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Food FMCG Product Sales in Rural Tamil Nadu
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12
FOOD FMCG PRODUCT SALES IN RURAL TAMIL NADU
NIMAL CN
Associate Professor
Adi Shankara Institute of
Engineering & Technology, Kalady
RENJITH KR
Assistant Professor
Adi Shankara Institute of
Engineering&Technology, Kalady
Abstract
Rural marketing in India is beset with obstacles and challenges. In this paper we look ata
case study of how a Food FMCG manufacturer overcame the difficulties they faced in rural
Tamil Nadu. Their problems were compounded by the fact that the products they
manufactured were not daily use or core necessities although it was food ingredients.
Keywords: Rural Marketing, Challenges, Rural Promotion, Rural Distribution, Case Study
1. Introduction
India lives in its rural areas. As per Kashyap(2016) 70% of the total population, or
over 80 crore people live in rural India comprising of around 600,000 villages. They
account for 56% of total income and 64% of total spending in India. More than half
the FMCG sales is from rural India.
It is in this scenario that companies like Bakers Colours and Flavour India Ltd. try
and sell their food FMCG Products. They are from Coimbatore and manufacturers of
Bakery Ingredients like Baking Soda, Baking Powder, Icing Sugar, Cocoa Powder
etc. They also manufacture ready to make dessert mixes like Ice Cream, Milk shake,
Custard, Jelly, Falooda, Frappe and Pudding mixes. They are the largest sellers of
Custard powder in South India and number two in the category behind Weikfields.
As a local manufacturer who sells in the South Indian states of Kerala, Tamil Nadu,
Karnataka, Telengana, Andhra Pradesh and Goa and knows the interior markets like
the palm of their hand while this is a great opportunity it is also a great worry. Any
rural marketing exercise in South India is fraught with obstacles. Just like in any
other rural market in India. As per Krishnamacharyulu et al(2011) and
Kashyap(2016) these include small pools of population spread out over vast areas,
RURAL MARKETING ISBN NUMBER 978-93-89488- Page 83
difficulty in access, low literacy rates, limitead awareness and exposure to new
products, lack of marketing infrastructure.. the list is large.
And Bakers has done fairly well in this market doin8 sales that is consistently above
the growth rate of the category year on year. Hence it was felt that it would be
illuminating to find out the modus operandi followed by their sales team, especially
in the rural belts of southern and central Tamil Nadu.
2. Objective of the study
The objective of the study was to understand the problems faced by FMCG Food
marketers in Rural Markets in Tamil Nadu. Further to find the ways how these
challenges and obstacles were tackled by Bakers and how effective their
strategy
was.
3. Scope of the study
Rural India is huge and diverse. This study is pertaining to FMCG Food products
and Tamil Nadu rural market. Specifically South and Central areas of the state
Although many of the factors studied will be applicable elsewhere, and especially
for other FMCG products we cannot generalize the same. More so because rural
markets vary widely across the country in terms of socio cultural characteristics. This
case study gives a glimpse into how challenges can be overcome by even small and
medium businesses.
4. The Case
Ravikumar the Area Sales Manager of Bakers Colours and Flavour in Thoothukudi
may not be a well-known personality. He is a hard working sales person, very
systematic and meticulous. Over the years he had on the job training and worked
different stints in professional set ups like Kelloggs. And now he was in charge of
the whole central and south Tamil Nadu markets for Bakers.
First he analysed the sales data and found that although the sales was good, the
growth rate in rural market especially could be much better. So the first thing that he
did was travel the market and do a system check in order to find the gaps. When he
started his rounds of the areas under him to acquaint himself he found a number of
things that had to be worked out.
RURAL MARKETING ISBN NUMBER 978-93-89488 Page 84
4.1 Coverage of smaller markets
There was a distinct lack of
coverage of smaller markets. Since he
was new to u e
company it took sometime for him to find the exact causes for this and a solution for
the problem.
The first reason he encountered was this. The
company had distributors in larEET
towns and they generally were covering huge areas. They were distributing to the
smaller towns and villages on different routes which stretched upto 30 or 40
kilometers. This amounted to a 70 or 80 kilometer round trip for their salesmen and
delivery van daily. With this kind of travel what the distributors' sales people were
doing was to cover only those outlets on the way which gave a fair amount of
income and were good paymasters.
