04/08/2023 RM SAINAND BEEDIS | IIM KOZHIKODE 1
Rural MarketingSAINAND BEEDIS
Amber Yadav Arnab Guha Malik Hersh Kenkare Abhisek Paul Ankur Dey Tarafdar
Sumanto Das
15/68 15/74 15/91 15/197 15/204 15/256
Submitted By Group 9
04/08/2023 RM SAINAND BEEDIS | IIM KOZHIKODE
Manufacturing in Koratla and Hyderabad (Karimnagar District, AP)
Bhadrachalam (83.33%)
Cherla (92.86%)
Palawancha (8.57%)
Kothagudam (0%)
January to June : 150 bags per month (Peak Season)
July to December : 128 bags per month (15% drop in sales ) (Lean Season)
+
_
Current Sales trend:
2
Started in 1979-80 by Satyanarayana
Production facilities in Hyderabad and Koratla in
Karimnagar district
Leading beedi manufacturer in
Bhadrachalam town area in terms of
market share
Case Facts!!!
04/08/2023 RM SAINAND BEEDIS | IIM KOZHIKODE 3
•Regional and Local Players•Stagnant Sale
Intense competition
•Counterfeit Products
Low Quality / Price
•Similar Quality as competitor•Low Price
Failure of Farmash Sainand Beedis
CUSTOMERS•Average monthly income of Rs. 1000•Purchased beedis in loose for Rs. 1 or Rs. 2 instead of buying in packs
•Quality, brand and price are critical•Target market: agricultural laborers and teenagers
COLLABORATORS•Started off by selling directly to retailer
•Currently have 2 distributors in Bhadrachalam and Cherla
COMPETITION•Highly fragmented market with no beedi
manufacturer having a share of more than 5%
•Competition regional in nature•PVS beedis biggest competitor in
Bhadrachalam• S beedis a competitor in Palawancha and
Kothagudam markets•Competition from imitation brands
Maintain growth rate of 5%
Develop Product Strategy (Segmentation, Target Market, Positioning)
Current Scenario!!!
Product sold in 2 sizes : big-sized and normal sized
70% high quality tobacco, 30% lower quality tobacco
Size of the bag
20 beedis made one packet
20 packets made one bundle
10 bundles were tied together
10 such units made one bag
Hand rolled beedis by the locals
Tendu Leaves and tobacco sourced from nearby areas :
Karnataka, Gujrat, MP, Orissa
Marketing Strategy – The 4 Ps | Product
Brand Manu-facturer
Distributor (Margin)
Wholesaler (Margin)
Retailers (Margin)
Consumer Cost to Consumer (per stick rate)
Sainand(Normal)
36.45 (7%) 39 (2%) 39.8 (2.5%) 40.8 (17.6%) 48 12 paise
PVS (Normal)
60.4 (2%) 61.6 (16.9%) 72 14.4 paise
S beedi (Big)
64.8 (2.8%) 65.6 (9.75%) 72 18 paise
Dost (Big) 36.6 (2.7%) 37.6 (27.6%) 48 12 paise
Kismet (Big) 31 (3.2%) 32 (25%) 40 11 paise
The cost per stick is less than the major brands but more than the local players
Price
Credit Policy Credit to retailer on first purchase Feedback and request for payment on second purchase In case of an increasing demand it could recover some of the due amount on the pretext of supplying stock Most of the benefits were in the form of kind and not trade discounts
Storage- Central storage in Bhadrachalam- Distributors in Bhadrachalam
and Cherla Mandal
Delivery- Kothagudam and Palawancha
mandal were located contiguously
Selling- Through Retailers- Replenishment once a week- Regular servicing – Less stock at
retailer
Nearby areas – 2 wheelers Upto 10km – Cycle rickshaw van 10km – 60km – autorickshaw/ van
Place
Promotion
P
•Promotion strategy was to focus on high quality of tobacco from Nippani
R
•Cinema slides, wall paintings, shop paintings & audio cassettes with recorded message
M
•Rickshaw decorated with posters and equipped with loud music•fe
edback mechanism- wholesaler had to sign in the locations covered
O•Free
sampling of beedis
T
•Consumer promotions•Rs 1,
2, 5 denominations in pack
•Silver coins on completing the brand name
E
•Educating consumers against duplicate brands
*•Pro
motions on erected tents
Sustaining
Continue the 5% growth in the Bhadrachalam market
Countering competition from PVS beedis and local players
New Markets
Market entry into Kothagudam, Palawancha
Gain retail shelf space, counter stiff competition
Issues in 2001
Palawancha has a potential of 35 bags
per month and Kothagudam 60 bags .
