Rural Marketing Project Essay Example For Students

Rural Marketing Project Essay RURAL MARKETING PROJECT DISTRIBUTION, MARKETING AND CONSUMER BEHAVIOR COMPANY: SHETH BROTHERS PRODUCT: KAYAM CHURNA DATE: 2nd MARCH 2010 SUBMITTED TO: DR. A. C. BRAHMBHATT INSTITUTE OF MANAGEMENT NIRMA UNIVERSITY SUBMITTED BY: VEDANT D. SHETH ROLL NO 084158 MBA FB E INSTITUTE OF MANAGEMENT NIRMA UNIVERSITY ABOUT THE INDUSTRY Ayurvedic medicines are produced by several thousand companies in India, but most of them are quite small, including numerous neighborhood pharmacies that compound ingredients to make their own remedies. It is estimated that the total value of products from the entire Ayurvedic production in India is on the order of one billion dollars (U. S. ). The industry has been dominated by less than a dozen major companies for decades, joined recently by a few others that have followed their lead, so that there are today 30 companies doing a million dollars or more per year in business to meet the growing demand for Ayurvedic medicine. The products of these companies are included within the broad category of fast moving consumer goods (FMCG; which mainly involves foods, beverages, toiletries, cigarettes, etc. . Most of the larger Ayurvedic medicine suppliers provide materials other than Ayurvedic internal medicines, particularly in the areas of foods and toiletries (soap, toothpaste, shampoo, etc. ), where there may be some overlap with Ayurveda, such as having traditional herbal ingredients in the composition of toiletries. The key suppliers in Ayurveda are Dabur, Baidyanath, and Zandu, which together have about 85% of Indias domestic market. These and a handful of other companies are mentioned repeatedly by various writers about the Ayurvedic business in India. Several small companies that have grown rapidly in recent years envision themselves as primary players in the Ayurvedic market. The market for Ayurvedic internal medicines is dominated by Chyawanprash, an herbal honey comprised of about 3 dozen ingredients, with amla (emblic myrobalans) as the key ingredient. The leader in this field is Dabur, which had a 69% market share at the end of 2002; followed by Baidyanath, with nearly 11%, and Zandu and Himani (Emami Group) with about 7. 5% each. A variety of individual herbs, traditional formulations, and proprietary medicines make up the rest of the health products section involving internal remedies, while the remainder of the market is taken up by toothpastes and powders, skin creams, massage oils, shampoos, and other topical preparations. Two of the largest companies involved with providing traditional medicine products, such as the above, are Himalaya Drug Company and  Universal Medicaments. Exports of Ayurvedic medicines have reached a value of 100 million dollars a year (about 10% the value of the entire Ayurvedic industry in India). About 60% of this is crude herbs (to be manufactured into products outside India), about 30% is finished product shipped abroad for direct sales to consumers, and the remaining 10% is partially prepared products to be finished in the foreign countries. The Indian government and non-government organizations have been collecting statistics on the Ayurvedic system in India and these data about the manpower and institutional aspects of Ayurveda have emerged: * Number of registered medical practitioners: 366,812 * Number of dispensaries: 22,100 Number of hospitals: 2,189 * Number of hospital beds: 33,145 * Number of teaching institutions (undergraduate): 187 * Number of upgraded postgraduate departments: 51 * Number of specialties in postgraduate medical training: 16 * Number of pharmacies manufacturing Ayurvedic medicines: 8,400 In India, 60% of registered physicians are involved in non-allopathic systems of medicine. In addition to the nearly 400,000 Ayurvedic practitioners, there are o ver 170,000 homeopathic physicians; India has about 500,000 medical doctors (similar to the number in the U. S. , but serving nearly 4 times as many people). Reliance on Ayurvedic medicine is heavy in certain regions of India, such as Kerala in the Southwest. Many Ayurvedic practitioners in small villages are not registered. ABOUT SHETH BROTHERS Sheth Brothers, a family owned firm, was established in 1972 by Mr. Rasikbhai Sheth along with his three brothers. Today company is managed by seven cousin brothers and they are the second generation of the family. It is into manufacturing of ayurvedic medicines in India. It is the acknowledged leader of Ayurvedic know-how. The company has played a pioneering role in re-establishing ancient knowledge with modern research and manufacturing techniques. The product range includes Kayam Churna, Somva-34, Bijorin and Pratikar Churna. It has its operation based in Bhavnagar. It has all India presence as well as it exports to South Africa and Kenya and gulf countries. Bringing the precious gifts of nature to common people has been the motto of the company. It tries to achieve its prime objective of customer satisfaction and customer retention. The success mantra of the company is â€Å"providing best quality products at affordable price†. The