Most fast moving consumer goods (FMCG) companies have a two-pronged strategy to tap rural markets. It comprises launching nano packs and scaling up rural distribution. Godrej Consumer Products Ltd (GCPL) is going a step further by adding a regional advertising component.
Says Dalip Sehgal, its MD: “Our regional advertising and publicity (A&P) spends have increased between 50-60 per cent in the first half of FY2010.” At present, the company spends 66 per cent of its total A&P spends on regional advertising. It spends 9 per cent of its total sales on A&P, which has more than doubled to Rs 50.9 crore (Q2 FY2010) from Rs 24.4 crore in Q2 FY2009.
The company advertises on Doordarshan, local TV and radio channels, the local press and outdoor media. For its top-performing brands, it spends most of the cut-out budget on regional advertising only. “For Godrej No. 1 soap, 100 per cent spends go in regional advertising. For Cinthol, it is more than 50 per cent and so is it for Expert (powder hair colour),” says Sehgal.
The strategy has borne fruit. Godrej No 1 is now the number one soaps player in the north. Its annual sales exceed Rs 500 crore and it is the country’s third largest soap brand. Cinthol’s market share has increased from 2.5 per cent to 2.8, while Cinthol deodorant has grown by 50 per cent in the second quarter. Expert has a 26 per cent market share.
For Expert, the company is running a campaign wherein it brands local barber shops and salons under the ‘Expert’ brand. Under the programme, its sales team introduces its products to rural folks through barbers, engaging the latter to co-brand their shops or salons as Expert salons. The company has engaged 50,000 barber shops and salons under this programme.
Price points are also important. Godrej has also been rolling out nano packs priced between Rs 5 and Rs 10. Besides Godrej No. 1 (Rs 5), Cinthol (Rs 6) and Expert (Rs 10), a couple of months earlier, it introduced Nupur (mehndi) in Rs 5 and Rs 10 packs.
Simultaneously, the company has been increasing its reach in rural areas. In the past six months, it has added 1,700 new small towns and 5,000 villages to its rural coverage and aims to reach 8,000 towns (from 5,500 now) and 50,000 villages (from 15,000 now) within next three years.
With the combined effect of all three, its rural sales have doubled in comparison with urban sales. In the past six months, rural sales have grown by 40 per cent, while urban sales grew at 20 per cent. The rural sector contributes 42 per cent to its total sales and it expects to make this 50 per cent in three years.