Low penetration of Sainand Beedis – 3 bags per month in
Palawancha
Geographically closer to Bhadrachalam
Sainand Beedis manufactures beedis of similar high quality
as that of its competitors in
Palawancha and Bhadrachalam
Competitor’s distributor had considerable influence on wholesalers
Sainand beedis’ initial efforts of
promotion had little impact
Customers are highly brand loyal and the market is strongly
held primarily by few competitors
PRO
SCO
NS
Option 1:To enter into new adjacent markets: Kothagudam and Palawancha
PROS
• Sainand Beedis commands higher brand awareness in Bhadrachalam and surrounding areas• Provides high quality beedis at low cost as compared to its competitors• It has established distribution channel in the Bhadrachalam and Cherla areas
CONS
• Stagnant growth observed in the market• Competition mainly because of the presence of local brands and imitation
products
Option 2: Increase efforts in existing markets to gain market share
Stagnant growth in existing markets
Huge potential in neighboring new markets
Sustainable growth through new market entry
Way Forward
Market penetration
Product Development
Market Development Diversification
MAR
KETS
NEW
EX
ISTI
NG
PRODUCTSEXISTING NEW
Ansoff Matrix - Analysis
• Consumer segment: Agricultural Labourers & Farmers
• High brand loyalty• Price Sensitive• Regional and seasonal
influences on purchase Summers -> stronger beedis
• Quality perception: taste & type of ash
• Loose units preferred over packs
Behavior
• Retailer promotions of much greater significance
• Need to compete in brand image as well as cost
• Peer group acts as source of information
• Low awareness / exposure to news media promotions
Consequences
Consumer Purchase Behaviour
Rural Market Spread
Spread over 3 mandals
Distance from Major market
BhadrachalamRegular sales calls on
retailers
High-cost distribution
systemGood channel
promotion
Retail Shelf
Space constraint
with retailers
Do not prefer to stock
Regular supply
Sales & Stock
Turnover
Retailers preferred brands with quick stock
turnover
Need to create brand
loyalty
CharacteristicCurrent
Situation Implications
Retailer Characteristics
Pricing & under-cutting
Credit facilities to consumers
Reason for stocking
Intense competition based on cost
Low cost FMCG product
•Wholesaler: Driven by demand from retailer• Retailer: preferred brands with
quick stock turnover
Attributes
Sainand beedis favorably placed
Insignificant influence
Local consumer base driven
Current Scenario Implications
Source of Information
Promotions
Wholesalers influence retailers
•Consumer promotion schemes• Awareness about duplicate brands•Distributor incentives
Manufacturers need to consider consumer and wholesalers
Retailers overlooked (low incentives)
Channel Behavior
Recommendations
Promotion: Demand CreationUse delivery vans as a promotion van for the new areas. This will help reinforce the brand in the minds of the customers
To generate sampling, provide free trials through the promotion van
As the retailers seek demand in the local market to stock products, we plan to use audio and visual promotions in haats and fairs to reach out to a larger base
Radio advertising to target the gricultural labourers
PLACE Delivery van can be used as point of sale until retailers gain confidence on the brand/ till demand is created in the market
Trade promotions targeted at wholesalers and not just retailers – quantity purchase scheme, discount schemes; wholesalers important influencers for retailers
As and when demand increases, we propose to create a new storage point to cater to the needs of Kothagudam and Palawancha
Existing Market Should go for paper ring with transferring the additional cost of 3.6% to consumers - Fight with counterfeited products, Increase brand awareness
Future Scope Launch Farmash Sainand beedis as there is good scope in these market for big beedis (table 1)
04/08/2023 RM SAINAND BEEDIS | IIM KOZHIKODE 17
Remarks Month 1 Month 2 Month 3
Target Sales (No of Bags per month ) 5 10 15
No of Bags to be sold per day 0.167 0.34 0.5
No of bundles to be sold per day 16.7 34 50Profit per bundle (Rs2.5 per bundle) 41.75 85 125Total Cost Per day 66 66 66Total Profit per day -24.25 19 59Total profit per month -727.5 570 1770
Total Monthly Profit after hiring the van (Daily cost 225 per day) (1st month = 10 days, the next 2 months = 5 days each) -2977.5 -555 645
Overall Profit for both market -5955 -1110 1290
Appendix