BPCL Casestudy Solution - Launchpad 2010

Launchpad (PRER2010_103319, PRER2010_103321)

Prerana 2010

LAUNCHPAD

Creating Differentiation in Rural Markets

BPCL Case Study

Team- ActiveY

NITIE, Mumbai

Rakesh Sahu (PRER2010_103321), [email protected], 9757308086

Shanu Singh (PRER2010_103319), [email protected], 9702018520

1

mailto:[email protected]

mailto:[email protected]


Executive summary

Rural India today, with increased income range and better living standards has tremendous

potential market which is still quite untapped. We have tried to provide rational strategies to

target these consumers. Surveys were carried out to analyze and evaluate the consumer behavior

and we were successfully able to correlate the factors that influence the purchase of petroleum

products in the rural sector. Based on the data collected, we proposed various consumer centric

marketing strategies which tries to encompass the needs and fulfills the expectation of a rural

customer in an effective manner. Strategy includes harnessing the power of information for the

betterment of rural consumers in the form of i-mandi. Concepts of Virtual Transport Agency and

Suvidha are proposed specifically with farmers and drivers of truck/tempo in mind. Also we have

tried to leverage upon the ever increasing mobile density of country, prachar marketing initiative

a perfect platform for marketing BPCL brand has been proposed. Being a cheap and effective

source, we can reach target market directly.

2


Introduction

Indian economy has been growing at unprecedented rate for last few years; this has lead to

growth of both living standard and purchasing power of major part of our population. Till now,

focus of all consumer centric firms has been restricted to urban market but now because of

saturation and intensely competitive low margin operating environment, corporations have

started looking towards untapped rural market.

Rural marketing has been a cliché for some time but still many of the firms failed to market their

brands since they simply overlooked Maslow’s hierarchy of needs pyramid and applied urban

strategies to cater rural consumers.

Through our study we tried to understand the consumer behavior and vis-à-vis designed

strategies to develop prospective customers and their loyalty for long term, towards brand BPCL.

Fig.1 Driving Algorithm

3

Insuring BPCL market share for long term in rural

India

Strategies to serve rural

demand and development of cutomer

Quantify and understand

the rural physcology

through survey

Launchpad (PRER2010_103319, PRER2010_103321) Survey

Area surveyed comes under the Gram Panchayat Khadavali, Nadgaon and Padghe, tehsil/mandal

Panvel, district Raigad, state Maharashtra. Nearest mandi to padghe is either Kalyan or Shahpur

which are 20 and 8 kilometers respectively.

Data was collected from the 70 respondents across categories such as tempo, tractor, pick-up

truck, tractor drivers/owners and tube well users. Average age of tempo driver and pick-up truck

was 29 years and while that of tractor driver was 30(rounded) years.

Fig. 2 Geographical location of survey

First survey (Appendix 1, 2) was conducted with the aim of understanding the psychology of

the villager (farmers, tempo, small truck drivers) towards the buying pattern of the petroleum

related products. The consumer behavior was understood in terms of decision making criterion

with the help of different predictors. Predictors which are proposed as the factors affecting the

behavior and decision are as follows:

1. How often a criteria helps you choose a particular petrol station.

2. Distance of petrol station from village/habitation

3. Brand/Advertisement of petrol/oil brand

4. Word of mouth publicity of oil company by mechanics

5. Proximity of petrol station to Bazaar/Mandi

6. Proximity of petrol station to Mechanics

4

Launchpad (PRER2010_103319, PRER2010_103321) 7. Proximity of petrol station to Banking service

8. Railway e-ticket booking counter.

Second survey (Appendix 2) was conducted with the aim of understanding the factors which

could develop loyalty of the rural customers (farmers) towards the brand. Since majority of the

customer here are involved in agricultural activity therefore information such as previous years

grain/fruit production information, rates of grain/fruit across the major mandis’ in country,

information about transportation and bank loan rates are of immense importance to them. In

order to understand their behavior with respect to value of information we carried out survey

with following predictors:

1. Always go to mandi for information/selling

2. How important is the Information about various bank loan rates

3. Importance of current and previous year buyer market information

4. Would you like to sell your product in a place far off if given better prices

5. Would you like to have goods transport office nearby.

Findings and discussions

First Survey

The randomly selected sample’s main characteristics were male (95 per cent), 30-40 years old,

carried (90 per cent) weight while primary school educated comprises of 70 per cent of sample.

All the respondents indicated that they always use a criterion in choosing a particular petrol

station. Strength of these criteria does vary from person to person and hence on basis of collected

data we have tried to understand the correlation between different criterions with respect to

selection of petrol station.

In table 1 we can see this relationship, petrol selection criterion is highly correlated (corr. >0.5)

to the predictor 2, 4, 6 and 8 i.e distance, Word of mouth publicity, proximity to Mechanics and

5

Launchpad (PRER2010_103319, PRER2010_103321) proximity to Railway e-ticket booking facility respectively. Hence our strategy will be based on

these highly correlated predictors.

Table 1: Multiple Correlations between predictors used in Survey 1

Second Survey

The randomly selected sample’s main characteristics were both male (65 percent) and female (35

percent), 16-50 years old, carried (90 per cent) weight while primary school educated comprises

of 65 per cent of sample.

All the respondents indicated that information is critical for them in making day to day

selling/buying activity. Table2 data reinforces this belief and clearly shows that information and

facilities holds high importance. Hence it can be leveraged to attract new customer base, hence

developing customer loyalty.

Table 2: Average score for information valuation for different parameter, survey 2

Other highlights from surveys:

1. It was found that rural areas seriously lack the availability of authorized service station. If

given opportunity, villagers would like try using service station even if the cost is 15-

20% higher.

