is the highest. But it should be done by the federations because the reach as well as the

marketing expertise of these groups is very limited. Also it puts the dual responsibility on them that is of

producing as well as marketing. The federations will be engaged solely in the marketing of the organic compost.

Women groups Producing unit

Federations Marketing unit

The proposed channel could be as follows

Figure 4: Proposed Channel for Direct sales

Women Groups Federations Consumers

3.3.2.2 Retail/Dealer/Distributor network

The strength of the dealer channel lies in the variety of locations (coverage). The product can be sold through

dealers in the urban market as well as in all those markets, which are far away from the production places. It

helps inWomen
gaining large market share and in increasing the reach by making product available. At the same time, it
Federation Dealers Consumers
Groups
eliminates the risk factor for producers. It helps in stabilizing prices.
Figure 5: Proposed Dealer’s Channel

Sub-
Dealers
20
The disadvantage of this strategy is that the dealer will pay a comparatively low price for the compost and that

the federations might not have control over marketing for the duration of the contract. Signing on with a dealer

will reduce the risk of market failure for the facility. However, revenue and control are reduced as well.

Established channels can be great asset, but it should not be taken for granted that the channel you have been

using is the one you should use in the future. As times and technology change you will need to adapt your

strategy.

Box No. 3: How to choose a dealer?

While choosing dealers, following points should be kept in mind.

A dealer should have a minimum of two/three years of experience so that he understands the market well.

He must be fulfilling the criteria of selling a certain minimum number of bags, say, 500 bags, per year. But for

sub dealers this number should be less.

He should be able to take future orders from the customers in his area and relay them to the

manufacturers/federations.

21
3.4 PROMOTION

Promotional activities are used to communicate with others about your product or services and to convince them

to use it. Potential consumers must get information that will positively influence what they think of any product.

Thus we can say that promotion is mainly about effective communication. Effective communication is an

important tool to reach out to the rural audience. “A rural consumer is brand loyal and understands symbols

better", says Mr. R.V Rajan, CMD, Anugrah Madison Advertising. The rural audience has matured enough to

understand the communication developed for the urban markets. So now, the effects of promotional activities on

the urban as well as on the rural market is alike.

Now we will discuss some ways to promote the sale of organic compost in rural as well as in the urban market.

Some common methods of promoting one’s product are

.  Advertising,

 Personal Selling

 Sales Promotion

 Public Relations

Now we will analyse these points in detail one by one.

Advertising

3.4.1.1 Rural Market

For the advertisement of organic compost in rural market, traditional media is the best way. Mass media is too

glamorous and unreliable in contrast with the familiar performance of traditional artist whom the villager could

22
not only see and hear, but even touch. Besides this villagers are more conservative buyers than their urban

counterparts. Their desire to innovate with new product is restricted. The traditional media with its effective

reach, powerful input and personalized communication system will help in realizing the goal. Besides this when

the advertisement is couched in entertainment it goes down easily with the villager. It helps in creating

awareness about the product, brand and services.

Advantage of traditional media

1. The accessibility is high.

2. Involves more than one sense.

3. Interest arousal capability is high.

4. Less operational liability-Minimum cost.

Some of the options available in traditional media that can be effectively used to advertise your product are

3.4.1.1.1 Wall Painting:

Wall Paintings are an effective and economical medium for advertising in rural areas. Wall painting stays as

long as the weather allows it to. The greatest advantage of the medium is the power of the picture completed

with its local touch. It increases the visibility of the product in the easiest way. But a good wall painting must

meet some criteria to generate awareness and remind consumer about the brand and product.

The message should be simple, direct and clear.

A definite way of arresting is to use bright colors and these do not fade away easily.

The most frequented shops can be painted from outside as well as from the inside.

3.4.1.1.2. Demonstrations:

"Direct Contact" is a face-to-face relationship with people individually and village groups (like women groups,

farmers’ groups etc.). Such contact helps in arousing the villager's interest in the product as well as in the brand.

The demonstrations could be about the product itself, its usage, the methods to use it, result demonstrations etc.

For demonstrations, use of audio-video media can be of a great help. They attract villagers very easily and the

message is conveyed very easily.

23
3.4.1.1.3. Posters/Calendars/Postcards:

Attractive and beautiful posters/calendars/ post cards distributed free help brands in catching the eyes of the

consumer.

3.4.1.1.4. Cultural Programmes:

Cultural programmes like folk dance, songs, theatre etc. are very good media to convey the desired message.

Agricultural games or village games also are very strong medium.

