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Chapter 7
Findings, Conclusions and Recommendations
Findings:
Rural Marketing is all about rural development in terms of serving a
customer with extra attentiveness, better quality of products. Rural
Marketing strategies are considered to be very effective in order to
attract large number of rural consumers. Dabur India and Godrej
Consumer have placed a well trained sales team in rural areas who is
well aware about the behaviour and tendency of rural people. Day by
day the competency among the FMCG companies is increasing
rapidly, which has compelled these companies to innovate new
products and ways to cater the specific needs of the rural customer.
Advertising in rural areas is considered to be important and the
presence of celebrity or mascots develops a curiosity among rural
people which ultimately affects the sales of the product. It was
observed during the interview with channel members that
advertising affects the sales of the company and helps in generating
higher profits. There is a perception about the sales promotion
activities in rural areas to be different than urban areas but later
after the research it was observed that sales promotion activities in
rural areas are similar to those in urban areas. Various promotional
schemes are offered by companies to the consumers, which includes
offers, coupons, money back offers, free gifts with purchase etc.
These all promotional activities affect the purchasing decision of
consumers in both urban as well as rural areas. Rural markets are full
of challenges; every company should promote innovative and
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customized products which will satisfy the needs of each customer.
The challenge for any company is not to customize products and
services in itself but to do it in a profitable way.
The primary vehicle that facilitated digital marketing has been the
Internet. Internet has so far been experienced by people through PCs.
As a result the internet penetration has remained limited to less than
10-15% in a country like India. According to the channel members
including retailers, rural consumers are not price sensitive
nowadays. They have named on to higher price products. Rural
consumers don’t prefer low quality products but they look for those
products which value for given money. Channel members think every
FMCG company has got a chance to grab the larger portion of the
market share, it totally depends on their aggressive rural strategies.
They don’t think FMCG giant HUL pose any threat to the chances of
growth of any company. Rural consumers and even channel members
advocated the attractive and colourful packaging of FMCG products
but it affects the cost of the product, it has now become a trend to get
the packaging attractive features such as easy to hold or dispense,
those with airtight or leak proof caps, measured pouring while others
may value eco-friendly on bio-degradable packaging. According to
channel members involved in the promotion and selling of products
of Dabur India and GCPL, Dabur India has more aggressive rural
strategies for rural Rajasthan. When rural consumers were
interviewed, it was observed that the awareness among rural masses
in the district of Jaipur and Alwar for the complete product width of
GCPL is higher than the DIL. But the popularity of Dabur Products is
higher than the products of Godrej Consumer Products among rural
masses in Jaipur and Alwar. It shows despite having aggressive rural
strategies and good brand image and awareness, GCPL is less
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effective in terms of popularity among rural masses in the district of
Jaipur and Alwar. Though television is the main source of information
for both DIL and GCPL followed by word of Mouth and Internet etc.
Godrej Consumer Products Ltd should re-strategize their marketing
strategies in rural region of Jaipur and Alwar. Even the brand
awareness about the different products of GCPL is higher; they
haven’t been able to take the advantage of it. Majority of rural
consumers select the product on the basis of the celebrities who
endorsed the advertisements. The celebrities in India are the role
models for majority of Indians. The consumers seek variety of
aspects like credibility, likeability, fit between the brand and the
celebrity. The companies believe that the celebrity changes the
purchase decision or intention of the rural consumers in India.
Rural consumers and even channel members in rural Rajasthan
believe that in-store advertising or shelf display affects the purchase
decision of a consumer and even it affects the buying behaviour of
rural consumers. In-store advertising includes placement of a
product in visible locations in a store, such as at eye level, at the ends
of aisles and near checkout counters (i.e POP-Point of Purchase
display), eye-catching displays promoting a specific product, and
advertisements in such places as shopping carts and in-store video
displays. They both believe in the universal mantra which works in
rural India “Jo Dikhta Hai Woh Bikta Hai”.
Approximately same percentage of rural consumers purchase their
daily consumable items from the same place or village while others
buys from nearby towns or cities, these rural consumers are affluent
and they make bulk purchase. Rural consumers prefer to purchase
their daily consumable items from one retailer, they shared few
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reasons for this association like extension of Credit, Good Behaviour
and courtesy of Retailer, Nearer to Home, Supply of quality goods and
they pass on every information related to various schemes available
on various FMCG products so it directly or indirectly benefits the
consumer.