vision of the company is to be the most respectable brand globally. Today after 38 years of presence in the market company is the market leader in the manufacturing of laxative product. â€Å"Kayam Churna† is one of the most successful brands around the country. Today company has more than 30 % market share in Ayurvedic laxatives in the country. Today company is having strong distribution network and logistics management. Company has at least one distributor in each state of India. Company is also exporting its product â€Å"Kayam Churna† to the countries like UAE, Oman, Yemen, South Africa, Kenya, Latin America and Nepal. At present company is also having modern production facility at Bhavnagar to meet increasing demand of its products. Recently the company was awarded with â€Å"Most trusted companies of 2008† in Gujarat by Zee Business Group. VISION Company’s vision is to be globally recognized as leading Ayurvedic Medicinal Firm and achieve a minimum of 20% of market share. MISSION Sheth Bros. is in the business of providing best quality ayurvedic medicine at reasonable rates to its customers; thereby re-establishing ancient knowledge with modern research and manufacturing techniques. PRODUCTS 1. Kayam Churna (Ayurvedic Laxative Medicine) Used for: chronic constipation, Acidity, Gas, headache, ulcer in mouth 2. Bijorin Churna (Tasteful digestive powder) Used for: indigestion and gas 3. Pratikar Churna (for resistance power) Used for: cold, flu, laziness, backache, loss of appetite, throat infection 4. Somva-34 (for healthy growth of baby) Used for: patristic infestation, excessive crying, stomachache The most well known products of the company are kayam churna, somva-34, Pratikar Churna, Bijorin and K-Yuva and Komla Gutika. Komla Gutika was the first product launched by the company in the year 1972. It was useful in shedding extra fat from the body. Komla Gutika brought great popularity and fame to Sheth Brothers, especially in Gujarat and Maharashtra. Later, in 1977 Sheth Brothers launched Kayam Churna into the market. Kayam Churna cures ailments like constipation, acidity and headache. Due to its effectiveness it has become popular across the country. Some other products of Sheth brothers are ‘Somva-34’ which is for the healthy growth of babies, ‘Bijorin’ which is a digestive powder, ‘K-Yuva’ which is a tooth powder. Recently in 2007 company has launched ‘Pratikar Churna’ which is for cold, flu, laziness, backache, loss of appetite ; throat infection. ‘Kayam Churna’ consists 90% of total turnover of the company. DISTRIBUTION NETWORK Company is having strong distribution network across the country. These distributors supply the stock to stockiest which in turn supply the product to the retailers. There is minimum one distributor in each state appointed by the company. Majority of them are with the firm since long time so they can support and help in launching of company’s new products. The company performs regular survey to keep a check on inventory levels maintained at the distributors, stockiest and retailers. It also keeps a track of demand fluctuations in the market. SIZE OF THE COMPANY Turnover Total sales turnover of the company is around 40 crores. Employees At present company have 84 employees out of which 71 are factory workers and 13 are administrative staff. Company also employs around 20 to 25 temporary workers during pick season. Geographical spread Company’s geographical spread is all of India. Company is having strong distributor network across the country. At the time of its inception it was limited to the states of Gujarat and Maharashtra only. Now company also exports its products to many countries. SWOT analysis (Sheth brothers) 1. Strengths * Company has been in the market from past 36 years which has helped establish a strong goodwill in the market. This goodwill and brand image has been established because people trust in the brand name. Company also sells other products using the goodwill of Kayam churna saying â€Å"from the manufacturers of Bhavnagar wala Sheth Brothers†, which means that this is a product from the Sheth Brothers which also manufactures Kayam churna. Another reason for establishing goodwill in the market is, company has always produced a good quality product which has happened because it procures best quality herbs (raw materials) irrespective of its fluctuations in prices. For eg the herbs which are used are available in Kutch (which is of low quality) also but we procure it from southern states becaus e the herbs are of good quality compared to that available in Kutch. * Company has a strong distributor network of 20 entities which has helped to sell our products all over India. In big states like Maharashtra and Uttar Pradesh Company has more than one distributor because of huge size of market. Below distributors company has stockiest in each city which helps in distributing products to retailers like chemists and other provision stores. * It has an open culture where there is a good relation between employer and employee and also they (employees) are free to give any suggestions to the employer. Such an open culture has helped to establish dedicated workforce of around 110 people with a very low turnover. Also the pay-scale is much more then industry standards and company also gives performance based increment which motivates an employee to be more productive. * Company is receptive to the customers and accepts feedback and complaints from them and for this it has started a helpline. In this if customer has any complaint for instance if the product is not working effectively, company asks them to send their address and bottle to the company and in return they send them 2 bottles of Kayam churna which results in customer satisfaction and customer loyalty. Kayam churna is an ayurvedic product which is made of 7 selected herbs and being an ayurvedic product it has no side-effects. 