Financial Daily from THE HINDU group of publications
Wednesday, Mar 09, 2005
Marketing - Strategy
FMCG cos change distribution tack to woo consumers
Sindhu J. Bhattacharya
New Delhi , March 8
FMCG companies are leaving no stone unturned in their quest for consumers.
Aware that in smaller towns and villages their access to consumers may be limited, several FMCG companies have taken to unconventional modes of distribution.
The Chennai-based CavinKare Pvt Ltd has created two separate brands - Chinni for smaller pack sizes and Priya for larger packs - and is using a separate sales force for each in its Foods division.
The Chief Executive Officer-Foods, Mr Satish Mane, told Business Line "We have launched pickles and spices in single-serve sachets that cost as little as 50 paise. Besides offering the consumer convenience, these pack sizes encourage out-of-home consumption and allow consumers to taste a variety of flavours at an affordable price. And instead of using the conventional distribution route, we have created a `sachet' sales force that sells only sachet packs to small retailers, including cigarette and pan shops."
He asserted that this is not an experiment but a dedicated mode of sales for the 15-month-old foods business and the results have been encouraging so far.
In a similar quest to capture consumers in remote villages, Emami Ltd has tied up with the Post and Telegraph Department to place its products across 5,000 post offices.
The pilot project has been initiated in Maharashtra. The President (Sales) of Emami's distribution arm, J.B. Marketing & Finance Ltd, Mr Hari Gupta, said that eventually the company wants to reach all the 1.05 lakh post offices across India.
Besides, Emami will also use `e-choupal' outlets - where a computer literate villager conducts trade on the Net - across Madhya Pradesh and Uttar Pradesh to gain better access.
Hindustan Lever Ltd, which began on similar lines by selling products through partnering with rural self-help groups under Project Shakti has expanded to cover 50,000 villages, involving 13,000 rural women.
Similarly, Wipro Consumer Care and Lighting (WCCL) has been using the Andhra Pradesh Government's e-seva project, which aims at enhancing the common man's interface with the Government. Coupled with traditional distribution methods, this approach allows WCCL to reach consumers who otherwise may not come to a retail point.
CavinKare's personal products division too is enthused by Emami's experiment. "The idea of placing products at post offices is a very interesting. We may evaluate this option, especially for products such as shikakai powder, shampoo and hair dye," said Mr K.S. Ramesh, Executive Director and CEO.
However, Mr Kumar Chander, Vice-President (Marketing) at WCCL, sounded a note of caution. He said that alternative distribution channels do not offer better margins and are, at best, tools to gain accessibility in certain areas. Also, distribution margins across these channels are identical to those in conventional routes, so there is little cost saving.
And, some FMCG majors such as Dabur India Ltd and Nirma do not believe in deviating from the tried and tested conventional methods. So, while alternative distribution options are gaining acceptability, it may be some time before these become a rage.
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