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Rural shop audit – A study on FMCG brands sold in rural shops in Tamil Nadu K Arul Rajan Gone were the days when a rural consumer went to a nearby city to buy “Branded” products and services. The impact of globalization has made significant change in the rural markets and is felt as much as in urban. Trends indicate that the rural markets are coming up in a big way and growing twice as fast as the urban, witnessing a rise in sales. Today, rural markets are critical for every marketer – be it for a branded shampoo or batteries.

According to a National Council for Applied Economic Research, there are as many ‘middle income and above’ households in the rural areas as there are in the urban areas. Similarly there are almost twice as many ‘lower middle income’ households in rural areas as in the urban areas. Hindustan Lever Limited had identified that the money available to spend on FMCG products by urban India is Rs. 49,500 crore as against is Rs. 63,500 crore in rural India.

Also the projected study by NCAER suggests that the number of middle and high income households in rural India is expected to grow from 80 million to 111 million by 2007; whereas in urban India, the same is expected to grow from 46 million to 59 million. Also, 40% percentage of students graduating from colleges are from rural areas, they become the decision makers and are similar in education, exposure, attitudes and aspirations to their counterparts at least in smaller cities and towns.

Our research aims at identifying whether the globalization has an effect on the shops in rural markets; whether the rural shops are selling global brands in a market or still sticking to the products made at local markets (the unbranded products and especially by informal sector). Towards the end the researchers also try to understand some of the purchase and distribution aspects. INTRODUCTION: Rural marketing is the recent buzzword for majority of the FMCG Majors, of course India providing the plethora of opportunities to be harvested.

That’s evident that the FMCG majors like HLL, Pepsi, Coca-Cola, LG Electronics, Britannia, Standard life, Philips, Colgate Palmolive have started smelling the aroma of rural market. If one looks at India, almost 70 percent of the population lives in 627000 villages in rural areas. In that, almost 90 percent of the population is concentrated in the villages with a population of less than 2000. As per National Council for Applied Economic Research (NCAER) identifies a significant proportion of “middle income and above” households in the rural areas as in the urban areas; “lower middle income” households are twice that of the urban.

Comparing the highest income level, there are 2. 3 million urban households as against 1. 6 million households in rural areas. The projected estimation shows that, the number of middle and high income households in rural India is expected to grow from 80 million to 111 million by 2007. In urban, this is expected to grow from 46 million to 59 million. So by looking the absolute size, the rural India is expected to be double that of urban. THE INDUSTRY TREND – THE CURRENT SCENARIO: Gone were the days where the rural consumer travels and purchases the branded products and services from a far away city.

Nowadays the MNC’s have flocked the rural market and started establishing its brands. For any marketer the rural market is very vital whether to sell a shampoo or a television. According to Mr. D. Shivakumar of HLL, the money available for spending on FMCG by urban India is Rs. 49,500 crores as against Rs. 63,500 crores in rural India. Rural FMCG market projections are given below: CategoryGrowth %2001-20022006Rural market share TotalRural shareTotalRural share Toilet soap13. 496456021180861129162. 4 Body talcum powder23. 6514457934237229254. 1 Tooth paste23. 50319814419376414045. 1

Cooking oil10. 912094615731322952580673. 4 CategoryGrowth %2001-20022006Rural market share TotalRural shareTotalRural share Vanaspati7. 63454928466648410862. 6 Tea10. 9780094955134958337661. 9 Health beverages28. 54605398211039. 839. 8 Electric bulbs9. 40354137155531. 731. 7 Electric tubes10. 157430812138. 738. 7 Cigarrates13. 0997846422180261187965. 6 Packaged biscuit6. 79286213234014183746. 2 Hair oil/cream30. 85300179115968959. 7 Source: business intelligence unit and NCAER, Business world, 11 Oct. 1989 The Indian rural market having a huge potential have pulled the MNC’s towards them.

As a result of growing affluence, fueled by good monsoons and the agricultural output to 200 million tones from 176 million tonnes in 1991, rural India has a large consuming class and 58 percent of the total disposable income. The following table shows the Indian FMCG Market -Brand penetration and Indian FMCG companies – overall rural market penetration. Indian FMCG market – Brand Penetration: CategoryWithin category %Highest penetration brand (company) Toilet soap91Life buoy (HLL) Washing cakes/bar88Wheel (HLL) Edible oil84Double Eran Mustard

Tea77Lipton Taaza (HLL) Washing powder/liquid70Nirma (Nirma) Salt64Tata Salt (Tata) Biscuits61Parle G (parle) Skin cream58Fair and lovely (HLL) Talcum powder65Ponds (HLL) Source: www. estrategicmarketing. com Indian FMCG companies – overall rural market penetration: CompanyHousehold penetration HLL88 Nirma Chemical Work56 Colgate Palmolive33 Parle foods31 Malhotra Marketing27 Source: www. estrategicmarketing. com Coca cola India has doubled the number of outlets in rural areas from 80000 in 2001 to 160000 in 2003, which increased market penetration from 13 % to 25%.