2. Weakness * An attractive packaging is very essential to sell any product but packaging of Kayam Churna is very traditional in looks which might drive away a prospective customer to buy it. * Demand for the product is huge compared to what the supply is; this is because of capacity constraints. Many a times K ayam churna is not available to customers at retail stores like chemists and mom and pop stores leaving the customer dissatisfied. Company has limited funds and it has budget constraints and because of this company is not able to do aggressive marketing compared to the competitors like Zandu and Emami which produces other laxatives like Nityam Churna and Good Morning Churna respectively. * Many a time customers don’t believe in taking faaki (taking in powder form with water) because they prefer taking pills rather then consuming powders. 3. Opportunities * We have a huge market to be exploited around the globe because many Indians are migrating to foreign countries and they carry Kayam Churna bottles along with them because it is not available in all foreign countries. Also laxatives could be used by many people in western and Middle East countries. * Young generation doesn’t take laxatives in powder form and this market can be captured by introducing laxatives in form of pills. * These days’ people don’t have sound eating habits and they also consume junk food a lot which results in constipation and other indigestion problems and they use laxatives to cure this which gives us a huge opportunity to expand the market. . Threats * Company faces competition from players like Zandu and Emami. These players have deep pockets and because of this they can market their product aggressively and because of these they can also indulge themselves in price wars which could be catastrophic to company’s product. There are many indigenous players who sell laxatives and they have also proved to be major competitors. For Eg. People in South India trust these local vaids (doctors practicing Ayurveda) and buy laxatives from them. * Duplication is another major threat for Kayam Churna. Rice EssayWe had intentionally targeted only those customers who lie in the age group of 18 years to 40 years. The results of the survey are as under. RESULTS – URBAN 35 % of the respondents did not show any appreciation for the idea of introducing Kayamchurna in a tablet form. They had their own reasons for the refusal. Some of them were not among those who prefer ayurvedic medicines and showed interest only in allopathic medicine. Some were people who said they would rather consult a doctor before taking any medicine. 65 % of the respondents appreciated our idea of introducing Kayamchurna tablet. Such a major % of the small sample supported our idea further. Although this is a very small sample to be examined when we talk about a product like Kayamchurna, yet, being in the youth age group, we ourselves also know about probable reasons why people avoid ayurvedic medicine like Kayamchurna. Normally the youth finds uncomfortable to take medicines in Churna (powder) form. However the tablet will remove this defect. RESULTS – RURAL 45% of the respondents did not show any appreciation for the idea of introducing Kayam Churna in a tablet form. They mainly find powder form comfortable than their urban counterparts. Some of them were not using any medicines for constipation and related problems. While 55% of the respondents appreciated the idea of introducing Kayam Churna tablet. Questionnaire response: RURAL Dear Sir/Madam. We would like to know your response to the following questions. Name: __________________________________ Age: ____ years 1. Are you already aware of Kayamchurna as a medicine for constipation? ___18___Yes ___2___No 2. If you suffer from constipation would you like to take Kayamchurna (powder)? ___5___Yes ___15___No 3. If your answer to above question is ‘No’, why would you not select Kayamchurna? A. I am not comfortable with powder form. 3 B. Kayamchurna is expensive compared to other brand. 2 C. Kayamchurna is very strong. – 2 D. I use another brand. (please mention)___________3____________ E. Other reason (Please mention) ______________________5______________________ 4. If Kayamchurna is available in tablet form A. It would be very good. I will surely buy it. 11 B. No. Introducing it in tablet form makes no difference. 