It was found that local shopkeeper charge additional amount on the
products, it affects the cost of the product and it makes the item
costly. Those rural consumers who can afford to buy in bulk quantity,
they travel to nearby city or town and they get discounts and even
free home delivery facilities.
When the researcher tried to understand the buying behaviour or
motive behind purchasing smaller or larger packs of FMCG items, it
was found that it depends on the family size of the household and
their income level. Those rural consumers have higher disposable
income and can afford to buy larger packs of FMCG items seek
additional benefits in buying a larger pack. Rural consumers prefer to
buy low or medium priced products and they expect value for money
for each product that they buy.
It is very important for DIL and GCPL to find out the most effective
advertising technique for rural consumers, Melas/Fairs were found
as the most effective advertising technique followed by Media & Print
Media than Radio and wall paintings. Television advertisements are
more influencing as rural consumers can easily identify the product
the product as it was shown on the television. Earlier, Radio was
considered as a well established medium in rural areas. Television
has proven advantageous in communicating with the rural people
due to the low literacy level.
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A very interesting fact was discovered in the research, researcher
found that rural consumers are very rigid by nature, they don’t easily
switch to another brand/product in case the product is not available
with the retailer, they ask the retailer to make the brand available in
next few days or if the retailer shows his incompetency in making the
product available than they try another retailer and search the same
brand at the another retail outlet.
DIL and GCPL have adopted various promotional schemes to
influence rural customers, it was found that money back offer is the
most effective and it affects the buying decision of a rural customer. It
is followed by other promotional schemes like prizes on bottle cap
and prizes on the specific number of bottle caps etc.
Rural consumers take advice from retailer when they buy any
product; In fact in rural areas shopkeepers recommendation is
considered to be most important and trustworthy. “Word of Mouth”
is considered as a very important tool in rural areas. Both these
FMCG giants are using this promotional tool in spreading out their
messages among the rural consumers which are ultimately the target
audiences of all the FMCG companies.
Problems perceived by the channel members of Dabur India Ltd
and Godrej Consumer Products Ltd in distribution of FMCG
found as:
1) Immovable Products: All channel members spend huge
amount on FMCG items and the major cause was the damage of
products in transit. Many times FMCG products are sold at
discount prices or returned to the manufacturers due to this
reason.
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These results are partly in agreement with those of Thakur
who found that the commodities which have fixed life, pose
special problems to retailers and distributors as these have to
be sold before their shelf-life. Retailers offer discounts on
perishable products nearing their shelf-lives to encourage
consumers to buy and studied how many units of the
commodity they should stock on the shelf to maximize their
expected profit. (1)
2) Dumping of goods: There was a scheduled dumping of the
goods by the Carrying and Forwarding Agencies who were
appointed by the marketers irrespective of the requirements in
a particular month at distributors’ level. This created huge
inventories which blocked the money. Few interior regions
which were located far away from the feeder villages were not
covered by the channels, taking cost factor into consideration.
These results are not totally in agreement with those of
Sangameshwar observed that to remove the conflict between
the manufacturer and its distributors, the consumer goods
giant Hindustan Unilever (HUL) has tied up with a third party
logistics service provider to manage the entire back-end
distribution chain to streamline distribution.
3) Payment terms: It was quite disturbing that some of the
distributors had problems of mode of payment. The main
reason which was creating chaos among channel partners was
that advanced cheques were issued to the manufactures; the
clearance should be done on the very same day of delivery;
distributors had to give 8-10 days credit period to their
wholesalers and retailers, obviously had to have overdraft
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facility with banks which was very costly so they felt it needed
to be addressed.
These results doesn’t support the observations of Banerjee et al
who observed that working capital crunch or expansion plans
of channel members going haywire has become the cause of
payment issue.
4) Excessive costs: Shrinkage cost was the biggest threat
distributors were facing in Jaipur and Alwar rural market; one
distributor lost approximately Rs 22-24 lakhs in previous years
and it was learnt that one of the distributors bid goodbye due
to excessive shrinkage cost. The requirement of the
manufacturer-number of employees, number of vehicles and
floor space the distributors should have, had become onus on
them. The wholesalers had a problem of reaching retailers due
to lack of good roads and distance so fuel consumption and cost
of recovery of credit was more. The rural distributors could not
run their businesses without credit to the down line channel
members and also many retailers who were on-cash-buyers go
to the places like BIG BAZAAR at distant places who sold them
at wholesale price and demand discounts from rural
distributors.
