Retail Strategy to Enter Rural India

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A Research Study on Rise of Retail sector in Rural India

By

Karan Kathuria (9030241411)

Nitin Solan (9030241419)

Sumit Aggarwal (9030241433)

Vibhor Gupta (9030241436)

Table of Contents

Abstract4
1Introduction5
1.1Background5
1.2Purpose of the Study6
1.3Research Questions7
1.4Research Methodology used7
2.Literature Review8
3.Data Analysis - Preference of Various FMCG goods in rural market8 3.1Toothpaste market in rural sector8
3.2Different Soap Brands in Rural Market9
3.3Preference of different shampoos9
3.4Preference of consumer towards detergents10
3.5Analysis of all data collected11
4.Data Analysis - Strategies used by different companies to expand their market share12 4.1Strategies to penetrate the rural market12
4.2Strategies adopted by companies and output they got14
4.2.1ITC14
4.2.2Amul15
4.2.3Coca Cola’s Parivartan15
4.2.4Project Shakti16
4.2.5 3A Bazaar16
4.2.6Kellogg’s16
4.2.7Nivea16
5Findings from the Research17
Bibliography19

Table of Figures

Figure 1: Demands of Different Toothpaste Brands8
Figure 2: Demand of Soap Brands9
Figure 3: Demand of Shampoo Brands10
Figure 4: Demand of Shampoo in Sache Category10
Figure 5: Demand of Detergents11
Figure 6: Demand of Detergent in Sache11
Figure 7: PUB Model for enhancing consumer awareness13
Figure 8: ITC’s share of rural market14
Figure 9: Sales Figure of Amul15

Table of Tables
Table 1: Strategy Matrix for rural penetration17

Abstract

The revolution in retailing industry has brought many changes and also opened door for many Indian as well as foreign players. In a competitive and volatile market like India there is a constant clash between challenges and opportunities. Plenty of companies are devising strategies to maintain their foothold and increasing their profits in organised retail sector. In order to maintain their supremacy most of the organised retail industries are planning to venture out in rural sector. Rural population in India forms almost 70% of India’s Total Population. Most of the needs of rural population is covered by unorganised retail players. This paper aims at studying the buying patterns of rural consumer with respect to FMCG goods. Different strategies which retail stores or companies selling FMCG goods have adopted in order to reap profits from rural sector and in the mean time expand its footprint in the retail sector. How have these strategies benefitted the companies and what more they can do in order to further expand their share in this sector.

Introduction

1.1Background

India’s GDP figures of last quarter of financial year 2008-09 reveal that rural sector is one sector which has remained aloof from the effects of global recession. One of the major factors for this can be attributed to the fact that 12.2% of world’s population is present in rural India.

There has been growth in agriculture for four consecutive years (for the first time in the past 40 years). While input prices have been benign due to huge subsidy, the minimum support price (MSP) of copra has increased by 18% and that of wheat and paddy (apart from increase in other crops like cotton, sunflower, pulses, soybean, jute, and groundnut) has increased a sharp 40%; besides, MSPs have never declined in the past. The farm loan waiver of INR 716 billion, National Employment Guarantee Act (payout of INR 300 billion), and shift to higher-value crops such as horticulture have put More money in the hands of rural consumers. Salaried workers (teachers, PSU banks and post office employees, power and other government departments) in rural India are mostly in government service (not impacted by the economic slowdown) and the wealth of rural consumers is safe (savings in post office and bank fixed deposits) unlike many people in urban areas who have lost money in the stock market. This has made rural sector immune to the...
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