CENTRE FOR POST GRADUATE STUDIES

NATIONAL INSTITUTE OF RURAL DEVELOPMENT

(An Organization of the Ministry of Rural Development, Govt. of India)

RAJENDRANAGAR, HYDERABAD – 500 030 INDIA

http://www.nird.org.in

REPORT

ON

RURAL PRODUCT MARKETING

OF

THE PRODUCT - AGARBATTI

IN NIRD & Surrounding Areas

Prepared & Submitted By:

CHANDRANSHU

DHARMENDER

MAREN AWMAKO

NIRMAL KUMAR

PANKAJ

PGDRDM Batch – 3 August’2010 – July’2011

2010-11

CONTENTS

S.No TOPIC Page No

1 EXECUTIVE SUMMARY / INTRODUCTION 4

1.1 Indian Context 5

1.2 Purpose of Study 5

1.3 Objective 5

1.4 Limitations 5

1.5 Market Potential 6

2 RESEARCH DESIGN & METHODOLOGY 7

2.1 Tools 8

2.2 Primary Data 8

2.3 Secondary Data Collection 8

2.4 Sampling Frame 9

2.5 Sampling Method 9

2.6 Limitations 10

2.7 Area of Survey 11

2.8 Statistical Analysis 12

3 CONSUMER RESEARCH 13

3.1 Mandal Profile 14

3.2 Major Brands in the Market 15

3.3 Area of Survey 15

3.4 Purchase Points of Agarbatti 17

3.5 Consumer is willing to buy a new brand of Agarbatti or not? 18

4 RETAILER RESEARCH 19

4.1 Retailer Research 20

4.2 Willingness To Trade New Brand Of Agarbatti? 21

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5 BUDGET / FINANCE 22

5.1 Finance For The Market Research 23

6 MARKETING STRATEGY PLAN 24

6.1 Place 25

6.2 Market Segmentation 25

6.3 Brand Name 25

6.4 Product Specifications & Pricing 25

6.5 Packaging & Labelling 26

6.6 Promotion 26

6.7 Benefits 26

6.8 Distribution Channel 27

7 CONCLUSION 28

ANNEXURES 29

REFERENCES 33

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1. EXECUTIVE SUMMARY

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INTRODUCTION

1.1 INDIAN CONTEXT

The size of the incense sticks industry in India about Rs 1000crores a year growing at 7% p.a.

Exports- Rs 300 crores. Current industry consumers spend estimated at over Rs. 900 crores

per annum. In India Agarbatti market is huge. Agarbatti is sold both in rural parts of country

as well as in urban counterparts. Agarbatti market is driven by tradition and religion. More

than half of world's Agarbatti supply is exported by India. Indian Agarbatti export is touching

Rs 220 crore mark.

There are about 10,000 Agarbatti manufacturing units in the country including tiny, small and

medium, besides another 200 well-established ones having over 50 branded Agarbattis.

Nearly 12 lakh people are directly or indirectly employed by the industry. India is exporting a

wide range of Agarbattis or incense sticks that have natural, exotic fragrances extracted from

jasmine, sandalwood and rose.

1.2 PURPOSE OF STUDY

a) To find out consumption pattern of Agarbatti among the consumers residing in and

around NIRD, Hyderabad

b) To introduce a new brand of Agarbatti into this target market

1.3 OBJECTIVE

a) To study the Agarbatti business in Rajendranagar Area of R.R. district (A.P.) and

develop a cluster based approach for Agarbatti stick production and its marketing

b) To identify the potential customer segments in market

c) Competitor Analysis of Agarbatti players in the region / area

d) Formulate a comprehensive marketing strategy for the brand

1.4 LIMITATIONS

a) Respondents might not give proper details and might provide lesser cooperation

b) Time period for the area to be covered was limited

c) Many traders did not reveal their exact transactions and did not cooperate properly

d) Language Barrier (may be)

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1.5 MARKET POTENTIAL

India is the world’s largest producer of incense sticks (Agarbatti). In 2003, an estimate by the

Planning Commission of India valued the annual domestic market for incense sticks at

US$400 million, with a yearly growth rate of 20% annually.

