A STUDY ON THE MARKET SIZE OF THE PERFUMED HAIR OILS IN THE RURAL

MARKETS

Submitted by- Kishore Kumar Risong Assam Institute of management PGDBM 2nd year batch Roll no:-26/D/2009

INDIAN FMCG INDUSTRY IN CONTEXT OF RURAL MARKETING

3) Competitions

Factors that enable small, unorganized players with local presence to flourish include the following

•Basic technology for most products is fairly simple and easily available.

•The small-scale sector in India enjoys exemption/ lower rates of excise duty, sales tax etc. This makes them more price competitive vis-a-vis the organized sector.• A highly scattered market and poor transport infrastructure limits the ability of MNCs and national players to reach out to remote rural areas and small towns.•Low brand awareness enables local players to market their spurious look-alike brands.

2)Huge Distribution Network –

a)India is home to six million retail outlets, including 2 million in 3,160 towns and four million in 627,000 villages.

b) Since retailers are reluctant to allocate slow moving items important factors for the FMCG ‘s to success are the ability to build, develop, and maintain a robust distribution network.

1)STRUCTURAL ANALYSIS OF FMCG INDUSTRY

1. Individual items are of small value (small SKU's) although all FMCG products put together account for a significant part of the consumer's budget.

2. The consumer spends little time on the purchase decision. He seldom ever looks at the technical specifications.

3. Limited inventory of these products (many of which are perishable) are kept by consumer and prefers to purchase them frequently, as and when required.

4. Brand switching is often induced by heavy advertisement, recommendation of the retailer or word of mouth.

PROBLEMS PREVAILING IN THE PARICULAR SECTOR• Less developed infrastructure.• In rural markets, brands are non-existent. They identify FMCG by three

things -primarily by color, visuals of animals and birds and by numbers. • Low education level. To do proper marketing of their products FMCG companies needs to

educate the consumers. So if you have to create brandcommunication, marketing efforts must be supported by education.

• Longer credit period requirement.• Rural retailers are far less specialized than their urban counterparts and

carry a wider range of products. Since frequent delivery is not possible in their part of the world, they tend to carry only a single brand in each product category & usually, the brands that are first on the rural shelves become synonymous with product category and are difficult to dislodge

MARICO business profile Marico is a leading Indian Group in Consumer Products and Services in the

Global Beauty and Wellness space. Marico markets well-known brands such as Parachute, Saffola, Sweekar, Hair & Care, Nihar, Shanti amla, Mediker, Revive,Manjal, Kaya, Sundari, Aromatic, Camelia, Fiancee and HairCode.

a)Distribution channel b)Sales hierarchyNeed of the project:- Marico has been the undisputed market leader in the hair oil, anti-lice

segment. The brand equity of this FMCG Company is one of the best in the market. But, over sometime, the company has been facing lots of threat from other hair-oil companies like Bajaj almond drops.Dabur,shalimer&vasmol in the light hair oil segment.In this context, the project was undertaken for, competition mapping&to determine the existing market size of Hair-oils .

RESEARCH METHODOLOGY a) RESEARCH APPROACH:- 1. Primary data collected by the survey method. 2. Secondary data collected by surfing the Internet, Organization records, etc. b)RESEARCH INSTRUMENTS:- 1. Detailed Questionnaire Method 2. Informal face to face interview method c)SAMPLING PLAN:- Sampling Unit :-Retailers.stockists,consumers Sample size :-190 outlets,100 consumers Sampling Procedure :-Questionnaire, personal interaction & Secondary data. Research Area: - Markets studied Golaghat Dergoan Amguri

Nazira Bokakhat Dimow Titabar

Research objectives:-

• Competition mapping of the hair-oils category with special reference to a)hair&care,BAD,Clinic all clear

b)Parachute jasmine,Bajaj jasmine,Vasmol jasmine. c)Parachute,shalimer,paragon&fortune coconut oils • To understand customers response to the small packs-20ml,50 ml,75

ml,100ml.• To know the availability of coconut oils in the rural marketsCompanies under study:-• Bajaj Almond Drops• Vasmol jasmine• Paragon• Shalimer• Fortune coconut oil.

FINDINGS&ANALYSIS

• Availability of marico product is 92%.

