Rural population driving the Indian cosmetic market

December 29th, 2011 | Posted by vrittivaani in Articles and Opinions - (0 Comments)

India has long glowing heritage of beauty. Specifically Indian women have been conscious beautifying and grooming themselves. In fact the Indian cosmetic market growth is accredited to female consumers. However, it was interesting to know that men and women from rural areas are also contributing to the growing demand of cosmetics in India. According to a recent research report by RNCOS on the Indian Cosmetic Sector, Indian rural population has been increasingly shifting towards more cosmetic products. It is also anticipated that the market will surge at a CAGR of nearly 19% till 2014.

The rural folks in India have gradually become conscious about their dressing and looks. Increasing western exposure, media awareness, penetration of local brands and most importantly, rise in incomes has resulted in higher rural market spends in the cosmetic category. Even the mind set of male consumers is changing. The fast emerging men’s grooming products market has also boosted the cosmetic sector. There is a rise in demand for essential everyday items like bath and shower products, hair care, oral hygiene and skin care products. Realizing the wide potential in rural markets, the cosmetic companies have invested heavily on promoting product visibility among rural folk, which has increased the demand for bar soap, talcum powder, lipstick, tooth powder and hair oil in these areas. The Indian rural market comprises of nearly 828 Million people i.e. 70% of the overall country population. These people generally prefer unorganized market to buy a cosmetic product, which usually belongs to domestic players. Although the penetration of the cosmetic products in these areas is continuously increasing, international players are facing quite reluctant environment due to the lack of consumer confidence.

Domestic players in this sector are giving stiff competition to global players in rural markets. With increased demand and consumer awareness, these players have even upgraded their production quality and technology to retain profits in future. On the other hand, big brands have opted for various innovative strategies to lure the rural consumers. One of the most effective strategies is the sachet format which helps the consumers to try new products at cheaper costs. Companies are focusing to expand their product portfolio in various ranges of products, thus giving an array of choices to the consumers. With the objective of increasing brand recognition and reliability in these markets, companies have come up with innovative consumer engagement activities like the FAL (Fair and Lovely) Vani initiative by HUL and more.

At present, the industry size is worth Rs 10,000 crore, the study by industry body Assocham said. The figures are predicted to increase drastically with rising rural consumer spends in this category. It’s uncertain if domestic players will continue to rule the rural landscapes or global players will take away the pie. But certainly the whole phenomenon has resulted in availing high quality cosmetics products at reduced prices to the consumers.

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Companies leverage the deep-rooted FMCG firms network in rural India

December 28th, 2011 | Posted by Veerendra Jamdade in Articles and Opinions - (2 Comments)

In process of understanding and reaching the scattered rural markets of India, FMCG majors HUL and ITC have formed a strong rural distribution network over the years. These networks reach out to the billion dollar consumer market which companies from various sectors aim to connect with. Hence, companies across sectors such as telecom, pharmaceuticals, banking and even cosmetics are queuing up to join forces with FMCG firms to leverage the entrenched network.

Pharmaceutical giants Ranbaxy and Pfizer recently tied up with the FMCG Company, ITC in order to distribute their over the counter (OTC) products across 6,500 e-Choupal centres spread across 40,000 villages. The e-Choupal initiative by ITC is by far one of the most successful initiatives in empowering the rural farmers thus building a healthy rural network across 40,000 villages in 9 states. The initiative currently empowers 4 million farmers while the number is growing fast. The alliance will open windows for the less equipped consumers in rural areas and provide them with better medical and healthcare products currently available only in urban cities and towns.

As corporate partnerships to push rural growth are on a upswing, the recent Reserve Bank of India (RBI) decision to allow “for profit” companies to be business correspondents of banks has encouraged such tie-ups.  For instance, in a step to promote financial inclusion, SBI bank has tied up with HUL. HUL’s ‘Shakti Ammas’ network,  the self-help groups that distribute the company’s products in remote villages with a population of 2,000 and less, will now be opening SBI bank accounts for people. The alliance will ensure that the rural folks not only get access to capital, but also generate savings. While multiple banks can use a company as a business correspondent, more than one bank cannot be in the same village. Hence, the wide spread network of consumer product companies is the most effective way to gain access to scattered rural market of India.

The Hindustan Unilever (HUL) board also recently announced its strategic alliance with Tata Teleservices for distribution of latter’s telecom products by leveraging company’s distribution network in rural markets in India.

“Creating a distribution network from scratch is a costly affair and hence arrangements with FMCG players are a win-win for both parties as network costs are shared. However, companies leveraging the FMCG’s network will be successful only if they come up with a differential pricing mechanisms, keeping in mind the sensitivity of the market,” said Mr Ranjit Kapadia, senior vice-president of Centrum Broking.

Nonetheless, such tie-ups will induce further consumer brand engagements giving further exposure to the rural folks and also make them aware of various products and services available in the market.

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How Lux used Vritti to become a household name in rural Maharashtra

May 27th, 2011 | Posted by vrittivaani in Articles and Opinions - (0 Comments)
"Rural Marketing, Vritti"

LUX

HUL wanted to create awareness about Lux Sandal and cream bathing, a new variant of Lux Soap among consumers in the tier 2 and tier 3 cities. This variant of Lux was meant to target the ladies of Maharashtra where Sandal, or chandan as it is popularly known, is considered to be very good for the body and makes the skin softer. As a result any soap made of chandan sells easily in Maharashtra. HUL wanted for there to be an increase in recall about Lux Sandal and Cream soap in the target market as opposed to competitors in the same category as well as an increase in the market share of Lux Sandal and Cream soap in tier 2 and tier 3 cities by highlighting the benefits of using this soap.

For meeting their objectives, HUL approached Vritti i-Media to run their campaign. Vritti i-Media along with their DW Audio Network which is a unique, innovative and cost-effective digital technology enabled media delivery solution that enables companies to market and advertise their products and services to Tier-2 and Tier-3 cities and rural markets in the form of audio advertisements. Vritti i-Media have also been appointed as the sole Authorized Agency by MSRTC to run commercial audio advertisements that are played along with the buses arrival/departure announcements on public address systems at bus stands across Maharashtra.

[youtube=http://www.youtube.com/watch?v=SDUJn0WVrcA&feature=channel_video_title]

The audio advertisement jingle was created and ran for a duration of 30 days from the 15th of December to the 15th of January. HUL wanted to have all the ST Bus stands that were under Vritti i-Media and therefore the same jingle was run across all of the 85 bus stands under Vritti i-Media without any changes in the advertisement. This included urban, semi urban and rural locations like Pune- Narayangaon, Solapur- Barshi, Kolhapur, Marathwada – Beed and Vidarbha – Yeotmal.

Once the ads were aired, it could be seen that there was a positive response from the target market. A survey was done on 100 women at bus stops to test the response of the audio ads. The survey focused solely on the women present at the bus stand. The findings showed that there was a deeper emotional connect to Lux Sandal and Cream than compared to other soap brands and women preferred using it rather than other soaps.

"rural Marketing" "rural advertising"The survey pointed out that the amount of people using Lux Sandal and Cream was at a very high level which was 71%. The soaps fragrance and color were found to be the most liked attributes. 19% were of the opinion that the soap had a good effect on skin and made it smooth and soft. Even amongst non users of the soap there were favorable comments as a great deal of them confirmed that they would like to try Lux Sandal and Cream soap.

Thus Lux were able to use Vritti i-Media’s DW Audio Network to tap the rural market and enhance their presence in rural areas resulting in a larger brand recall and market share.

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