3.4.1.1.5. Haats and Mela:

Haats are the mobile supermarket of India. Haats are a better opportunity for promotion after brand building has

been done. Demonstration at Haat goes very long way in creating a customer in a villager. The demonstrator can

have literatures over which the following benefits should be emphasised.

1. It Converts nutrients to a more stable form

2. Less likely to leach

3. More available to plants

4. Adds humic acid to the soil

5. Holds 3-5 times more nutrients than soil

6. Holds nutrients in the root zone

7. Makes nitrogen more available.

8. Increases beneficial soil organisms; Bacteria can increase available nitrogen and help suppress plant

diseases Fungi kill pests, aid in the uptake of nutrients, and may improve product quality and yields.

9. Increases water retention

10. Improves soil tilth and aeration

11. Aids root penetration

12. Reduces non point-source pollution of surface and ground water.

13. Reduces nutrient over-loading of soil

14. Easier and less costly to spread than manure

24
 15. Can be used to amend soil, as mulch, or as a peat substitute

16. Kills weed seeds and pathogens

17. Reduces reliance on synthetic fertilizers

But in all these activities timing plays a very crucial role. Advertisements done before the start of agricultural

activities in the field, especially at the time when the farmers are planning about the kind of crop they will go

for, kind of agricultural inputs they would apply, goes a very long way in registering the brand and product in

the consumers’ mind.

3.4.1.2 Urban Market

In cities the literacy rate as well the purchasing power is high. Appeal of mass media is also very high. So to

advertise a product in urban area is different from doing the same in the rural area though the goal is same, to

get your brand registered in people’s mind. Some of the methods that can be used are

1. Advertising in newspapers being published locally.

2. Advertising on Cable television.

3. Displaying small hoardings and signboards.

4. Organizing flower shows generally just after winter season.

3.4.2 Personal Selling

Personal selling is about face to face selling or direct selling. It helps in maintaining good customer relations. It

gives freedom to the organisation to adjust a message to satisfy customers’ needs. It is a very good tool for two-

way flow of information, interactivity.

3.4.3 Sales Promotion

25
Sales promotion consists short-term incentives to encourage sales of a product or a service. It is divided into two

categories- trade promotions and consumer promotions. Some common methods that can be applied for both the

categories

1. Trade allowances: Like waiver of transportation cost on purchase of a particular quantity.

2. Special offers: Generally during festivals or in the initial and last phases of the start of agricultural
season.

3. Point-of-purchase discount: When a consumer buys in bulk some discount can be given.

4. Sales Contest: It can be made a policy that the dealer selling say 2 tons in a year, would be eligible for

some prize.

5. Free merchandise: Some free objects like a glass, or a marketing bag, or any thing else can be given
with every bag purchased in initial phase.

6. Refunds or rebates: E.g. Buyback policy for unsold bags or damaged bags.

Public Relations

It is about linking an organisation with its public, dealers and customers, for providing better understanding.

Sales contests, exhibitions, displays, demonstrations of products, staff conferences, stock taking of the situation

etc. all are part of public relations.

3.5 PACKAGING

3.3.2 Sizes

For rural areas 50Kg bag size should be made available but in the urban areas it should be sold in small pack

sizes like 5kg, 1kg, 500gm and 200gm as now it is being sold in the Junagadh and Ahmedabad area by the other

players.

26
3.5.2 Labeling Informations

The following information should be on the bags.

1. Organization Name

2. Organization Address

3. Organization Phone Number

4. Nutrient Content (NPK)

5. pH value

6. %Moisture

7. Salinity

8. % Organic Matter

9. C: N Ratio

10. % Humic Acid

They should get the amount of nutrient contents in their product tested from any agricultural university. But it

can be also tested in the NEERAN laboratory, which is situated in the station road Vyara.

CHAPTER 4

4.0 SUSTAINABILITY

AKRSP (I) should consider the sustainability part while venturing in this business in a full-fledged manner. Here

the sustainability means they should be able to capture the market share at present with the help of current

production and marketing processes and organizational support and to become a market leader in the long run.

When we talk of sustainability we basically mean four major dimensions. They are as follows

27
4.0.1 Technical Sustainability

Technical sustainability refers to the production process mainly. It tells that whether the current method of

production is good enough to meet the right quality demanded by the customer. If not then the organization has

to look for other options. It should always aim to produce what the customer needs not that what it can produce.

Ultimately they are producing for the customers and it should meet their requirements.

4.0.2 Organizational Sustainability

For this AKRSP (I) has to look into several aspects. Do they have the required knowledge to cope up with the

changing situations or to depend on external resources? Can they get the required raw material, which will be

used, for the production? Will the organization sell or market the products forever or hand it over to the women

group? All these questions should be internally answered by the organization. It should be in tune with the

organizational activities.