9 Any other comments (please mention) ________________________ Questionnaire response: URBAN Dear Sir/Madam. would like to know your response to the following questions. Name: __________________________________ Age: ____ years 1. Are you already aware of Kayamchurna as a medicine for constipation? ___14___Yes ___6___No 2. If you suffer from constipation would you like to take Kayamchurna (powder)? (Please tick mark) ___8___Yes ___12___No 5. If your answer to above question is ‘No’, why would you not select Kayamchurna? F. I am not comfortable with powder form. 6 G. Kayamchurna is expensive compared to other brand. 0 H. Kayamchurna is very strong. 2 I. I use another brand. (please mention)___________3____________ J. Other reason (Please mention) ______________________1_______________________ 6. If Kayamchurna is available in tablet form C. It would be very good. I will surely buy it. 13 D. No. Introducing it in tablet form makes no difference. 7 Any other comments (please mention) ________________________ RURAL DISTRIBUTION OF TH E COMPANY At present company has very good distribution network across the country but it is very difficult to reach at the remotest place. As more than 40% sales come from rural market it is very important for the company to design its marketing strategy accordingly. Efficient distribution network is the backbone of each marketing campaign. If product doesn’t reach to the target market, there is no relevance of spending huge amount on advertisements and promotional activity. So, availability of the product is utmost important. At present company is having 20 distributors in different states of the country who distribute to the stockiest than some stockiest distribute to the wholesalers and some stockiest distribute directly to the retailers. Currently company has 935 stockiest across the country. Normally company appoints a stockiest in every town population exceeding 1 lac. Now in extreme rural area company doesn’t have any distribution center. The retailers from such area get our product from the nearby town as per the demand in their village. RURAL MARKETING OF THE COMPANY ADVERTISEMENT Both print media and electronic media are being used by the company. Firm is concentrating on print media as it is more effective for the nature of the business and products and it also concentrates on wall paintings for advertising in rural markets which forms a huge share of the total sales. Company advertises in regular intervals that are most appropriate and cost effective. And there are several versions of firm’s advertisements. We give advertisements according to region and target audience. In India we give advertisement almost in all major languages and concepts of advertisement are also different for different group of people. Currently company is dealing with two advertisement agencies; one based in Rajkot and another in Mumbai. The main functions of agencies are to create new creative ideas and prepare advertisement for us. And they are the intermediaries between the company and all media. All advertisements are released through these agencies and media planning is also done by them. Company spends considerable amount in Doordarshan and Radio to reach remotest place in the country. This is because still there are lacs of people who are not connected to the cable and have no access to the electricity. So Doordarshan is the best medium to communicate with those people who do not have cable and radio is the best option to reach to the people who do not have access to electricity and where electricity cut offs are frequent. Company has also put up hoardings on the highways which connects many villages in many states in the local language. SALES PROMOTION Company gives various promotional schemes to its distributors to boost up the sales of the products. Company gives 4 bottles free with every 96 bottles purchased of a particular product. Company also gives 10 free bottles of its new product with purchase of every 100 bottles of Kayam Churna to promote and make the new product available in the market. Company has set standards for every distributor. They are being awarded if they exceed their standards. Holiday packages are also given on achieving certain benchmark set by the company. CONSUMER BEHAVIOR Rural consumer is all together different from the urban consumer. Their need, preference, lifestyle, priority, spending pattern, income and knowledge about the product are very different from their urban counterparts. Rural people are very price sensitive and they want value for money. One interesting thing is that they are very loyal to the brand they use. They would never switch to other brands easily. I would like to quote one rural guy whom I met during my field work. He said, â€Å"if ‘Kayam Churna’ is not available in the store in my village, I go to buy it for my mother from nearby town which is 15 Kms away and I also buy it for my neighbours. † This shows that they are very loyal to whatever brand they are using. The store man asked him to buy a similar product, but he refused to buy it. Many of the rural consumers are illiterate, they don’t know how to read and write. They identify the product only by the color, shape