Rural Marketing Strategy by Colgate free essay sample

From a modest start in 1937, when hand-carts were used to distribute Colgate Dental Cream Toothpaste, Colgate-Palmolive (India) today has one of the widest distribution networks in India – a logistical marvel that makes Colgate available in almost 4. 93 million retail outlets across the country. The Company has grown to a Rs. 2805 crore plus organization with an outstanding record of enhancing value for its strong shareholder base. The company leads the Rs. 5200 crore Indian toothpaste market by holding 53. 2% of the market share. This report details about the strategies that Colgate adapted in order to expand its market share. RURAL MARKET SCOPE IN INDIA According to the FDI World Dental Federation, in rural areas of India, the penetration of oral care products is just one third of that in urban areas. Here people predominantly clean their teeth with natural items like twigs of neem tree, salt and ash. One can conclude that a tremendous opportunity lies in the oral care market in rural India. We will write a custom essay sample on Rural Marketing Strategy by Colgate or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page The Accenture report gives several indications, including increase in procurement prices resulting in greater purchasing power of rural population allowing consumers to buy discretionary goods. Between 2009 and 2012, spending in rural India reached US$69 billion, significantly higher than the US$55 billion spent by urban populations. Rural India accounts for about 50 percent of India’s GDP and nearly 70 percent of India’s population. STRATEGIES ADOPTED Colgate adopted the following marketing strategies for their low end product, Cibaca Top through which they entered rural segment: 1. ‘Sampark’ – Promotion Strategy Sampark – a specialist in rural advertising, was hired by Colgate to promote their product in the Indian hinterland. Main techniques used were door to door selling and use of publicity vans called A/V vans. These vans were placed at strategic areas on specific market days of different villages in order to access a wider audience. Local salesmen to breach the communication barrier, showcasing of educational films on oral hygiene were additional measures undertaken by Sampark. The major thrust of promotion was through schools and was in line with Colgate’s school dental education plan in collaboration with the Indian Dental Association called â€Å"Young India, Bright Smiles, Bright Futures† 2. Van Model – Distribution Strategy Colgate demanded its distributors to be ‘Intellised’, i. e.  billing information should be computerized through the company software only. They distribute the product to wholesaler and retailer in the assigned rural area. The distributors are given instructions by the company regarding the frequency of visit to be made by the vans to a particular town. An average subsidy of 4% per van, is offered to the distributors based on thei r sales. Distributor’s vans take orders from the wholesalers and retailers on their route and deliver the same on their next scheduled visit. The company gives an initial 5% discount to its distributors, who are asked to provide 10% discount to the wholesalers and retailers. The loss incurred by the distributors is then reimbursed by the company. Thus overall, in order to attract distributor, the company gives extra 10% reimbursement credit on the price of goods sold to wholesalers retailers apart from 5% initial discount. And the wholesalers and retailers avail the margin of approx 15%. 3. Rs 8 Strategy: Colgate-Palmolive (India) Ltd. launched Cibaca Top at an affordable price point of Rs. 8 which was an instant hit, with Cibaca Top garnering a 5. 9 per cent share of the rural market. Cibaca targeted the low price segment that accounted for around 25% of total category volumes. Colgate Cibaca caters to low economy segment as a competitor to brands like Babool, Anchor etc. Consumers preferred Cibaca because of the low rates, flexibility and quality assurance. Moreover, as population and purchasing power of the individuals are increasing there is increased market for toothpaste industry. Apart from the above mentioned strategies, Colgate also decreased their expense on advertisement. Despite low sales in the years 03-05, the company experience increased net profit by decreasing their expenses on advertisement. This can be shown via exhibit number 1 and 2. The green coloured cells indicate the significant increase in the profit.