Coca Cola India's Thirst for the Rural Market

            
 
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Case Details:

Case Code : MKTG081
Case Length : 10 Pages
Period : 2002-2004
Pub Date : 2004
Teaching Note : Available
Organization : Coca Cola India
Industry : Food & Beverages
Countries : India

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.



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CCI's Rural Marketing Strategy

CCI's rural marketing strategy was based on three A's - Availability, Affordability and Acceptability. The first 'A' - Availability emphasized on the availability of the product to the customer; the second 'A' - Affordability focused on product pricing, and the third 'A'- Acceptability focused on convincing the customer to buy the product.

Availability

Once CCI entered the rural market, it focused on strengthening its distribution network there. It realized that the centralized distribution system used by the company in the urban areas would not be suitable for rural areas.

In the centralized distribution system, the product was transported directly from the bottling plants to retailers (Refer Figure I). However, CCI realized that this distribution system would not work in rural markets, as taking stock directly from bottling plants to retail stores would be very costly due to the long distances to be covered.

Marketing Management Case Studies | Case Study in Management, Operations, Strategies, Marketing Management, Case Studies

The company instead opted for a hub and spoke distribution system (Refer Figure II). Under the hub and spoke distribution system, stock was transported from the bottling plants to hubs and then from hubs, the stock was transported to spokes which were situated in small towns. These spokes fed the retailers catering to the demand in rural areas.

CCI not only changed its distribution model, it also changed the type of vehicles used for transportation. The company used large trucks for transporting stock from bottling plants to hubs and medium commercial vehicles transported the stock from the hubs to spokes.

For transporting stock from spokes to village retailers the company utilized auto rickshaws and cycles. Commenting on the transportation of stock in rural markets, a company spokesperson said, "We use all possible means of transport that range from trucks, auto rickshaws, cycle rickshaws and hand carts to even camel carts in Rajasthan and mules in the hilly areas, to cart our products from the nearest hub."7

In late 2002, CCI made an additional investment of Rs 7 million (Rs 5 million from the company and Rs 2 million from the company's bottlers) to meet rural demand. By March 2003, the company had added 25 production lines and doubled its glass and PET bottle capacity.8...

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7] Shashidhar, Ajit, Colas' Countryside Crusade, The Hindu Business Line - Catalyst, July 3, 2003.

8] Apart from the rural markets, CCI also began to focus on the home segment, by introducing - 1 litre, 1.5 and 2 litre PET bottles.

 

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