The smaller villages and shops were in effect being left alone. Which meant good
sales volumes but no growth. Except if a big shop was opened in one of the areas
where they had delivery. So he had discussions with the distributor. At the end of it
he suggested to the distributors to have smaller redistribution distribution stockists
(RDS) at different points and act as super stockists.
The distributors had two problems with that. One they didn't want to lose the sales
they already had. This was easily solved since Ravi told them that for those shops to
which they were already supplying they could go with the status quo and continue
supplying directly. And that whoever is the RDS he will personally ensure that they
did not encroach into the shops by undercutting the prices which was a genuine
the distributors saying that this is
Concern of the main distributor. He convinced
otherwise got and is a bonus for them.
sales which they would not have
RDS agents. Those RDS the main distributor
The second problem was getting good
substantial enough sale for it to be
Contacted felt they would not be getting a
distributor had great reluctance in reducing
Worthwhile. Especially since the main
all that Ravi had to do was find RDS willing to work under
their own margins. Now
the conditions prevailing.
4.1.1 Two solutions
of small shopkeepers in different areas
Shopkeepers: He met a number
1.1.1 Small
distributiorn. He was able persuade
some
length on taking up
and spoke to them at
ISBN NUMBER 978-93-89488- Page 85
RURAL MARKETING
of them to take up distribution of Bakers products. One example was that of a
shopkeeper in Earvady. He had reservations but consented. The first time he and
Ravi took a bike and covered more than 80 kilometers on a round trip that covered
such small localities as Valliyoor, Radhapuram and ended up at the outskirts of
Nagercoil. Ravi did the sales pitch as the shopkeeper was not conversant about the
product range. They took quite a few orders which the shopkeeper delivered a
fortnight later with the stock coming from the Thirunelveli distributor. This time
while Ravi went with the shopkeeper it was the shopkeeper who took the orders
with Ravi helping him out where needed so that he could get enough hands on
experience to become adept at the salespitch. What started off with orders of
11,000/- a month within a year had reached almost a lakh per month. And for a
person who was selling shampoo sachets, local pickles, 10 rupee masala packs and
low cost unbranded products this was a huge improvement in income especially for
an effort of two or three days a month.
4.1.1.2 Van Sales: This is a strategy that had been used by other companies before.
For example, AVT has regularly used it in rural areas. Instead of a distributor with
godowns and sales and office personnel, these are small businessmen with just a van
like a Maruti Eeco who works from home. The best part of these distributors are that
their overheads are low and they can work on small margins and small incomes.
Ravi got a number of van salesmen. One van sales person whom Ravi's team call
"hallwalker covers the area from Tirunelveli to Kadayanallur on Tuedays, to Tenkasi
on
Wednesdays, Ambasamudram on Thursdays and Courtallam on Fridays.
Mondays are for stock replenishment and paperwork and a bit of local sales.
Saturdays are also local sales in small outlets in Tirunelveli. Now this salesman takes
not only Bakers products but those of other brands which are sold in the same
Channel outlets. This saw a jump in sales of over fifty percent for the distributor
under whom the hallwalker was
working.
Once he set up the distribution and they started going regularly to the market there
were other problems that Ravi started facing.
4.2 Stock Returns
The first of the problem was stock returns. The offtake of many of the shops where
RURAL MARKETING ISBN NUMBER 978-93-89488-
Page86
placed his product were low. Added
Ravi
to this were the fact of unorganized
mpetition on one hand or some of his
products and low usage
usa awareness of some
on the
his products other. So the
shopkeepers and distributor were reluctant to
co his products in those areas.
They had concerns of stock return. Most
companies
especially
unorganized ones in such cases ask the shop
credit
keepers
keep th
the product
to
and pay on on or even after selling the product only. Then they take back any
products that go beyond the expiry date.
Ravii could not do that because his was an established brand and was working cash
dd
an carry elsewhere. He could not
have a
separate strategy for one area. If
nkeevers
shopk and distributors in other
places heard of it he would have
hands.
a major
mutiny in his
4.2.1 Return Strategy
He worked out a number of ideas for tackling this at the distributor and shopkeeper
level.
421.1 Distributors: First of all he offered an additional margin
sales instead of on
return stock to the distributors. He was able to convince the distributors on the same
because then they would have less paper work of debit notes and follow up and no
hassle of collecting the returns packing it and sending it to the company. With this
the distributors agreed to put effort
more to persuade even small shopkeepers to
place the product.