of the bottle and font of the letters. One retailer during the field study told me that many times people from nearby village come with the empty ‘Kayam Churna’ bottle and asks for it. They do it because they want the same product. They can’t read and write so they have fear of getting cheated. Questionnaire – stockiest (Ahmadabad) Name: ________________________________________________________ Other brands: ___________________________________________________ Turnover: ______________________________________________________ Sales per month (Kayam Churna) ___________________________________________________________ __ Region: ________________________________________________________ Feedback/Suggestion: _____________________________________________ Results: Total 4 stockiest of the company was surveyed, 3 in Ahmadabad and 1 in Bhavnagar. Their turnover ranges from 3 crore to 20 crores. They are also the distributors of some big pharmaceutical companies like Himalaya, J ; J, Gillette, Torrent Pharma, Paras Pharmaceuticals, Zandu, Dabur, Baijyanath and so on. All stockiest are happy with the relationship with the company. One of the stockiest commented that company’s policy is very transparent and fair, while the other stockiest had some problem regarding payment mode and credit period. ‘Sheth Brothers’ has advance payment policy since the beginning so it doesn’t allow any credit period to the distributors and stockiest. And it accepts only demand drafts for the safety of the transaction. Once money is received, order gets dispatched. So stockiest and distributors have to pay some extra charges for demand draft. Company doesn’t accept cheque or bank transfer. Questionnaire – retailer rural and urban Name: _____________________________________________________ Area: ______________________________________________________ Sales of ‘Kayam Churna’/month: ________________________________ Sales of competitor’s product/month: _____________________________ Competitors Product: __________________________________________ Consumer behavior: ___________________________________________ Availability: _________________________________________________ Relationship with stockiest/distributor: ____________________________ Feedback/suggestion: __________________________________________ RESULTS chemists from each rural and urban area were surveyed. Some interesting things came to know from them. In urban area ‘Kayam Churna’, ‘Nityam Churna’, ‘Kabzhar Churna’, ‘Samay Churna’ was available almost in all medical store surveyed. While in rural area ‘Kayam Churna’ was available in 4 out of 5 medical stores surveyed and Ni tyam Churna, Kabzhar Churna and Samay Churna were available in 3, 2, 0 stores respectively. Few of the medical stores in village area also told that few customers come with the empty bottle of Kayam Churna or Somva – 34 so they don’t get cheated. So they identify products by color, shape of the bottle, logo and so on. They also told that rural consumers are very brand loyal and they would not easily switch to other brands. Survey about the availability of the product – ‘Kayam Churna’ Total 3 respondents from rural area were asked about the availability of ‘Kayam Churna’. These people were the regular user of ‘Kayam Churna’ since many years. The village surveyed for this purpose was also very small with less than 5000 population. There were only 2 medical stores in the village with limited medicines. Feedback There is good demand of ‘Kayam Churna’ in the village but availability is the biggest problem always. Half of the times they do not get ‘Kayam Churna’ from the medical store in their village. One of the respondents told that he goes to nearby town to get ‘Kayam Churna’ for his mother and his neighbors too. While other respondent told that if ‘Kayam Churna’ is not available than either he has to wait for some days or he has to buy some local brand which is not as effective as ‘Kayam Churna’. After talking for some time with the respondents I had talk with one of the retailers in the village. He told that he used to go to the nearby town every month and get necessary medicines from there. When he was asked about ‘Kayam Churna’ he replied that there is huge demand of ‘Kayam Churna’ in the village but he doesn’t get good margins and competitors (local brands) give huge margins. So he tries to sell competitor’s product more than ‘Kayam Churna’. This was the main reason behind non-availability of ‘Kayam Churna’ in that village and same can be the case with thousands of villages across India. So it is very necessary to initiate some promotional strategy for these retailers which motivate them to stock ‘Kayam Churna’ in ample quantity. It will also help customer switching to competitors products. PROBLEMS FACED BY THE COMPANY IN REACHING RURAL INDIA * Illiteracy * Financial constraint * Poor infrastructure * Local brands * Dedicated sales force * Price SOLUTION AND FUTURE PLAN OF ACTION * Aggressive marketing strategy * Dedicated sales force team * Introduce sachets * Divert advertisement budget to rural area for next 5 years * Focus on 1 state for 1 year * Promotional scheme for customers and retailers