04/08/2023 RM SAINAND BEEDIS | IIM KOZHIKODE 1

Rural MarketingSAINAND BEEDIS

Amber Yadav Arnab Guha Malik Hersh Kenkare Abhisek Paul Ankur Dey Tarafdar

Sumanto Das

15/68 15/74 15/91 15/197 15/204 15/256

Submitted By Group 9

04/08/2023 RM SAINAND BEEDIS | IIM KOZHIKODE

Manufacturing in Koratla and Hyderabad (Karimnagar District, AP)

Bhadrachalam (83.33%)

Cherla (92.86%)

Palawancha (8.57%)

Kothagudam (0%)

January to June : 150 bags per month (Peak Season)

July to December : 128 bags per month (15% drop in sales ) (Lean Season)

+

_

Current Sales trend:

2

Started in 1979-80 by Satyanarayana

Production facilities in Hyderabad and Koratla in

Karimnagar district

Leading beedi manufacturer in

Bhadrachalam town area in terms of

market share

Case Facts!!!

04/08/2023 RM SAINAND BEEDIS | IIM KOZHIKODE 3

•Regional and Local Players•Stagnant Sale

Intense competition

•Counterfeit Products

Low Quality / Price

•Similar Quality as competitor•Low Price

Failure of Farmash Sainand Beedis

CUSTOMERS•Average monthly income of Rs. 1000•Purchased beedis in loose for Rs. 1 or Rs. 2 instead of buying in packs

•Quality, brand and price are critical•Target market: agricultural laborers and teenagers

COLLABORATORS•Started off by selling directly to retailer

•Currently have 2 distributors in Bhadrachalam and Cherla

COMPETITION•Highly fragmented market with no beedi

manufacturer having a share of more than 5%

•Competition regional in nature•PVS beedis biggest competitor in

Bhadrachalam• S beedis a competitor in Palawancha and

Kothagudam markets•Competition from imitation brands

Maintain growth rate of 5%

Develop Product Strategy (Segmentation, Target Market, Positioning)

Current Scenario!!!

Product sold in 2 sizes : big-sized and normal sized

70% high quality tobacco, 30% lower quality tobacco

Size of the bag

20 beedis made one packet

20 packets made one bundle

10 bundles were tied together

10 such units made one bag

Hand rolled beedis by the locals

Tendu Leaves and tobacco sourced from nearby areas :

Karnataka, Gujrat, MP, Orissa

Marketing Strategy – The 4 Ps | Product

Brand Manu-facturer

Distributor (Margin)

Wholesaler (Margin)

Retailers (Margin)

Consumer Cost to Consumer (per stick rate)

Sainand(Normal)

36.45 (7%) 39 (2%) 39.8 (2.5%) 40.8 (17.6%) 48 12 paise

PVS (Normal)

60.4 (2%) 61.6 (16.9%) 72 14.4 paise

S beedi (Big)

64.8 (2.8%) 65.6 (9.75%) 72 18 paise

Dost (Big) 36.6 (2.7%) 37.6 (27.6%) 48 12 paise

Kismet (Big) 31 (3.2%) 32 (25%) 40 11 paise

The cost per stick is less than the major brands but more than the local players

Price

Credit Policy Credit to retailer on first purchase Feedback and request for payment on second purchase In case of an increasing demand it could recover some of the due amount on the pretext of supplying stock Most of the benefits were in the form of kind and not trade discounts

Storage- Central storage in Bhadrachalam- Distributors in Bhadrachalam

and Cherla Mandal

Delivery- Kothagudam and Palawancha

mandal were located contiguously

Selling- Through Retailers- Replenishment once a week- Regular servicing – Less stock at

retailer

Nearby areas – 2 wheelers Upto 10km – Cycle rickshaw van 10km – 60km – autorickshaw/ van

Place

Promotion

P

•Promotion strategy was to focus on high quality of tobacco from Nippani

R

•Cinema slides, wall paintings, shop paintings & audio cassettes with recorded message

M

•Rickshaw decorated with posters and equipped with loud music•fe

edback mechanism- wholesaler had to sign in the locations covered

O•Free

sampling of beedis

T

•Consumer promotions•Rs 1,

2, 5 denominations in pack

•Silver coins on completing the brand name

E

•Educating consumers against duplicate brands

*•Pro

motions on erected tents

Sustaining

Continue the 5% growth in the Bhadrachalam market

Countering competition from PVS beedis and local players

New Markets

Market entry into Kothagudam, Palawancha

Gain retail shelf space, counter stiff competition

Issues in 2001

Palawancha has a potential of 35 bags

per month and Kothagudam 60 bags .

