ITC`s Quest for the Rural Indian FMCG Market
| Case Code: MKTG467 Case Length: 8 Pages Period: 2022-23 Pub Date: 2024 Teaching Note: Available |
Price: Rs.300 Organization : ITC Ltx. Industry : FMCG Countries : India Themes: Rural Markets Marketing Mix, Listing,delisting |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
The Rural Market
Rural India was home to 72% of the Indian population and 75% of the poor, and 75% of the workforce. Increasing purchasing power and growing disposable incomes made this an attractive market for companies. There had been a change in the lifestyle and aspirations of the rural youth who were educated, and were exposed to urban lifestyles and products. With the high penetration of the media and the internet, the rural population had also become brand conscious. Consumers in small villages with populations of around 5,000 people also demanded branded and high quality products. FMCG was the fourth major industry in India..
ITC’S Strategies
Though ITC had a strong presence in the rural areas through its tobacco products, FMCG was a different ball game altogether. ITC had a well-entrenched distribution network in the country to distribute tobacco products. But, according to government regulations, the distributors of tobacco products could not distribute non-tobacco products. Even as of 2017, ITC FMCG had only 10-15% of its revenue coming from the rural market. Thus, the company lagged behind its competitors in this market..
Products and Price Points
In the FMG market, ITC had always entered the premium segment, and then moved down the value chain. For example, in the personal care market, it came up with the Essenza Di Wills super premium brand in 2005 and then moved to premium brand Fiama Di Wills in 2007. It later moved to mid-market brand Vivel and then the mass-market brand Superia. Similarly, in the stationery segment, it entered with the Paperkraft range in 2002 and then moved to the mass market Classmate range. By 2007, Classmate had become the largest notebook brand in the country. In food brands, ITC first launched Kitchens of India in 2001, and then introduced Aashirvaad in 2003..
Reaching Rural India
ITC stocked products at its distribution centers across the country. The products were then sent to exclusive wholesale dealers, distributors, and direct retailers. In rural areas, big retailers supplied to small retail outlets..
Digital Tools to Reach Rural Customers
To reach the retailer in the hinterlands, ITC used information technology and developed digital tools. These included Virtual DS, the Unnati App, and Store Locator..
Looking Ahead
Even as ITC was looking at expanding in rural India and consolidating its position, the competition was not far behind. All its major competitors had come up with strategies to cater to the needs of the rural market. (Refer to Exhibit II to know more about ITC’s Competitors). ITC, on its part, was looking at bringing some of the other products to rural India. It was planning to bring floor cleaners, hand washes, and pens in low unit priced packs of Rs.5, 10, and 20. ITC was also looking at increasing the grammage of some products to cater to the customers..
Exhibits
Exhibit I: ITC’s Non-tobacco Brands and Products
Exhibit II Rural Marketing Initiatives of Indian FMCG Companies
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