Agarbatti is used for both religious purposes as well as home fragrance purposes. In addition

to this large domestic market, the international demand for incense sticks too is growing

rapidly. India’s size of the domestic bamboo economy is estimated at Rs 2043 crores by the

Planning Commission. The Market potential is, however, estimated at Rs 4463 crores, which

could grow to Rs. 26,000 crores by 2015.

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2. RESEARCH DESIGN AND METHODOLOGY

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METHODOLOGY

The market we are focusing on is RajendraNagar Area in and around NIRD Campus. In order

to fulfill the above objectives the following supporting studies were done:

a) Consumer Survey was done using a standard questionnaire in order to analyze

consumer expectations and behavior

b) Interaction was done with five traders (Shopkeepers) to understand and analyze the

market conditions and demand of the consumers

c) Secondary research was done in order to better analyze the competitors’ products and

strategies

2.1 TOOLS

Interview schedule was adopted for whole sellers and the consumers in the target area. The

sample will be selected in such a way that all the Agarbatti trade channel (IN/OUT) members

are covered comprehensively.

The Interview Schedule (Refer Appendix 1) comprises of various exhaustive questions which

were posed to the sample consumers and traders in order to know the generalised preferences

and patterns according to which the product marketing strategies mentioned below were

designed.

2.2 PRIMARY DATA

Primary data was collected by conducting survey in the target area selected for study. The

survey was conducted with the help of two structured questionnaires. Different questionnaires

were formulated for the different components of the value chain, i.e. traders and the

consumers. The area covered was NIRD campus and surroundings in RajendraNagar area of

R.R. District of Andhra Pradesh state.

2.3 SECONDARY DATA COLLECTION

Due to lesser resources secondary data collection was restricted and is not very exhaustive. It

was limited to gathering various project related data from internet and other mediums.

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2.4 SAMPLING FRAME:

The sampling frame is selected on the basis that these are the people who play main role in

marketing ‘Agarbatti’:-

a) The Agarbatti Consumers

b) Traders

c) Transporters

d) Middleman/contractors

e) Perfuming Unit

2.5 SAMPLING METHOD

2.5.1 SELECTION OF AREA

The area was selected on the basis of the market we are targeting. We have targeted our

Agarbatti sales in and around NIRD Campus of RajendraNagar Area of R.R. District (A.P.).

As per our observation and estimation, the total number of households in the RajendraNagar

is 900–1000 (approximately). Assuming the average number of family members in each and

every household is 5 and therefore the total population of this Rajendranagar comes to 4600–

5000.

2.5.2 SELECTION OF RESPONDENTS

The factors considered in the determination of the sample size are 3 viz..,. Religion, age and

seasonality (festival time) and by the strata method we found the sample size as 5000/48, this

gives the sample size as 104 and making it into a round figure 100 individuals.

100 Households and 5 traders is the final sample size which was being considered by us for

the survey. In this market study we will treat each individual as a representation of one

household and therefore we made the sample size as 100 households.

The middleman/traders were also interviewed to get a proper idea of the size of the market

and the Agarbatti value chain.

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2.6 LIMITATIONS

Questions were framed indirectly to get the best possible data. Due to few festivals in the

month of study / survey we might not be able to collect / estimate appropriate data relevant to

festival season.

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2.7 AREA OF SURVEY

Rajendra Nagar Area of R.R. District

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2.8 STATISTICAL ANALYSIS

The data was analyzed by using MS-Excel software. The data is presented in terms of

numbers, tables and graphs throughout this .

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3. CONSUMER RESEARCH

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INTRODUCTION

Consumer research is an important and necessary part of market research as it provides an

organisation an opportunity to take proper steps to maximize consumer satisfaction. The

interview of the consumers of the target area gave us visibility about their demand patterns.

Various patters of daily usage, festival usage, purchase points, etc.

3.1 MANDAL PROFILE

Our market concentration is the Rajendranagar which is 26 km far away from Hyderabad

Rajendranagar is the mandal headquarters and also the municipality which comes under the

Rangareddy district. A total of 14 village gram panchayaths are under the Rajendranagar,

constituting a total population of 1, 43,184. In the town of Rajendranagar approximately there

are about 1000 households and the average family members is the 5-6 which makes the total

population of Rajendranagar town to approximately 6000.

Rajendranagar town is the financial, economic, political and educational town of Andhra

Pradesh. Approximately 30% of the total population of Hyderabad are employed in the

formal sector and generally the urban population generally has a higher purchasing power.

