Synopsis

STUDY THE DISTRIBUTION PATTERN OF FMCG COMPANIES

Submitted for the permission of pursuing Research Project Report (MBA-043)

Under the Guidance of Mr. D. N. Tiwari

Submitted by Abhishek Singh MBA IV Semester

Department of Management GIHS Lucknow 2012-2013

INTRODUCTION
FMCG refers to consumer non-durable goods required for daily or frequent use. Typically, a consumer buys these goods at least once a month.

Rural marketing means efforts taken by the producer to sell the product in rural areas like villages, small towns and interior parts of the country. More than 75% of the consumers live in rural areas and more than 50% of the national income is generated there. Therefore, rural markets occupy an important position and should be given special attention. The rural markets were recognized from 1960.In the past three decades the market has steadily developed. Challenges in Rural Marketing The challenges arise primarily because of the unique characteristics of the market environment. One of the major factors to be considered is the low per capita income of rural consumers, which is the single most influential factor in determining consumer behavior and product preferences. According to Euromonitor data, the per capita income of India was a mere $360 in 2002 , which tanslates into a very low level of disposable income. This makes the semi-urban and rural markets extremely price sensitive and requires that the marketing strategies be focussed on large volumes rather than a fat profit margin. One of the best strategic initiatives for driving volume growth is that of Hindustan Lever Limited, which introduced the concept of sachets for its range of shampoos, targeted primarily at the rural consumer who lacks the steady income of salaried professionals in the urban areas. This low volume-low price strategy turned out to be immensely successful as revealed by an ORG-MARG study, which found that sachets sales accounted for almost 95% of total shampoos sales in rural region. Another hurdle in the path to success in rural markets is the absence of a formal distribution network. Rather, the villages have one or two small kirana or local provision stores from where the villages make daily purchases in small quantities. This makes it imperative for manufacturers to realize the importance of these small local retailers who interact directly with the customers and play an important role in the decision process. Another point in concern is that these local

retailers often sell goods on credit which, in turn, affects their income levels making it hard for them to hold large stocks of products. Moreover, the rural population is spread over a large region which makes reaching them a tough task for the marketer. Not all villages in India have electricity and proper road networks connecting them with the nearby towns or cities. This makes conventional media like TV, radio, etc. ineffective, thereby increasing the value of non-conventional mediums of advertising like puppetry, stage shows, folk dramas, et al to spread awareness about the brands. The dispersion of population is also a hinderance to market research, making it difficult to establish market samples and to apply research results from one region to another. Despite the inherent challenges, more and more companies are turning towards the rural marketplace to drive volume growth. Following the footsteps of HLL, many more FMCG companies are coming up with conveniently packaged and affordably priced products for the countryside. That the rural boom is over is the biggest misstatement of the century. The days when a rural consumer had to travel to the nearest city for his purchases is over, the rural markets arriving in a big way as is proved by the fact that of the 2 million mobile connections sold by BSNL in 2002, nearby 50% were in rural areas; LIC of India sold more than 55% of its insurance policies in rural India and of the 20 million signups on the Rediffmail website, 6% are from the Indian countryside. The 800 million strong rural markets are an untapped goldmine and those who take the initiatives to penetrate it first are bound to reap rich rewards. AMUL In the 1950s the life of a farmer in the kaira district of Gujarat was as miserable as that of his counterparts in other parts of India. Overdependence on seasonal crops, erratic climatic conditions and lack of infrastructural support left very few avenues for substantial income. Added to this was the gross exploitation by strong middlemen. Additional income was procured from milk and other dairy products, but in the absence of a proper distribution network, the perishable nature of milk and milkdeviations meant that farmers had to sell these products at throwaway prices to private traders and strong middlemen who controlled the marketing channels. With time, the exploitation by private traders intensified, and the farmers were left in a no-win situation.

OBJECTIVES OF THE RESEARCH 1.To achieve widely scattered market:Rural Consumers are spread or scattered over a wide area. Therefore the producers find it difficult to establish contact, with rural consumers in order to find out their needs, wants, likes and dislikes and tastes and preferences.

2.To find out underdevelopment Transportation:The transportation system in rural areas is not satisfactory. During monsoon the roads become unusable. It is one of the prime obstacles in the improvement of rural markets.

3.Problem in direct marketing:Producers also face the problem in direct marketing because of nonavailabilty of middlemen and also due to high cost of distribution.

4.Sales Force problem:The salesman who represents the company in rural areas cannot understand the rural consumer due to lack of knowledge of local language, habits and their culture.

5.Regional Differences:Demand for products varies for people living in different areas with different climate conditions, occupations, level of literacy, outlook towards life and exposure to modern sophisticated things.

RESEARCH METHODOLOGY Meaning of Research

Research means searching for knowledge through objectives and systematic method of finding to the solutions.

Sample size It signifies the number of respondents chosen to collect the required data. In this research study sample of 22-25 retailers were done on random basis.

Research design My research is of descriptive type. The major purpose is the description of state affairs, as it exists in present.

Sampling method

For this purpose of study questionnaire was given to the retailers in rural areas. The method adopted was that of simple random sampling. A sample contains all the relevant characteristics of the distributors of non-durables in a shorter span.

Sampling procedure It is observed that data of one grand are not sufficient enough so it is necessary to collect data from different resources that are appropriate. They are:-

A) Primarydata collection The data collected is primary and has been obtain through: Questionnaire:-The purpose of this was to obtain information regarding the opinion of retailers of rural areas towards the distribution of non-durables in their area. For this questionnaire was given to them for their response.

B) Secondary data collection: It was done through literature and informations obtained from various sources to increase the deptness and effectiveness of the research report, which are obtain from; 1. Internet 2. Magazines

ANALYTICAL TOOLS USED The term analysis refers to the computation of certain measures along with searching for patterns of relationship that exists among data group. Analysis is essential for a scientific study and for ensuring that we have all relevant data for making contemplated comparisons. Therefore, I have used Tabulation, Graphs & Charts in my project.

PROPOSED CHAPTER PLAN.

Introduction: About the Organization Objectives

Research Methodology Data Analysis and interpretation Findings

Suggestion Conclusion Bibliography

BIBLIOGRAPHY

a). Ramaswamy V.S. & Nama Kumari. S, Marketing Management Planning Implementation & Control, McMillan India Ltd. b). Philip Kotler, Marketing Management Analysis, PHI, New Delhi. c). Kothari. C. R, Research Methodology, University of Rajasthan, Jaipur(India). d). welinkar institute of management development & research, Marketing Management, pulisher wellinkar press, Mumbai. 2.Magazines: a). ICFAI association, markating mastermind, addition-March 03, April 04, August 04, December 04, New Delhi. b). Indian management,addition of March 2004, New Delhi.

3. Internet: Websites: http://www.google.com/ http://www.amul.com/