• Reasons for not keeping Marico products-

Outlets Numbers

Keep marico product 174

Donot keep marico products

16

Total outlets 190

Reasons for not keeping marico products

No of outlets

No sales person(PSR or sales person from stockist)visit

7

Inadequate credit facility 4

Delivery issue 5

Total outlets 16

92%

8%

Availability of Marico products in the markets

Outlets keep Marico productsOutlets do not keep marico products

From the table, it is seen that irregular visit made by the sales person is the prime reason for not keeping marico products followed by the improper delivery&credit facility.

c)Retailer purchasing from outside the territory

• aaaMARKET NO OF OUTLETS PURCHASE FROM- TOTAL

STOCKIST WHOLESELLER OUTSIDE THE TERRITORY

GOLAGHAT 25 29 54

NAZIRA 15 20 2 37

AMGURI 5 3 7 15

TITABAR 15 11 3 29

BOKAKHAT 8 6 14

DIMOW 7 4 2 13

DERGAON 6 2 4 12

PURCHASED MARICO PRODUCT FROM OUTSIDE THE TERRITORY

16 174

50%

13%

19%

6%

13%

Reasons for purchasing outside the terrtory

Underutting of rate

Less offering in scheme

No credit facility

No sales persons visit

No cash discount

From the above table it is observed that in the Amguri market most retailers purchases from outside the territory,followed by Titabar&Dergoan.

Undercutting of rate is the major reason for the retailers for purchasing out the territory

2)Factor that influence a retailer to motivate a customer to buy a product

Yes81%

No19%

Factor that motivate a the retailer

When I asked that is profit margin is important for them to motivate that customer to buy that brand, then 81% said that profit margin is an important factor&the rest of 19% said no.

3)Brand awareness of coconut oils among users

Parachute67%

shalimer17%

paragon

4%others13%

Brand awareness

62%

38%

Brand awareness of coconut oilsYES NO

3)b)When I asked the 62% retailers what coconutoil brand the most customers specifying for when they come to your shop,then 67% said that customers come to my specifying the name of parachute,17% said shalimer.

3.a)When I asked retailers about brand awareness of coconut oils among the consumers then 62% said that yes, customers coming to my shop specifying the name of the particular coconut oil.

3) Availibility of Parachute in different outlets as compared to its competitorsBRANDS PARACHUTE SHALIMER PARAGON FORTUNE CLINIC PLUS

COCONUT OILTOTAL

OUTLET

VISITED

MARKET A B C Total A B C A B C A B C A B C

GOLAGHAT 4 20 30 54 2 5 2 3 2 55

NAZIRA 2 12 23 37 1 1 3 3 2 40

AMGURI 2 3 20 25 2 2 2 2 1 15

TITABAR 3 5 1 9 1 3 1 3 1 1 30

BOKAKHAT 2 4 8 13 2 3 2 15

DIMOW 1 5 7 13 1 2 1 15

DERGAON 2 6 4 12 2 1 2 2 2 15

A=A class outlets= 4500< MONTHLY SALES

B=C category outlets= 2000< MONTHLY SALES< 4500

C= C category outlets=MONTHLY SALES< 2000

From the above availability table it can be said that the availability of parachute in the different outlets is much better than its competitors brands.

4)Promotions of various perfumed hair oil companies in the rural market

a)Point of sale advertisement of bajaj almond drops

b)Wall painting promotion of Marico at the point of sale.

5)Availability of perfumed hair oils(BAD,H&C,Clinic all clear) in the outlets of different markets BRANDS

HAIR AND CARE

BAJAJ ALMOND DROPS CLINIC ALL CLEAR

MARKETS A B C A B C A B CGOALGHAT 4 20 30 4 20 30 1 20 10

NAZIRA 2 10 20 2 12 23 1 8 10

TITABAR 2 4 15 3 5 20 2 3 8

DERGAON 1 3 8 1 3 9 1 3

BOKAKHAT 2 3 7 2 5 7 2 3

AMGURI 2 2 9 2 3 10 1 2

DIMOW 1 2 6 2 3 8 1 2 7

A B C A B C A B C CARE

HAIR AND BAJAJ ALMOND DROPS CLINIC ALL CLEAR

0

5

10

15

20

25

30

GOALGHATNAZIRATITABARDERGAONBOKAKHATAMGURIDIMOW

Availability of H&C is found highest in Golaghat in the outlets including A category,B category,C category followed by Nazira. The availability of hair&care is found lowest in Dimow,followed by Dergoan.On the other hand the availability of bajaj almond drops is found highest in the outlets at the different markets as compared to hair &care.