These results are in agreement with those of Nottingham who
reported that the Indian retail industry suffered a total loss of
floundering Rs 9,691 crore due to embezzlement and waste in
2007. The study found that the average shrinkage rate (stock
loss from crime or waste expressed as a percentage of retail
sales) for India is 2.90 percent of sales.
5) Excessive lead time: Some channels faced from over dumping
of products and not because of long lead time. Lack of pucca
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road and inadequate transport facilities have affected the
business to great extent, resulting in the grievances of the
retailer over excessive lead time, therefore, their waiting
period was longer especially those who located far away from
the distributors/wholesalers.
These results are in agreement with those of Kashyap et al who
reported that poor road connectivity-lack of all weather roads
and inadequate transport facilities are responsible for long lead
time.
6) Dearth of Promotional schemes: These two FMCG players
categorized wholesalers in 2 to 3 types depending on their
monthly billing so extra commission was given if they achieved
the levels as prescribed by the manufacturers. It affects the
distributor to some extent; benefits and the promo-offer was
given directly to wholesalers and retailers while distributors
didn’t get the benefit due to this reason
7) Lack of cooperation and cohesiveness: Existing rural
distributors were capable of handling multi-distributorship of
the same company in other areas of rural market to cover the
remotest places and smoothen the distribution system which
could help in reducing lead time and proper coordination and
also might help in long association with the same company.
Some wholesalers and retailers also expected to have syndicate
distribution and found not being resolved getting mingled.
These results are in agreement with those of Rajiv et al who
found that co-operation among distribution channel members
could be fostered through the use of participative and
supportive activities which help in improving performances of
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the channels and fostered the relationship between co-
operation and channel member performance.
8) Unresolved issues: Rural wholesalers were supposed to buy
goods from rural distributors but to increase sales urban
distributors tried to jump their territory and approached the
rural wholesalers giving some 3 to 4% discount which was not
being given by their rural counterpart so there was a
horizontal channel conflict and remained unresolved.
These results are partly in agreement with those of
Ramachandran et al who at ‘All India Distributors Association
Stirr’ reported that the distributors raised a stong protest with
leading fast moving consumer goods (FMCG) companies for
bypassing them and selling their products directly to large
retail stores because making direct supplies would have a
negative impact on the turnover of distributors.
9) Lack of action: Few wholesalers had complaint against
distributors ill treatment due to long distance, consequently
more lead time which adversely affected their sales; after
lodging complaints against such distributors no action was
taken and subsequently they could not deliver in time to their
retailers.
10) Discrimination: Distributors didn’t get credit from companies
but they had to give some credit period to wholesalers and
retailers and because of that they had to have overdraft facility
with bank. They expected to be given some credit by the
manufacturers.
These results are in agreement with those of Banerjee et al.
Their study revealed that almost all organized retailers are
seeking longer credit. Small format retailers, who don’t have an
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extensive network and therefore the bandwidth to negotiate
with companies, are feeling the squeeze more than the big
retail players.
11) Menace of Fake products: Many distributors, wholesalers lost
profit margins due to prevalence of spurious goods with the
same brand name and packing colours and many rural
consumers were becoming victims of such menace.
Kaul also studied counterfeiting and how FMCG companies
were facing problems due to the spurious goods entered in the
distribution channels. He added that other than pulling down
the profits of the FMCG companies, a counterfeit product of
lesser quality gave a “bad name” to the brand.
Conclusions:
Hence it can be concluded that if the Indian organizations want to
reach out to the rural India in an efficient and more effective manner,
they have to re-strategize their policies and should consider rural
perceptions, values and traditions. It has to immerse itself in rural
colours, customs, traditions and modes of communication so that
they can satisfy the needs and desires of rural society. The companies
has to gain the popularity among rural masses and the trust of the
masses by weakening its own excessive dependency on western
styles of advertising on one hand and on its use of deceptive and
manipulative claims on the other, so that it can bring about the
desired behavioural changes. All the different aspects of rural
marketing were studied for this study; Dabur India Ltd and Godrej
Consumer Products Ltd were selected as two FMCG companies for
the study. Their rural marketing strategies including pricing,
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promotional strategies and channel of distribution were studied in
the rural regions of 2 districts of Rajasthan i.e. Jaipur and Alwar.