The rising average income is leading to greater demand for high-value processed food.

We are in the process of introducing a new brand of pickle to Rajendranagar town which is

the hub of educational institutions and the households and also for the students living as

bachelors and therefore we have selected a small town with varied sectors living together in a

relatively small market.

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3.2 MAJOR BRANDS IN THE MARKET

1) Bangalore-based N Rangarao and Sons (owner of the Cycle brand), with some 1,800

million sticks per annum, have a very strong market presence in the `3-in-one'and

market segment.

2) ITC’s Mangaldeep now sells around 1,200 million sticks per annum. Now ITC also

making its strong presence in market by introducing 3in 1 and 5 in 1 packets which

are giving multiple choice of fragrances in single packet.

3) Hari Darshan Sevashram Pvt. Ltd, Delhi

4) Shrinivas Sugandhlaya, Bangalore

5) Other branded players: Shalimar, Ambika

Agarbatti brand in use?

AmbikaITC MangaldeepLocalCycle

Figure: Agarbatti brand being used by the surveyed consumers

3.3 AREA OF SURVEY: As of 2001 India census, Rajendranagar had a population of

143,184. Males constitute 52% of the population and females 48%. Rajendranagar has an

average literacy rate of 55%, lower than the national average of 59.5%. Our focus was on the

area in and around NIRD which has population of 5000 approximately.

From the survey we can deduce that the major festival celebrated in the target area are –

Diwali, Ganesh Pooja, Pongal, Ugadi, etc.

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Mainly the population is middle class families with average household income of Rs. 16000

per month. Diwali and Ganesh Pooja are the main festivals which approximately 90% of the

surveyed families celebrate. In today’s modern world, perfumed sticks are also used in

houses and in other public places as air fresheners and/or mosquito repellents.

The demand for Agarbatti is increasing both in the domestic and export markets because of

the improvement in quality and increase in the types of products. Similarly, in our target area

there have been mixed responses over the usage of Agarbatti – Fragrance purpose is as

important as Religious purpose.

Usage of Agarbatti

Religious PurposeFragrance PurposeBoth

Figure: Pattern of Usage of Agarbatti in the target area

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3.4 PURCHASE POINTS OF AGARBATTI

Out of the 100 customers surveyed 72 showed the preference of retails shops as their

purchase point of Agarbatti for the household consumption. 12 preferred dealer’s point and

38 preferred Retail Super Markets for the same.

The maximum customers are dependent on Retail shops and retail super markets in the

vicinity for the supply of Agarbatti, so we need to focus on these retail business

establishments for maximum sale in the target area. Supply of the Agarbatti needs to be

multiplied especially during the festivals and auspicious occasions like Diwali, Ganesh Pooja,

etc.

Purchase Points of Agarbatti

Dealer's PointRetail ShopRetail Super MarketsOthers

Figure: Number of different purchase points preferred by the sample consumers

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3.5 CONSUMER IS WILLING TO BUY A NEW BRAND OF AGARBATTI OR NOT?

68 percent of the respondents were willing to purchase a new brand of Agarbatti if the new

brand satisfies their preference about the relevant attributes. 30 percent of the respondents

were not willing to try new brand mainly because they are happy and satisfied with the

current branded or unbranded product in use.

Product differentiation needs to be done properly according to the respondent’s choice and

preferences about the attributes. The remaining 30 percent can be lured to change their brand

by giving proper incentives, offers with the new Agarbatti being marketed in the area.

Willing to buy new brand or not?

YesNoCan't Say

Figure: Percentage of respondents willing to buy new brand or not.

It was found out from the survey data spread sheet that in normal usage 4.8 sticks per day per

household is used in contrast with 18 sticks per day per household during the festival season.

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4. RETAILER RESEARCH

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4.1 RETAILER RESEARCH

The target area – RajendraNagar – NIRD & surroundings have approximately 18-20 retail

shops. The market survey study is carried out for 5 retailer shops present in the market.

All these retailers sell Agarbatti. The brands of Agarbatti mainly sold by these retailers are:

ITC Ltd. – Mangaldeep, Durbaar

Cycle Brand

Ambika

Lia, other local brands, etc.

Pricing of Agarbatti packets being sold per day

21015-20Others

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4.2 WILLINGNESS TO TRADE NEW BRAND OF AGARBATTI?

