rural marketing in pakistan mirza shakeel
DESCRIPTION
TRANSCRIPT
Rural Marketing in Pakistan
i a m
Why
Rural
Pakistan
Is
Important
???
68% Population 32% Population
Thanks to TV
Awareness in Rural
Has
Increased
Exponential Growth
30% plus Organic Growth (2o10)
S …of major companies
comes from Rural Pakistan
Around
35%
Wholesale
Retail
Modern Trade
Wholesale
Family Grocers
Pharmacy/Mass Retail
Rural
Changing Market Place
In the world
2.5 Billion people earn 1500$ plus per year
…and remaining
4 Billion people Earn less than 1500$
Majority of these
4 Billion people Lives in Rural
Key Factors
In
Rural Marketing
1. Awareness
2. Availability
Trade Off Between
Distribution Cost
&
Incremental Penetration
Vast Geographical Spread
3. Affordability
Low Disposable Income
Avg. Monthly
Consumption Rs.8945/-
Vs.
Income Rs.10,929/-
Dependent Upon
Vagaries Of Monsoon
4. Acceptability
Low Price
&
Low Margins
Customization
Vs.
Standardization
Shopkeepers At Rural
Divided into
Wholesalers
&
Retailer
Assortments Carried
Smaller SKU’s of
Branded Items
Karyana Items
Unrelated Items
Vegetables, Ice etc
Ideas For Effective
Rural Marketing
1. Product Offering
Smaller SKUs
Single Serving (per capita or per time period)
Mainly due to illiteracy
Distinctive
Packaging
Brands are
identified &
differentiated
on basis of
color
2. Price
Attractive Price Points
Rs.10 sachet contributes
around 50% in surf sales
Rs.10 sachet major
growth driver for
powder creamer
Rs.10 sachet rapidly
growing despite challenges
from smuggled tea
Per Gram Costing
Brand Large SKU Sachet
Surf Excel 0.20 0.17
Everyday Tea Whitener 0.43 0.40
Sunsilk Shampoo 0.78 0.60
Cheaper Small SKUs
enhances consumer
acceptance
Attractive Retail Margins
For Retail Penetration
&
Advocacy
Brand Large SKU Sachet
Surf Excel 4.7% 5.5%
Supreme Tea 5.1% 11.1%
Everyday Tea Whitener 8% 8%
Sunsilk Shampoo 9.7% 9.7%
Better Retail Margins on
Small SKUs improves retail
penetration
Retail Margins
Credit to Retailers improves
Trade Relationship
&
Product Penetration
3. Promotion
Connect in More Understandable Way
Use local dialects to engage
consumers
Use Customized
Media
Trade Engagement Activities
Sachet Display Drives
P&G Golden Stores
2% for Displays
Unilever Project
Interface paying 6-7%
& Perfect Shops for
small stores
Contribute Towards the Society
CSR Activities creates a
positive brand/company image
4. Distribution
These wholesalers supplies product to rural
retailers. Products supplied included branded &
loose (unbranded items)
Traditional Rural Distribution System
Distributor
Retailers
Wholesellers
Wholesale Channel
Playing Dominant Role
Product directly distributed to rural retailers
ensuing product availability & minimizing the
influence of wholesale
Direct Rural Distribution System
Distributor
Retailers
Wholesellers
Direct Distribution to
Rural Retailers
Major Hurdle in
Direct Distribution
Cost of Distribution
…which is overcome by
subsidizing rural distributions
Subsidy varies from 50% t0 100%
of expenses
Heads Unilever (50% sharing)
Unilever (Retail Extension program 100% sharing)
Rentals (Rs. 700/day @ 25 days)
17,500 17,500
Fuel (Rs. 5/km cost & avg. 50 km/day)
6,250 6,250
Salesman Salary 7,500 7,500
Loader Salary 4,500 4,500
Total Cost 35,750 35,750
Breakeven Sales (assuming 3.5% avg. dist. margin)
1,021,428 1,021,428
Estimated sub-dist margin ( at 3.5% net margin )
35,000 (assuming Rs.40,000
sales/day)
35,000 (assuming Rs.45,000 sales/day)
Company Sharing 17,875 (50% cost sharing)
35,750 (100% cost sharing)
Net Dist Margin 17,125 (1.7%) 35,000 (3.4%)
Rural Sales Van Costing
Unilever Subsidizing its
rural distributors
This subsidy varies from
50% to 100% in
(Retail Extension Program)
This subsidy helps in
improving distributors ROI
& numeric expansion
resulting in overall rural
stronghold
An Example Of How Subsidy Helps
…make distribution infrastructure
Self Sustaining
Through Subsidy…
But…
Major Challenge
Consumer Price Index
Shrinking consumer disposable
income
8%
24%
Inflation
2008
2009
21%
2010
Maintaing price points becoming
difficult for companies
Increasing Distribution cost &
struggling ROIs of distributors
Attractive Price Points
Rs.10 sachet contributes
50% plus in surf sales
Rs.10 sachet major
growth driver for
powder creamer
Rs.10 sachet rapidly
growing despite challenges
from smuggled tea
Surf Excel promoting Rs. 15 SKU
Decreasing weight
Decreasing weight
Pressure on Purchasing
Power
So Companies Need to be
very ….
In Short…
Right Price Points
Smaller Affordable SKUs
Customized Media
Collaborative Distribution
Better Retail
Margins
Rural Marketing
…
Inflationary
pressures
So
Rural Marketing
Is…
Provided
You Move
With
Sources www.statpak.gov.pk
www.flickr.com
www.google.com
www.research.nestle.com
HUL CDM Sanjiv Kakkar