During the interview it was found that channel partners have similar
opinion as that of rural consumers. According to channel partners,
Dabur India Ltd is more aggressive in rural regions of Rajasthan as
well as Northern regions of the country while Godrej Consumer
Products Ltd is aggressive in southern regions of the country and it is
a part of their business strategies. Similarly the products of Dabur
India are more popular among rural masses in the district of Jaipur
and Alwar. Hence, the rural marketing strategies of Dabur India
Limited were found to be more aggressive and result oriented in the
rural district of Jaipur and Alwar. They were timely announcing
different promotional activities and their advertising was found to be
more influencing and effective.
Recommendations:
1) Innovative medium of communication and use of viral
marketing as communication strategy: In order to address the
need for innovation in rural communication as well as the need to
utilize viral marketing strategy, the suggestion and recommendation
to the marketers is the use of Brand Melas. Brand Melas can ensure a
large participation of people and hence provides a perfect platform
for the marketers to communicate with the rural consumers. The
characteristics of these Brand Melas should be:
1. They should be grand and elaborative so as to generate the effect
of viral marketing not only in the particular locality, but it should also
cover the nearby areas. The stalls including game stalls, food stalls,
rides etc should be vivid as vividness appeals to human minds and
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usually results in viral spreading of messages. This should be the
marketing strategy for the marketers to capitalize on.
2. Communication should be done in regional languages in the form
of game shows, magic shows, movies and skits. This will encourage
them for participation and stimulate the interest level of the rural
population.
3. Distribution of test samples of different products and gathering the
feedbacks from the rural consumers so as to make them feel
important. This will also induce trials among the rural customers.
Moreover it will be quite helpful for the marketers who can collect
valuable consumer insights which are often difficult to gather
through market research.
4. Brand Melas can ensure participation from all members of the
family thereby increasing brand recall by any one of the members of
the family. This is essential as purchase decisions often involve all the
members of the family.
5. Through excessive care and attention, the company can easily
convey that the company values their association as much as their
urban counterparts and they are equally as important business
partners as their urban counterparts.
For example, Dabur uses Melas to sell some of their products. Many
paint companies uses Melas for promotion and communication.
2) Focus on value creation and branding rather than only on
Price & Discounts:
Communications for rural consumers often lay less emphasis on the
value creation aspect and more emphasis on the low pricing of the
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products and services. However the effort should be directed
towards creating a sustainable brand value through communicating
and delivering value as per promise as well as managing consumer
perception and attitudes towards the brand. The communications
should focus primarily on
Developing positive attitude or environment towards a product
or service through effective communication.
Generating brand recall amongst the consumer base.
Building brand image by stressing on the value creation for
customers.
Developing value for money products or services rather
producing cheap products or services.
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References
(1) Thakur, M.”Dump Dumping in India”,
http://www.botree.co.in/industryanalysis.php.
(2) Sangameshwaran,P.”HUL Provides Back-end Support to Distributors-
Outsourced Logistics Services to Ease Distributor Burden”, the
Economics Times, 29th July 2008, p4.
(3) Banerjee. R. and Maiti, M. “FMCG cos Ask Retail Chainsto clear Dues”, the
Economic Times, 11th Nov 2008, Pg 1.
(4) Nottingham, UK. “Shrinkage Costs Indian Retail Industry Rs 9,691 cr
Study”, Financial Express, 15th Nov, 2007.
(5) Kashayap,P. and Raut,S. Rural Marketing Book, Biztantra, pp 189.
(6) Rajiv, M., Trina,L. and Bert,R. “The Influence of Leadership Style on Co-
operation in channels of Distribution”, International Journal of Physical
Distribution and Logistics Management, Vol 26, No 6, 1996, P 32-59.
(7) Ramachandran, S. and Gupta,SD. “FMCG Companies face Kerala
Distributors’ Ire”, Business Standard, 4th Aug 2007.
(8) Banerjee,R. and Maiti,M. “FMCG Cos Ask Retail Chains to clear dues”, the
Economic Times, 11th Nov 2008, Pg 1.
(9) Kaul,V. “Why HLL’s Power Brands Failed”, www.rediff.com, 19th Feb
2005.