Willingness to trade new branded Agarbatti?

YesNoCan't Say

Figure: Willingness of the trader to trade new branded Agarbatti?

Increased Sales during Festival Season:

January – Pongal

Oct – November - Diwali, Id & other festivals

October – Ganesh Pooja

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5.BUDGET / FINANCE

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5.1 FINANCE FOR THE MARKET RESEARCH

PARTICULARS UNIT UNIT

COST

NO OF

UNIT

TOTAL

AMOUNT

(INR)

Contract Payment for

Surveyor (Self or outsourcing)

– Including all associated

expenses

Rs. per

surve

y/person

Rs.30-

35/day

100 3500

Stationary (Prints, pen, clips,

pin, etc.)

- - - 500

Communication 250

Miscellaneous - - - 1000

TOTAL 5250*

Survey was carried out by the team members (or it could have been outsourced to any

external agency on the basis of number of households to be surveyed).

*Approximate data

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6. MARKETING STRATEGY PLAN

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MARKETING STRATEGY PLAN

6.1 PLACE: Adilabad has been chosen as Place of production of Agarbatti as it is a tribal

belt with adequate bamboo forest reserves and target sales area is NIRD and its surroundings.

6.2 MARKET SEGMENTATION: Our Product will be sold in Rajendranagar area of R.R.

District in the first phase of operations. We will hire 4-5 young boy or girls for interaction

with consumers (probably computer literate so that they can maintain and operate computers

also).

6.3 BRAND NAME: “SWARG” – The destiny of a Human Being. This brand name has

been selected keeping in view that any household after lighting the Agarbatti will feel the

spiritual power and will be able to concentrate on prayers in a better manner and might feel as

if he / she is in heaven and meeting the god.

6.4 PRODUCT SPECIFICATIONS & PRICING: Looking at the surveys and responses to

the questionnaires we will launch 3 Types (Quality wise) of Agarbatti’s namely:

a) Super

b) Medium

c) Regular

In four perfumes, namely:

a) Lily

b) Rose

c) Jasmine

d) Mogra

e) Without perfume

In five types of prices:

a) Mini Pack (Kabhi Kabhi) – Rs.2

b) Regular Pack (Rozana) – Rs.10

c) Thick (Bada) – Rs. 25

d) (Extra Bada) – Rs.40

e) Jumbo – Rs.90

Hence, we have a wide range of variety for the customer for his selection and needs. The

product line can be modified from 60 as per the feedback at a later stage.

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6.5 PACKAGING & LABELLING: According to following criteria

Consumer Wealth

Company & Brand Image

Innovation Opportunities

To avoid loss due to breakage of AGARBATTI’s before & after sales

6.6 PROMOTION: False and deceptive advertising will be prohibited. Following

promotional strategies will be followed:

a) Banners

b) Distribution of free mini pack with some of the regular household commodity

(Bundling)

c) Pamphlets

d) Painting on the walls or shutter of the kirana & general stores

Social marketing – Use 50paisa to 1 Rupee from sale of each packet for social causes

6.7 BENEFITS: Various extra features as mentioned below will be implemented and continued according to the feedback and public response:

a) Free matchbox with every or two Agarbatti packet will help in increasing the sales and attracting the customer

b) Retailers will be given extra margin if they achieve certain targets. For example: For every 100 packets of Agarbatti sold the retailer will get a free gift, etc.

c) In order to attract consumers and capturing the market during festival season schemes like lucky draw coupon can be put in the box and properly advertised – This will help in attracting those 30% customers also who were not ready to change their Agarbatti brand.

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6.8 DISTRIBUTION CHANNEL

Figure: Pictorial View of the Distribution Channel

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Factory

Retailer 1 Retailer 2 Retailer 3

District Distributor

Consumer 1 Consumer 2 Consumer n

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7.CONCLUSION

Various sections of the report emphasize on the formulation of marketing strategy plan for selling a newly launched product – “Swarg” Agarbatti in NIRD and surrounding areas in Rajendranagar, R.R Dist, AP.

Section 6 tells more about various Marketing related concepts and strategy to be followed which is derived from the feasibility survey undertaken by our team.

Overall, this plan tries to cater the needs of all the sections of the consumers’ especially middle class families which are prominent in number in NIRD campus and surrounding areas. Exhaustive product range and various offers associated with our product for prospective customers as well as the retailers will surely help us in fighting the competition with the big corporate Agarbatti manufacturers as well as local manufacturers.