It also brought down the average price of it products from Rs. 10 to Rs. 5, thereby bridging the gap between soft drinks and the other options like tea, butter milk and lemon water. It doubled the spend on DD and the result being 80% of the new coke drinkers are from rural market. Looking at Godrej, it recently introduced three brands: Cinthol, Fair glow and Godrej in 50 gram packs, priced at Rs. 4-5 meant specifically for MP, Bihar and UP. HLL, the first MNC to realize the potential of India’s rural market, has launched a variant of its largest selling soap brand, lifebuoy at Rs. for 50 gm. HLL’s partnership with self help groups covers over 5000 villages in 52 districts of Andra Pradesh, Karnataka, MP and Gujarat. The vision is to reach 100000 villages thereby touching about 100 million consumers. A typical Shathi entrepreneur conducts business of around Rs. 15000 per month. Coco cola has also introduced Sunfill, a powdered soft drink concentrate. The instant and ready to mix sunfill is available in a single serve sachet of 25 gm priced at Rs. 2 and multi serve sachet of 200 gm priced at Rs. 15.

Hyundai India is betting on tie ups with varied organizations to expand its reach in the semi urban and rural areas due to the increased demand in these areas. By concentrating on rural areas, Hyundai’s sales percentage has increased by four percentages in two years. Life Insurance Corporation (LIC) and SBI Life insurance Co. , the Department of posts have drawn up an elaborate plan to capture a sizable market of the rural insurance market and set a target of collecting Rs. 7160 Crore as sum assured for its Rural postal insurance scheme, which is nearly double of the Rs. 612 crore sum assured collected in the previous year. HDFC standard life topped private insurers by selling policies worth rs. 3. 5 crores in total premia coming out with tailor made products for the rural market. In order to reach distant rural customers, Bharat Petroleum have introduced the rural marketing vehicle (RMV) way back in 1999 in the state of Punjab. This vehicle moves from village to village and fills cylinders on the spot for rural customers encouraged by success of this method of reaching the rural customers.

BPC have introduced 12 such vehicles covering 45000 customers in the states of Punjab, Tamil Nadu, Maharastra, West Bengal, Karnataka, Gujarat, Mathya Pradesh, Chattisgarg, Rajasthan, Uttarpradesh. ITC followed a cost effective alternative supply chain system to deal with the farmers to buy products for exports in getting transformed into a Meta market in rural India. ITC has setup over 700 choupals covering 3800 villages in four states dealing with products ranging from Soya bean, coffee, aqua culture and wheat RURAL MARKET:

A location is defined as rural if atleast 75% of the population is agrarian (Huhmann Sara, Tapping India’s Rural market, Journal of rural research). Our nation is classified in around 450 districts and approximately 630000 villages, which can be sorted in different parameters such as literacy levels, accessibility, income levels, penetration, distances from nearest towns etc. , the features of Indian rural markets are Large and scattered market Major income from agriculture Low standard of living Traditional outlook Diverse socio economic backwardness

Infrastructure facilities like roads, warehouses, communication system, financial facilities are in adequate in rural areas. SCOPE OF THE STUDY Since there lies a huge potential for the MNC’s in the rural market and many already looking stronger in the market, the scope of the study is to identify whether the globalization has made an significant effect on the shops in rural markets with respective to selected products; what are the global brands available in rural markets competing with the local brands. Towards the end the study attempts to understand some of the purchase and distribution aspects of the rural shops.