4.0.3 Marketing Sustainability

To have a marketing sustainability they should have a deep knowledge about all the marketing practices. They

should know all the rules of the game before they start playing it. The marketing wing should emphasis on

building relationship with the dealers as well as the customers for long-term sustainability.

4.0.4 Financial Sustainability

The organisation should be financially sound to cope up with any changing situation like increase or decrease of

the demand. More over it should be looked upon as a commercial system rather than a side activity. They should

well understand why they are doing this business.

4.1 INFORMATION REQUIRED BEFORE START OF PRODUCTION

28
 1. Approximate number of consumers

2. Growth rate of the farmers switching to organic farming

3. Profile of the farmers i.e. their inclination towards the crop and modern technologies and their

purchasing capacity

4. The raw material they prefer to be used in organic composte

5. Quantities of the matter they use in area wise

6. How frequent they use

7. Where they are getting such organic matters

8. Price range

4.2 SWOT ANALYSIS of AKRSP (I) AS ORGANIC COMPOST PRODUCER AND

MARKETER

STRENGTH WEAKNESS

The biggest strength is brand value of AKRSP (I) New player in the retail market.

Production technique of the organic compost which Absence of marketing wing at present.

is totally different from the other market players It has not been considered as a major activity so far.

Willing to take risk and experiment No detail information regarding the product among

It has got the capacity to produce as much as needed. the users.

At present they have the right mixture (as shown in

annexure IV) and production process.

OPPRTUNITY THREAT

29
 Demand of organic compost is on rise. It will be a new player in the market

In some districts there are few players operating The large scale production of other major players

which gives Vasundhara a good marketing like Orgo and Excel may lead to lowering in the

opportunity. selling price of their product and in that case AKRSP

(I) may not be able to compete.

The press mud cake from sugar factories has become

a major substitute for organic compost.

4.3 CONCLUSION

4.3.1 Marketing Myopia

If AKRSP (I) considers that just by selling their product to the dealers they will get market share then they have

a false notion of marketing through dealers’ channel. So they have to look for both the short term as well as the

long-term relationship with the dealers. Targeting only short-term benefits may prove detrimental for their

product in long run.

4.3.2 Backward and Forward Integration

AKRSP (I) should have detail knowledge about the raw materials that they procure to produce their product.

The knowledge regarding the availability of the constituents and their rate should be thoroughly known to them.

Accordingly they can plan the strategy. Similarly the forward integration with the market should be done well

before the cropping season. The farmers should be convinced that they are going to get these products from

AKRSP (I). So both forward as well as back ward integration is essential for the success of the business.

4.3.3 Separate marketing wing

30
Marketing of organic compost needs a lot of time and other resources like human resource and investment. So

for getting better result more emphasis should be given on marketing. A separate marketing wing should be

there to look after all the marketing related matters.

4.3.4 Product life cycle approach

As the product is in the introduction stage. So initially, it will face several competitions from the competitors.

Here there is an urgent need of creating the awareness of the product. Informing the customers and also

educating them with the help of some training will be of great help. Initially the distribution should be limited

only to few areas and after getting a strong hold in those areas it can be extended to other areas. The pricing

strategy should be in such a way that it can easily penetrate/capture the market.

4.3.5 Efficient and Effectiveness

AKRSP (I) has to operate both efficiently and effectively. By efficient it means that all the operations including

production and marketing will be done at the lowest possible cost. Where as effectiveness means creating value

for the organization and also for the customer’s money.

4.3.6 Decision making

When any organization wants to take any decision regarding either the production or marketing of organic

compost then it must see the time period or the durations available. Accordingly the decision will vary. These

are mainly

1. Strategic decisions or Long-term decisions: This will mostly include the long-term aspects. What the

organization wants is to be able to run the compost business on the sustainable basis. They must be

clear about what product they want to sell and in which market segment they want to be. Once the

goals are fixed suitable strategies should be made.

2. Tactical decisions or Intermediate decisions: This relates to the intermediate decisions. How they will

face any problem either in meeting the demand of the customers or with excess production. They

should be well prepared and always be ready with alternatives i.e. what to do in any situation and how

31
 to get out of it quickly. The sooner they recover from any fluctuations the better they will be equipped

to lead the market.

3. Operational planning and control decisions or Short-term decisions: This is basically to meet the

immediate challenges of the market. Now the immediate target is to the increase sales and volume as

well as to increase awareness among the farmers and dealers regarding the Vasundhara brand of

organic compost.

4.3.7 Operational Strategy

There are several dimensions of making the competitive operation strategies. These dimensions are as follows.

