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Chapter 7

Findings, Conclusions and Recommendations

Findings

Conclusions

Recommendations

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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

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http://www.botree.co.in/industryanalysis.php.

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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-

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(7) Ramachandran, S. and Gupta,SD. “FMCG Companies face Kerala

Distributors’ Ire”, Business Standard, 4th Aug 2007.

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Economic Times, 11th Nov 2008, Pg 1.

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2005.