Nerolac Paints to tap potential in rural market

With the rural sector contributing only about 10 per cent of the overall paints market, Nerolac Paints is gearing up to make inroads into the rural market in a major way.

The company will focus on Maharashtra, Gujarat and Madhya Pradesh (MP), as it has, through a study, found out that the rural population in each of these three states has a sizeable disposable income.

To begin with, Nerolac is putting its distribution network in place in these rural areas in line with the FMCG model. The company is looking at setting up 25 distributors in the these regions.

The rationale behind the company's imminent rural foray has been the recent upswing in rural marketing, said Anuj Jain, the company's vice-president for marketing & sales. He added that the rural market for paints is a growing segment with clear signs of demand moving up.

On the rural penetration strategy, Jain said, "We have tied up with ITC's e-choupal (rural malls) to create a shop-in-shop display, which will enable both exhibition and sales."

Currently, ITC's Choupal Sagar only exists in MP, but the plan is to roll out 10 more by the end of 2006. Nerolac will be partnering with all the upcoming malls to promote the paint categories in those areas, he said.

The product portfolio that the company is offering in these areas is the Goody range of enamel, distemper and primer. Jain added that brighter shades are being manufactured for the rural areas as people in these areas prefer bright colour.

In addition, pack sizes are also being designed differently keeping in the mind the specific needs of the rural regions. One-litre and four-litre packs are being manufactured for these areas.

The company has decided to price a one-litre pack of enamel at Rs 80, while the same in the urban areas would cost about Rs 130-140. Distemper is also made cheaper for the rural pockets with one kg of it costing Rs 30, compared with Rs 45 in the urban area.

Jain said, "The challenge for us to educate the rural consumer about the category first. Rural consumers are more inclined towards using lime wash and, hence, an awareness drive in our target markets is imperative."

Apart from partnering with the e-choupal malls, the company is also launching a rural programme comprising roadshows, dealer meets, folk media and consumer guidance camps.

Jain said the company, based on its efforts, is quite optimistic about the rural markets. He added that the rural segment is expected to add about 15 per cent share to the paints industry, currently estimated at Rs 8,000 crore, in the next three years.