This study is conducted in the rural areas of Udumalpet, Poollachi, Karamadai and Palladam of Coimbatore district. LIMITATIONS OF THE STUDY 1. The study is restricted to Udumalapet, Pollachi, Karamadai and Palladam. 2. The study is restricted to the selected 16 product categories only. OBJECTIVES OF THE STUDY 1. To identify whether the globalization has made an significant effect on the shops in rural markets with respective to selected products 2. What are the global brands available in rural markets competing with the local brands 3. To understand some of the purchase and distribution aspects

RESEARCH METHODOLOGY RESEARCH DESIGN The study is Descriptive in nature. NATURE OF DATA The nature of data used for this research is both Primary and Secondary data. Primary data is collected from the shop keepers and secondary data is collected from magazines, journals, and books and from web sites. SAMPLE DESIGN a. Sample Unit The sample unit consists of rural shop owners of Udumalpet, Pollachi, Karamadai, and Palladam. b. Sample Size The sample size for this study is 120 c. Sampling Area The sampling areas are Udumalpet, Pollachi, Karamadai, and Palladam. d. Sampling Technique

Convenience Sampling A convenient sample is obtained by selecting convenient population units. Here the fraction of the population being investigated, are selected neither by probability nor by judgement but by convenience. METHOD OF DATA COLLECTION Observation, Interview schedule is adopted for Primary data collection. Analysis and interpretations Product Category: BATH SOAP Availability (%) Cinthol80. 83 Hamam85. 8 Lux94. 1 Rexona88. 3 Jeeva62. 5 Margo65. 8 Johnson & Johnson59. 2 Medimix77. 5 Mysore Sandal70 Lifebuoy95. 2 Interpretation: 95 percent of the shops in rural areas sell Lifebuoy. 4 % of the shops sell Lux which is considered to be a beauty soap, followed by Rexona and Hamam. About 85 % of the people specify the brand name they want and only 17 % of the people ask by product name. The fastest moving brand in the bath soap is still Lifebuoy. Product Category: TOOTH BRUSH ProductAvailability (%) Colgate59. 16 Pepsodent46. 66 Close-Up29. 16 Ajanta15. 83 Oral-B15. 83 Anchor8. 33 VIP Jawan8. 33 Promise2. 5 Aqua Fresh5 Cibaca Flouride0. 83 Interpretation: Around 60 percent of the shops in rural areas sell Colgate followed by Pepsodent which is 47 %.

Only 1% of the shops in the rural areas are selling Cibaca Fluride. About 40 percent of the people specify the brand name they want and 65 percent of the people are still asking by product name. Shop keepers are purchasing the product Colgate from the wholesale and retail shops for around 32 % and 16 % of the shopkeepers get the product Colgate directly from the distributors. Of all the tooth brushes that are sold in the rural markets, the fastest moving brand to be seen is Colgate. Product Category: TOOTH PASTE ProductAvailability (%) Colgate 71. 6 Close up68. 3 Pepsodent57. 5 Vicco17. 5 Anchor Gel5. Promise0. 83 Babool5 Cibaca Flouride0. 83 Anchor— Gopal— Interpretation: About 72 % of the shops in rural areas sell Colgate followed by Closeup which is 69%. Of the Cibaca Flouride and Promise are to be seen only in 1% of the shops, and Anchor and Gopal toothpaste are not to be seen at all. About 92 percent of the people specify the brand name and only 10 percent of the people are asking by product name. Around 48 % of the shop keepers are purchasing the product Colgate from the wholesale and retail shops and 40 % of the shop keepers get the product Colgate directly from the distributors.

Of all the toothpastes that are being sold in the rural markets, the fastest moving brand to be seen is Colgate. Product Category: MASALA ProductAvailability (%) Surthi69. 17 CBR33. 33 Adithya4. 14 Annapoorna17. 5 MTR15. 83 Eastern1. 67 Interpretation: About 70% of the shops in rural areas are selling Sakthi masala followed by 34% of the shops selling CBR. Only around 2% of the shops in the rural areas are selling MTR. About 60 percent of the people specify the brand name they want and only 45 % of the people ask by product name.

Around 45% of shop keepers are purchasing the products Sakthi masala from the whole sale and retail shops and 27% of the shop keepers get the product CBR directly from the distributors. Of all the masala items that are being sold in the rural markets, the fastest moving brand to be seen is Sakthi masala. Product Category: COFFEE ProductAvailability (%) Nescafe38. 3 Bru65 Brooke Bond40 Mr. Bean6. 7 Coffee Day4. 17 Kannan2. 5 Narasu’s45. 83 Green Label18. 33 Interpretation: About 65 % of the shops in rural areas sell Bru followed by around 46% of the shops selling Narasus coffee.