Cost: To gain a perfect place in the competitive market they have to keep their production cost low without

compromising on the quality front. They have to provide the customers with better quality product at reasonable

price. How they can keep the cost of the product low that depends upon their efficiency and effectiveness, which

has already been discussed.

4.3.8 Quality

when we talk about quality. We should consider it holistically. Here holistically means AKRSP (I) has to take

care of both the product quality i.e. the end product and the process, which they follow to achieve it. They

should manufacture keeping in view the customer needs and their requirements. Process quality should be good

one as it has direct relevance with the product.

4.3.9 Deliverability

To most of the customers deliverability matters. The way the product is delivered has importance on the

subsequent purchase and in turn with the business. The product should be delivered as quickly as possible. The

fast deliverability can be a competitive factor and better deliver system can give a good result. Similarly they

should deliver what they have promised. It is related to the time, quality and quantity as per the agreements or

declarations.

4.3.10 Coping Ability

32
 AKRSP (I) should have enough capacity to cope of with the changing demand. The demand may increase or

decrease but they have to stay in tune with it by adopting appropriate marketing strategies.

4.3.11 Flexibility:

They should always be flexible regarding the product quality and price of the product. If the customers feel that

there should be some nutrients in more quantity then their feedback should be considered seriously. Because the

product is meant for the customers and they should incorporate the changes customers need.

If AKRSP (I) takes note of all the above dimensions then they will be definitely on the track. Their product first

should be an order winner i.e. the product should have differentiating criteria from the other existing products in

the same categories. After being an order winner it should be then an order qualifier i.e. after screening it is

considered as possible option for purchase.

REFERENCES

1. Khetan. Santosh Kumar , Marketing of Agricultural Product, 1995,Jaipur, Rupa Books Pvt. Ltd.

33
 2. Gopalswamy T.P. , Rural Marketing: Environment, Problems and Strategies, First Edition, 1997, A.H.

Wheeler & Co. Ltd., New Delhi

3. Rajagopal, Rural Marketing: Development, policy, planning and practice. Rawat Publications Jaipur,

1998

4. Xavier M.J., Strategic Marketing: A Guide for developing sustainable competitive advantage, first

edition, Response Books, 1999

5. Khurana Rakesh and Ravichandran A.N. , Strategic Marketing Management: Cocept & cases An Indian

Context, Abhinav Publishing Industries Pvt. Ltd, Delhi,

6. Bush Robert P., Hair JR. Joseph and Ortinau David J., Marketing Research: Within a changing

information Environment, second edition, Tata Mc Graw Hill Publishing Company Ltd., New Delhi,

2002

7. Philip Kotler, Marketing Management, Eleventh Edition, 2003, Pearson Education ( Singapore) Pte.

Ltd Delhi

Annexure I

Farmers’ Survey

34
Questionnaire

1. What type of products do you use?

a) Fertilizers b) Compost

2. Is compost readily available in your area?

a) Yes b) No c) Don’t know

3. From where do you obtain compost?

a) From producer b) Dealers c) Make your own d) Other sources

4. Do you purchase products in loose or bag?

a) Loose b) Bag

5. What encourages you to buy one product over another?

a) Price b) Results c) Ease of use d) Easily available e) Other

6. What are your concerns about using compost?

a) Inconsistency b) Weed seeds c) Odor d) Too wet e) Other

7. Are you able to get the information you need about a product?

a) Yes b) No

8. From what source do you obtain information about compost now?

a) Labels b) Written material c) Dealers d) Haat e) Advertisements

9. From what sources would you like to obtain information about compost?

a) Labels b) Written material c) Advertisements d) Dealers e) Others

10. What information would you like to see on a bag or label for a compost product?

a) Percent sand b) pH c) NPK ratio d) C: N ratio e) Use instructions

f) Raw material used

35
11. Bag attributes

a) Size b) Side labels c) Resalable d) Seal of approval e) Clear bag

12. Label Attributes

a) Use instructions b) NPK ratio c) pH d) C: N ratio e) Net weight

f) Benefits g) Warnings h) Application rates i) Contact info

Annexure II

Checklist for Dealers

1. Name of the Dealer/Shop

2. Address

3. Products kept

4. Brands kept

5. Cost Price of products of different brands

6. Whether buy on credit or cash or partial credit and partial cash?

7. Sale Price of the products of different brands

8. Whether Exclusive Dealer or not?

9. Areas Covered

10. Competitors

11. What kind of schemes is available?

Annexure III

FARMERS’ SURVEY RESULT

36
1. What type of products do you use?