6

Launchpad (PRER2010_103319, PRER2010_103321) 2. Small farmers are always in need of money/finance hence they take loan from

commission agents in mandi and hence get restricted to sell their produce to them at

predefined price. Here lies a opportunity to introduce microfinance/financing to farmers

through collaboration, it will be covered under strategy section.

3. Service level provided by the LPG gas cylinder agents is very critical.

7

Launchpad (PRER2010_103319, PRER2010_103321) Strategy

Marketing strategies are devised to cater to the behavior factors studied and analyzed in the

above analysis. On the basis of these studies we propose to establish the following new facilities

near or in compound of the petrol pump hence.

1) Information Mandi (i-mandi): Currently most farmers rely on nearby local mandi for

market rate their produce. Information-mandi is designed to tackle this issue and to get

maximum benefit to the farmers .This information centre would have a computer with

internet connection and a dedicated employee. The prime function of the information

centre shall be:

a. To provide information about the rates of the different crop produces, fruits and

vegetables grown by the farmers in the all regional and national mandis’

b. Weather forecast

c. Prices of seeds and fertilizers in light of related government policies along with

available best deals etc

d. New Government plan/policies/schemes related to rural/agriculture sector

e. New advancement/technology in the field of agriculture/any other rural business

f. Financial Inclusion: i-mandi platform can be leveraged by collaboration with

bank and microfinance institutes. It will help in disseminating the financial

knowledge about savings, loan, microcredit etc. Our information centre can

provide some basic information about the same and help arranging a gathering for

such social causes. This facility should be available with the petrol pumps in the

village with population more than 5000 and which are surrounded by other small

villages. This effort will be in sync with the government commitment of financial

inclusion of all the major part of country. A further study is required for the

optimized decision for locating these facilities.

g. It can also facilitate railway e-ticket booking leveraging on the developed

infrastructure (internet/computer).

8

Launchpad (PRER2010_103319, PRER2010_103321) i-mandi will target the majority of rural population which comprises mainly of farmers.

Since i-mandi provides a platform to address different needs, this ideal platform can be

utilized to advertise the BPCL as a brand. This will be a multi pronged approach since it

will build loyalty and add to the BPCL’s CSR activity.

Fig. 3 i-mandi initiative logo

i-mandi concept itself can be marketed in haats/melas (fairs) in and around villages,

where importance of using i-mandi service could be showcased along with advantage of

using BPCL products.

i-mandi implementation can be done in collaborative model by going for partnership

with CSO, IMD, NCAER and other third party knowledge partners. Apart from it BPCL

can develop its own web platform to make all the information available across petrol

stations.

2) Authorized service station (Suvidha): It was found that rural areas seriously lack the

availability of authorized service station. If given opportunity, villagers would like try

using service station even if the cost is 10-15% higher. BPCL can go for rollout of

Suvidha stations in collaboration with major automotive player such as M&M (tractor,

Jeep), Escorts, Bajaj and Piaggio. Opening of Suvidha should be distributed such that in a

region all BPCL retail outlets should have a different type of service station so that in

totality it could cater to all categories – tractor, jeep, motor bikes and tempo (three-

wheeler shared taxi).

Here stakeholders will benefit from each other since suvidha will get BPCL customer

while suvidha will help in developing BPCL brand and customer loyalty.

9

Launchpad (PRER2010_103319, PRER2010_103321) 3) Virtual transport Agency (VTA): We suggest implementing a virtual transport agency

which will not have vehicles of its own but rather have collaboration with both the

regional and national level transport agencies. VTA can act as a facilitator between farmer

and agencies and help farmers to transport their produce to a location which would get

them better prices. VTA can also facilitate the shared transport since small farmers

generally don’t require full truck load hence reducing the cost. This will help in making

the both ends meet and also it would ensure a twin benefit for the petrol pump in

establishing huge customer base including both farmers and transporters.

4) Prachar regional advertisement (LBS marketing): Since most of the petrol stations in

villages are situated on highways therefore we can have a share of revenue from

transporters/travelers passing through that region. Almost all the travelers have mobile

phones with them, leveraging on this fact we can make use of Location Based SMS, B2C

marketing strategy. When ever a vehicle enters particular location then on basis of

triangulation technique a SMS regarding the services offered in that area would be sent.

Format of the SMS can be :

10


Discount code provided above can be used up by the consumer if the he refill oil in order

of 10 litres and discount can be a small free gift or bumper prize scratch card. Free gift

can be in form of small flashy stickers advertising both BPCL and its collaborating

advertisement partner which can be FMCG, film industry, it will provide them platform

to advertise their product and also solve our purpose.

Example:

1. ROBOs photo sticker with Rajnikant signature impression. This product will

vary with regional characteristics - collaborate with movie production houses.

2. Free newspaper distribution – collaborate with newspaper companies.

Triangulation method works on basis of distance from 3 nearby BTS hence it can be

highly focused advertising strategy as it would directly market the petrol station in that

location. Service partner can be BSNL.

5) Distance and customer service level: Surveyed area is almost captured by

competitor LPG supplier because of fast delivery service. Therefore it is very important

for LPG agent to have intact backend supply, properly trained task force and fleet of

delivery vehicles. Ensuring prompt service shall help in capturing burgeoning rural LPG

market.

11


While in case of petrol/diesel, distance from retail outlet plays very critical role in

deciding petrol station. Therefore idea of mobile retail outlet needs to be implemented

with following checks:

a. Small mobile retail tanker must be tamper proof to avoid the slightest possibility

of adulteration.

b. Schedule of retail tanker should be shared with the village Panchayat,

broadcasted over radio, local cable TV so that rural consumer would know in

advance about the availability.

12


Appendix 1

13


Appendix 2

14


Appendix 2 Continued.

15

Education

BPCL Casestudy Solution - Launchpad 2010