4.2.1.2 Retailers:He also
persuaded the distributors not to dump the products and
instead supply small amount of stocks the
to shops and have shorter cycles. For
example if their competition in rural areas Harima were placing 25 packs they would
place only 10. Instead of one visit a month, which could be what their competition's
Sales
people were doing they visited once in a fortnight, that is twice a month.
while this increased the number of visits of the distributor sales people they were
E TO
keep expiry low, were even able to give bill to bill credit from their own
poc and hence get more shops to place the product andmore profit through
volum and all the while risking less returns. Now with the stocks low a major
O r the additional margin provided they were able to keep as income. A win-
Win
situation for all concerned.
RURAL MARKETING ISBN NUMBER 978-93-89488- Page 87
There was a third problem he faced in his quest for growth.
4.3 Lack of exposure
In a market were exposure and awareness was low there was a
question of how to
persuade customers to buy products that they were not using regularly and didn't
quite know the use of except vaguely. Here Ravi had to educate the customer
about
his products and its use. For which he used a three pronged strategy.
4.3.1 Liquid Sampling: In of the
bigger villages where there were local
some
supermarket chains he conducted liquid sampling exercises. For example he placed
plastic kiosks in front of the supermarkets with management permission
during
peak hours of the pre Diwali days and distributed badam drink in paper cups for
free. He found in sales
a
spurt during the time in the supermarket not only for
badam drink powder but many other products of Bakers associated with Diwali
food. This he did for different
products in different places.
4.3.2 Recipe booklet: He printed recipes using
the different products
they were
selling in sheets of paper in the vernacular language and gave to the retailers to
distribute to the customers who had any doubt with the
products they were selling.
4.3.3 Retailer Orientation: He also gave orientation to the retailers on the uses of
different products like Apple Cider Vinegar. For
Soda he even gave Baking
examples of non food use. Now in the rural areas the retailer many a time acts as an
opinion leader and customers ask for his opinion and advice. This ensured that they
were comfortable to talk about the products and many a time they even took pride
in the fact that they could explain to the locals about the different food items that
could be manufactured
using Bakers ingredients.
4.4 Sales force
He also had problems in finding good salespeople who were willing to learn about
the products, improve sales and then stick on for
minimum period of time. There
a
was also the concern that with the kind of returns the salespeople could bring the
company could not afford to employ them. Usually Bakers has a policy of having a
sales officer for every 4-5 lakh sales in an area.
Conversely they were unwilling to
hire people if the returns too low
were or
spend more than 5-10 percent of sales per
salesperson salary.
RURAL MARKETING
ISBN NUMBER 978-93-89488- Page 88
He c a m e 1uD with two solutions for this. In some
cases he asked the distributor to ger
hispeople
also work as a sales
to a
person for Bakers on a
acting as order taker or
an orderi
as an
commission basis instead of
just acting In delivery boy. some areas where he had problems in
finding sales
ing sales reps he joined hands with
Area Sales an
ng firm, pooled the resources
Manager from a non-
competing
and got a sales
representative to wor
ork for both
rompanies sharing the same route and distributor.
companies
se were some of the major problems that were cleared
by tried and trusted as
well
l as innovative methods. But there minor irritants and obstacles that
are
keeP
croppin up in rural marketing which has to be solved
as and when it
arises. For
ample
examp Ravikumar did the
liquid sampling for the badam drink to
hort term sales but also
improve the
persuaded his company to come out with size smaller
rhets, the idea for which came
during his liquid sampling exercise.
5. Conclusion
With all these measures Bakers was able to bring the company into a
path of
Sustained growth even in the smaller rural areas of South and
Central Tamil Nadu.
And in this he was
supported all the way
by his bosses the Vij family especially
Naresh Vij his immediate boss. But in
marketing there never is a finished product. A
company has to keep on
innovating and try to come out with new ideas constantly
to keep ahead of the pack. This can be in terms of product differentiation,
pricing
strategies like offers and schemes, channel decisions like the ones
mentioned above
and unique promotion schemes. As an established regional brand competing against
unorganized Bakers have to think national and act local.
ones
Which they intend to
keep doing with dedicated salesmen at the helm like Ravikumar.
on
References
L.
Pradeep Kashyap, The Rural Marketing, Pearson India Education Services, New Delhi,
2016.
2.C.S
4CS.G.
Krishnamacharyulu and Lalitha Ramakrishnan, Rural Marketing, Pearson
Education, New Delhi, 2011.
3. www.bakersfoodsindia.com
RAL MARKETING
ISBN NUMBER 978-93-89488-
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