Also, continuous feedback tracking will surely enhance the capability and sales of the product – “Swarg”.

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ANNEXURES

Part 1: CONSUMER QUESTIONNAIRE

CONSUMER QUESTIONNAIRE

Date: _ _ / _ _ / _ _ _ _ Serial Number: _ _ _Name of Respondent………………………………………………………..Gender: A. Male B. Female…… Age: …………………

Address: …………………………Block: ………………….Town/ City: ………………….

1. Festivals you celebrate:

A. Diwali

B. Ganesh Pooja

C. Id-Ul-Fitr

D. Christmas

E. Suggest any other ____________________________________________________

2. Details of family members

A. Younger Age Group (13-19 Yrs.) No. (……..)

B. Adult Age Group (20-59 Yrs.) No. (……..)

C. Old Age Group (>60 Yrs.) No. (……..)

3. Earning members of the family ………………………

4. Monthly income of the family Rs……………………...

5. How many Agarbatti sticks does your family use in a day? ………………..

6. During festivals how many more number of Agarbatti sticks does your family use? ……

7. Total amount spent on Agarbatti per month: ___No of Box * Price in Rs.___

8. What type of Agarbatti do you use?

A. Un-Branded B. Branded

9. Agarbatti Brand used? ______________________________________________

10. Reason of using Un-Branded AgarbattiA) Low price B) Good Quality C) Easy Availability

D) Any Others __________________________

11. Please mention the purchase point for the Agarbatti packets:

A. Dealer’s point B. Retail Shop C. Retail Super Markets D) Others ___________

12. Usage of Agarbatti

A) Religious Purpose B)Fragrance purpose

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13. Which size of packet do you buy?

A) Rs. 2 B) Rs. 10 C) Rs. 15 - 20 D) Other ____________

If a new brand of packaged Agarbatti is launched in the market14. Are you willing to buy the new brand?

A. Yes B. Noa) If No, Specify the reason

______________________________________________________________________________

______________________________________________________________________________

______

b) If Yes, What are the attributes you are looking for in the new brand rank from

1 – 5, where 1 represents the highest value of rank and 5 the least.

A) Low price ……

B) Good quality……

C) Easy Availability……

D) Good smell………

E) Good packaging ………

15. Are you willing to pay any premium priceA. Yes B. NoIf Yes, how much?

a) Upto Rs. 2b) Rs. 2 to 5c) Rs. 5 -10d) Rs. 10 or more

Thank You

Respondent Name & Signature

Investigator Name & Signature

Supervisor Name & Signature

Data Entry Operator Name & Signature

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Part 2: TRADERS’ QUESTIONNAIRE

Serial Number: ……………………… Date & Time of Interview ………………..

Q1.Name of Respondent………………………………………………………..

Q2.Gender: A. Male B. Female……

Q3.Do you sell Agarbattis? A. Yes. B No

b) If no why? .........................................................................................................................

c) If yes which brands? Please list the main ones in order of customer preference

1…………………….

2……………………….

3………………………..

4……………………..

Q4. Why do you think customers prefer number 1 in Q1 above? List the attributes below

1………………………

2……………………..

3……………………….

Q5 What are the pricing of the different types of Agarbattis you sell ?

A) Rs. 2 B) Rs. 10 C) Rs. 15 - 20 D) Other ____________

Q6. Should there be need to introduce another brand of Agarbattis, what do you think the manufacuter

should do?......................................................................................................

………………………………………………………………………………………………

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Q7 Where do you get your supplies from? (Name of place and distance)..............................

………………………………………………………………………………………………….

Q8. Which are the main festivals and which months do they occur when customers use more

Agarbattis?....

Festival month

a)……………………………..

b)…………………………….

c)……………………………..

Q9. Current Margin (or incentives) being offered by the various Agarbatti suppliers:

Brand / Company Name Margin (per packet) or other incentives

Thank You

Date ………………………..

Time of ending interview session…………………………

Name of interviewer……………………. Signature of interviewer……………

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REFERENCES

1. http://en.wikipedia.org/wiki/Rajendranagar

2. http://www.ncaer.org/

3. http://itcportal.com

4. www.google.co.in

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