Only 2. 5 % of the shops in the rural areas are selling Kannan coffee. About 78% of the people specify the brand name they want and 25% of the people ask by the product name. Around 29% of the shop keepers are purchasing the products Bru from the wholesale and retail shops, and around 15 % of the shopkeepers get the product Bru and Narasus coffee directly from the distributors. Of all the coffee being sold in the rural markets, the fastest moving brand to be seen is Bru. Product Category: Tooth powder ProductAvailability (%) Colgate 96 Anchor25 Dabur16. 5 Vicco30. Gopal27. 5 Pepsodent40. 8 Pyorea27. 5 Namboodri13. 3 Roja12. 5 Ajantha1. 67 Interpretation: About 96% of the shops in rural areas sell Colgate followed by around 41% of the shops selling Pepsodent. Only 1. 6 % of shops in the rural areas are selling Ajantha tooth powder. About 92 % of the people specify the brand name they want and only 10% of the people ask by product name. Around 52% of shop keepers are purchasing the product Colgate from the wholesale and retail shops and around 17% of the shop keepers get the product Colgate directly from the distributors.

Of all the tooth powders being sold in the rural markets, the fastest moving brand to be seen is Colgate. Product Category: PENCIL ProductAvailability (%) Nataraj16. 3 Camlin49. 16 Apsara14. 16 Faber castle2. 5 Platinum extra dark— Playboy— Ambassador0. 83 Apollo— Winball— Monarch— Interpretation: About 49 percent of the shops in rural areas sell Camlin followed by 17% of the shops selling Natraj. Only around 1% of the shops in rural areas are selling Ambassidor pencil. About only 5% of the people specify the brand name they want and 97 % of the people ask by product name.

Around 37 % of the shop keepers are purchasing the product Natraj from the wholesalers and retail shops and around 14% of the shop keepers get the product Natarj directly from the distributors. Of all the pencils that are sold in the rural markets, the fastest moving brand to be seen is Natraj. Product Category: SHAMPOO ProductAvailability (%) Ajantha Health13. 33 Ayush33. 33 Chik71. 66 Clinic Plus All clear60 Pantene32. 5 Head & Shoulders43. 3 Sun- Silk56. 66 Meera36. 67 Vatika16. 66 Nile Herbal16. 66 Interpretation : About 71% of the shops in rural areas sell Chik followed by around 60 % of the shops selling Clinic plus.

Only around 14 % of the shops in the rural areas are selling Ajantha Health. About 89 % of the people specify the brand name they want and only 12% of the people ask by product name. Around 75% of the shop keepers are purchasing the product Pantene from the wholesalers and retail shops and around 47% of the shop keepers get the product Nile Herbal directly from the distributors. Of all the shampoo that are being sold in the rural markets, the fastest moving brand to be seen is Clinic plus. Product Category: CANDIES Availability (%) Nutrine 595 Alpenliebe23. 311. 6 Parry42. 511. 6 Orange candy108. 33 Joyco7. 59

Kimmy Koffse3. 3311. 6 Interpretation: About 59% of the shops in rural areas sell Nutrine followed by around 43 % of the shops selling Parrys. Only around 4% of the shops in the rural areas are selling Kimmy Koffse. About 55% of the people specify the brand name they want and only 60% of the people ask by product name. Around 38% of the shop keepers are purchasing the product Nutrine from the wholesale and retail shops and around 10% of the shop keepers get the product Parrys directly from the distributors. Of all the candies that are being sold in the rural markets, the fastest moving brand to be seen is Nutrine.

Product Category: CHOCOLATES ProductAvailability (%) Cadbury’s46. 67 Parry20 Nestle32. 5 Asai6. 67 Coffee- Bond4. 17 Ahasa2. 5 Double Milk2. 5 Interpretation: About 47% of the shops in rural areas sell Cadbury’s, 33% of them sell Nestle followed by Parry. Only 3% of the shops in the rural areas sell Ahasa and double milk. About 85% of the people specify the brand name they want and only 20% of the people ask by product name. Around 37% of the shop keepers are purchasing the product Cadbury‘s from the wholesale and retail shops and 19% of the shop keepers get the product Cadbury’s directly from the company distributors.

Of all the chocolates that are being sold in the rural markets, the fastest moving brand to be seen is Cadbury’s. Product Category: HAIROIL ProductAvailability (%) Aswini 15. 83 VVD65. 83 Parachute47. 5 Dabur Vatika7. 5 Dabur Amla7. 5 AVM10. 83 Johnson & Johnson8. 33 Keshavardhini2. 5 Clinic All Clear5 Ayush IT5 Interpretation: About 66% of the shops in rural areas sell VVD, followed by Ashwini (16%). Only 3% of shops in the rural areas are selling Kesavardhini. About 70% of the people specify the brand name they want and only 35% of the people ask by product name.