a) Fertilizers b) Compost

Type of Product used

25
No. of farmers

18 18 20
20
15 12 12 10 Fertilizers
10 Compost
5
0
Large Medium Small
Farmers farmers farmers farmers

2. Is compost readily available in your area?

a) Yes b) No c) Don’t know

Yes
Ease of availability
No
20 Don't know
No. of Farmers

15
10
5
0
Large farmers Medium Small farmers
farmers

3. From where do you obtain compost?

a) From producer b) Dealers c) Make your own d) Other sources

37
 Place of purchase

12
No. of farmers

10 Producer
8 Dealers
6 Own
4
2 Other
0
Large Medium Small
farmers farmers farmers
Farmers type

4. Do you purchase products in loose or bag?

a) Loose b) Bag

Type of Purchase
No. of farmers

30
20 Loose
10 Bag
0
Large farmers Medium Small farmers
farmers
Farmers

5. What encourages you to buy one product over another?

a) Price b) Results c) Ease of use d) Easily available e) Other

38
 Preferance
20 16 16
No. of farmers

15
15 11
9
10 7
4 Price
5 1 23 22 Results
0 Ease of use
Large Medium Small Easily available
farmers farmers farmers
Farmers type

6. What are your concerns about using compost?

a) Inconsistency b) Weed seeds c) Odor d) Too wet e) Other

Concerns of using compost

15
No. of farmers

10
Inconsistency
5
Weed seeds
0 Odor
Large Medium Small Too wet
farmers farmers farmers Other
Farmers type

7. Are you able to get the information you need about a product?

a) Yes b) No

39
 No. of Farmers Availability of Information

20
15
Yes
10
No
5
0
Large farmers Medium Small farmers
farmers
Farmers type

8. From what source do you obtain information about compost now?

a) Labels b) Written material c) Dealers d) Haat e) Advertisements

Source of Information
20
No. of farmers

15
10 Labels
5 Written material
0 Dealers
Large Medium Small Haat
farmers farmers farmers Advertisements
Farmers type

9. From what sources would you like to obtain information about compost?

a) Labels b) Written material c) Advertisements d) Dealers e) Others

40
 No. of farmers Preferable source of Information
15
10
Labels
5 Written material
0 Dealers
Large Medium Small Advertisements
farmers farmers farmers Others
Farmers type

10. What information would you like to see on a bag or label for a compost product?

41
a) Percent sand b) pH c) NPK ratio d) C: N ratio e) Use instructions f) Raw material

Information requirement
20
No. of farmers

15
% Sand
10
pH

5 NPK ratio

C:N ratio
0
Use
Large Medium Small instructions
Raw material
farmers farmers farmers used
Farmers type

11.Bag attributes

a) Size b) Side labels c) Resalable d) Seal of approval e) Clear bag

42
 Bag Attribute
20
No. of farmers

15
10
Size
5
Label
0 Resalable
Large Medium Small Seal of approval
farmers farmers farmers Clear bag
Farmers type

12.Label Attributes

a) Use instructions b) NPK ratio c) pH d) C: N ratio e) Net weight

f) Benefits g) Warnings h) Application rates i) Contact info

All the farmers were of the opinion that all these informations should be provided in the label.

Annexure IV

ORGANIC COMPOST PRODUCTION:

Percentage of Raw Material:

43
SL No. Year Neem Cake Castor Tobacco Dust Cow Dung Total
1 1997 20 20 0 60 100
2 1998 10 10 10 70 100
3 1999 13 16 36 35 100
4 2000 35 20 15 30 100
5 2001 48 12 10 30 100
6 2002 48 12 10 30 100
7 2003 48 12 10 30 100

Annexure V

Nutrient content of Vermi Compost

Elements Value
pH 7
Humus 63.5
Carbon 28.69
N 2.02
P 0.647
K 1.30
Ca 0.0340
Mg 2.480

Annexure VI

Nutrient Content Of different manures

From Excel Industry

SL No. Manures N P2O5 K2O

1 FYM 1.0 0.6 1.2
2 Rural Compost 0.6 0.5 0.9
3 Urban Compost 1.5 1.0 1.5
4 Castor Cake 5.6 1.8 1.0
5 Neem Cake 5.2 1.0 1.4
6 Rapeseed Cake 5.1 1.8 1.1
7 Rapeseed Cake 5.1 1.8 1.1
8 Bone Meal 1.5 25.0 __

44
Annexure VII

Nutrient content of Press Mud Cake:

SL No. Nutrients % Content

1 N 1.5-2
2 P 3.5-5
3 K 0.72-1
4 pH 4.5-7.0
5 EC 4-6

45