Low penetration of Sainand Beedis – 3 bags per month in

Palawancha

Geographically closer to Bhadrachalam

Sainand Beedis manufactures beedis of similar high quality

as that of its competitors in

Palawancha and Bhadrachalam

Competitor’s distributor had considerable influence on wholesalers

Sainand beedis’ initial efforts of

promotion had little impact

Customers are highly brand loyal and the market is strongly

held primarily by few competitors

PRO

SCO

NS

Option 1:To enter into new adjacent markets: Kothagudam and Palawancha

PROS

• Sainand Beedis commands higher brand awareness in Bhadrachalam and surrounding areas• Provides high quality beedis at low cost as compared to its competitors• It has established distribution channel in the Bhadrachalam and Cherla areas

CONS

• Stagnant growth observed in the market• Competition mainly because of the presence of local brands and imitation

products

Option 2: Increase efforts in existing markets to gain market share

Stagnant growth in existing markets

Huge potential in neighboring new markets

Sustainable growth through new market entry

Way Forward

Market penetration

Product Development

Market Development Diversification

MAR

KETS

NEW

EX

ISTI

NG

PRODUCTSEXISTING NEW

Ansoff Matrix - Analysis

• Consumer segment: Agricultural Labourers & Farmers

• High brand loyalty• Price Sensitive• Regional and seasonal

influences on purchase Summers -> stronger beedis

• Quality perception: taste & type of ash

• Loose units preferred over packs

Behavior

• Retailer promotions of much greater significance

• Need to compete in brand image as well as cost

• Peer group acts as source of information

• Low awareness / exposure to news media promotions

Consequences

Consumer Purchase Behaviour

Rural Market Spread

Spread over 3 mandals

Distance from Major market

BhadrachalamRegular sales calls on

retailers

High-cost distribution

systemGood channel

promotion

Retail Shelf

Space constraint

with retailers

Do not prefer to stock

Regular supply

Sales & Stock

Turnover

Retailers preferred brands with quick stock

turnover

Need to create brand

loyalty

CharacteristicCurrent

Situation Implications

Retailer Characteristics

Pricing & under-cutting

Credit facilities to consumers

Reason for stocking

Intense competition based on cost

Low cost FMCG product

•Wholesaler: Driven by demand from retailer• Retailer: preferred brands with

quick stock turnover

Attributes

Sainand beedis favorably placed

Insignificant influence

Local consumer base driven

Current Scenario Implications

Source of Information

Promotions

Wholesalers influence retailers

•Consumer promotion schemes• Awareness about duplicate brands•Distributor incentives

Manufacturers need to consider consumer and wholesalers

Retailers overlooked (low incentives)

Channel Behavior

Recommendations

Promotion: Demand CreationUse delivery vans as a promotion van for the new areas. This will help reinforce the brand in the minds of the customers

To generate sampling, provide free trials through the promotion van

As the retailers seek demand in the local market to stock products, we plan to use audio and visual promotions in haats and fairs to reach out to a larger base

Radio advertising to target the gricultural labourers

PLACE Delivery van can be used as point of sale until retailers gain confidence on the brand/ till demand is created in the market

Trade promotions targeted at wholesalers and not just retailers – quantity purchase scheme, discount schemes; wholesalers important influencers for retailers

As and when demand increases, we propose to create a new storage point to cater to the needs of Kothagudam and Palawancha

Existing Market Should go for paper ring with transferring the additional cost of 3.6% to consumers - Fight with counterfeited products, Increase brand awareness

Future Scope Launch Farmash Sainand beedis as there is good scope in these market for big beedis (table 1)

04/08/2023 RM SAINAND BEEDIS | IIM KOZHIKODE 17

Remarks Month 1 Month 2 Month 3

Target Sales (No of Bags per month ) 5 10 15

No of Bags to be sold per day 0.167 0.34 0.5

No of bundles to be sold per day 16.7 34 50Profit per bundle (Rs2.5 per bundle) 41.75 85 125Total Cost Per day 66 66 66Total Profit per day -24.25 19 59Total profit per month -727.5 570 1770

Total Monthly Profit after hiring the van (Daily cost 225 per day) (1st month = 10 days, the next 2 months = 5 days each) -2977.5 -555 645

Overall Profit for both market -5955 -1110 1290

Appendix