Around 29% of shop keepers are purchasing the product VVD from the wholesale and retail shops and 4% of the shopkeepers get the product Kesavardhini directly from the company distributors. Of all the hair oils that are being sold in the rural markets, the fastest moving brand to be seen is VVD. Product Category: SOFT DRINKS ProductAvailability (%) Coco-cola31. 66 Fanta28. 33 Rasna19. 16 Pepsi32. 5 Kissan 1. 66 Frooty10. 83 Kalimark1. 66 Mirinda4. 16 Citra4. 16 Bovonto0. 83 Interpretation: About 33% of the shops in the rural areas sell Pepsi, 32% of them sell Coca-cola followed by Fanta and Rasna.

Only 1% of the shops in the rural areas are selling Bovonto. About 56% of the people specify the brand name they want, and only 37% of the people ask by product name. Around 35% of the shop keepers are purchasing the product Coke from the wholesale and retail shops and 18% of the shop keepers get the product Pepsi directly from the company distributors. Of all the soft drinks that are being sold in the rural markets, the fastest moving brand to be seen is Pepsi. Product Category: PEN ProductAvailability (%) Reynolds62. 5 Rotomac35. 83 Luxor20 Cello32. 5 Montex29. 16 Add 24. 16 Faber Castle 13. 3 Camlin25 Todays18. 3 Schefield scera8. 3 Interpretation: About 63% of the shops in rural areas sell Reynolds, 36% of the shops sell Rotomac followed by Montex. Only 9% of the shops in the rural areas are selling Schefiels scera. About 83% of the people specify the brand name they want and only 24% of the people ask by product name. Around 33% of the shop keepers are purchasing the product Reynold’s from the wholesale and retail shops and 13% of the shop keepers get the product Reynold’s directly from the company distributors. Of all the pens that are being sold in the rural markets, the fastest moving brand to be seen is Reynolds.

Product Category: TEA ProductAvailability (%) Brooke Bond83. 33 3 Roses10. 83 Tata Chakra Gold28. 33 Lipton10. 83 AVT52. 5 Goldstar83 Taj Mahal10. 83 Arasan0. 83 Nestle Nes Tea- Ooty Tea- Interpretation: About 84 % of the shops in rural areas sell Brooke Bond, 83% of the shops sell Goldstar followed by AVT and TATA. Only 1% of the shops in the rural areas are selling Arasan. Nestle Nes Tea and Ooty Tea is not to be seen in the shops at all. About 90% of the people specify the brand name they want and only 16 % of the people ask by product name.

Around 99% of the shop keepers are purchasing the products Brooke bond from the whole sale and retail shops and 1% of the shop keepers get the product Arasan and Goldstar directly from the company distributors. Of all the tea that are being sold in the rural markets, the fastest moving brand to be seen is Brooke Bond. Product Category: BISCUITS ProductAvailability (%) 50-5020 Parle G36. 7 Mango Treat31. 7 Pineapple Treat30 Milk Bikis64. 74 Orange Treat 32. 37 Good Day58. 1 Brita Marie Gold23. 24 Maska Chaska25. 73 Horlicks22. 41 Interpretation:

Around 65% of the shops in rural areas sell Milk Bikis, 94% of the shops sell Good Day followed by Parle G. Only 20% of the shops in rural areas are selling 50-50. About 70% of the people specify the brand name they want and only 33% of the people ask by product name. Around 37% of shop keepers are purchasing the product Milk Bikis from wholesale and retail shops and 44% of the shop keepers get the product Good day directly from the company distributors. Of all the Biscuits that are being sold in the rural markets, the fastest moving brand to be seen is Britannia. Product Category: MOSQUITO COIL ProductAvailability (%)

All Out 17. 5 Elephant Jumbo 23. 3 Good Knight54. 16 Maxocy-clothen20 Good luck syndicate5. 83 HCT3. 3 Jet 3. 3 Major3. 3 Mortein39. 16 Sumo XL9. 16 Interpretation: About 55% of the shops in rural areas sell Good Knight followed by 40% of the shops selling Martin. Of this HCT, Major and Jat are to be seen only 4% each in the rural shops. About 5% of the people specify the brand name they want and 94% of the people ask by product name. Around 30% of the shop keepers are purchasing the product Good Knight from the wholesale and retail shops and 9% of the shop keepers get the product Martin directly from the company distributors.

Of all the mosquito coils that are being sold in the rural markets, the fastest moving brand to be seen is Good Knight. CONCLUSION: There is a significant penetration of multi national brands in the rural markets. The brands like Nescafe, Bru, Johnson & Johnson, Carbury’s, Nestle, Pantene, Pepsi, Coca-cola, Faber Castle, Reynolds etc. , have started selling in the rural shops. Hence this study proves that globalization has helped multi national brands penetrate rural Indian market.

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