A=(A category outlets)= 4500< MONTHLY SALES

B= (B category outlets) = 2000< MONTHLY SALES< 4500

C=(C category outlets)= MONTHLY SALES< 2000

BRANDS Bajaj Almond Drops

MRP(in Rs)

H&C MRP(in Rs)

Clinic all clear

MRP(in Rs)

sku If contains, then “Y”If don’t contain, then “N”

Ifcontains,then “Y”

If don’t contain, then “N”

Ifcontains,then “Y”

If don’t contain, then “N”

Consumer offer

20 ml N 10

50 ml Y ,Godrej soap

24 N 20

75 ml Y ,Chinthol soap

38 N 35

100 ml N 42 Y,20% extra 35

150 ml 75 N 55

200 ml N 100 Y,20% extra 60

Trade offer 20 ml N

50 ml N N

75 ml N

100 ml N N

150 ml N

200 ml N N

Retail Margin

10% 9% 10%

Cash discount

1.5-2% 1.5% 2%

7)Comparative study of Bajaj Almond Drops,Clinic all clear and H&C in terms of price ,consumer offer,trade offers

The blank row indicates absence of such SKU of the brand

FINDINGS

i)SKU variety of Bajaj almond drops is higher than H&C and Clinic all clear.

ii)Cash discount of Bajaj almond drops, Clinic all clearis higher than H&C.

iii)Retail margin of Bajaj almond drops, Clinic all clearis higher than H&C.

Stretegy adopted by both the companies :-

Both the companies are trying to create demand among consumer through consumer offer.

7)Brand awareness

YES44%

NO56%

brand awareness

a)When I asked retailers about brand awareness of perfumed hair oils among the consumers then 56% said that yes,customers coming to my shop specifying the name of the particular perfumed hair oil brand.the brand awareness among the consumers is low from the retailers prospective.

bajaj amond drops63%

hair&care31%

clinic all clear6%

Brand awareness

b)From the 44% retailers to where most brand aware customers specially come,63% said that customers coming to their shop asking bajaj almond drops .So we can say bajaj almond is the most preffered brand.

Monthly sales of Hair&care,bajaj almond Drops&clinic all clear

BRAND

(IN A CATEGORY OUTLETS) MARKETS

GOLAGHAT BOKAKHAT DIMOW TITABAR DERGOAN AMGURI NAZIRA

H&C 800 200 200 120 400 450

BAD 1600 500 400 1400 500 1000 900CLINIC ALL CLEAR 300 100 120 90 200 180

TOTAL 2700 800 400 1720 710 1600 1530

BRAND

(IN B category outlets) MARKETS

GOLAGHAT BOKAKHAT DIMOW TITABAR DERGOAN AMGURI NAZIRA

H&C 200 100 100 80 90 100 150

BAD 480 300 200 400 250 400 420

CLINIC ALL CLEAR 100 80 50 40 70 50 90

TOTAL 780 480 350 520 410 550 660

BRAND

(IN C CATEGOY OUTLETS) MARKETS

GOLAGHAT BOKAKHAT DIMOW TITABAR DERGOAN AMGURI NAZIRA

H&C 100 80 60 40 40 80 100

BAD 340 220 120 220 150 300 260

CLINIC ALL CLEAR 60 40 35 35 40 50

TOTAL 460 360 215 295 190 420 410

Monthly sales(in Rs) Category

Above 4500

A

Between 2000&4500

B

Below 2000

C

Some abbreviationsH&C=Hair careBAD=bajaj almonds dropsSku=stock keeping unit

To find the marketshare of H&C,Bajaj Almond Drops ,Clinic all clear in the different rural markets I have selected some of the specific rural markets with very high sale,high sale,moderate sale&low sale,since it is notpossible to present to present the market shares of all the markets that have visited.

Sale Market

Very high sale

Golaghat

High sale Nazira Moderate sale Titabar

Low sale Dergoan

GOLAGHAT MARKET

CALCULATION OF MARKET SHARE

Total monthly sale is calculated in terms of the brand sold in the respective outlet .

Total outlet covered in the Golaghat market =55

Among the outlets surveyed I have found that 54 outlets keep both BAD,H&C and33 outlets kept Clinic all clear.

BRAND AVERAGE SALE IN THE A CLASS RETAIL OUTLETS

AVERAGE SALE OF B CATEGORY OUTLETS

AVERAGE SALE OF C CATEGORY OUTLETS

SALE IN TERMS OF AVAILABILITY

(Availability in the different category outlets)*(average sale)

H&C 800 200 100 4*800+20*200+30*100=10200

BAD 1600 480 340 4*1600+20*480+30*340=26200

CLINIC ALL CLEAR 300 100 60

3*300+20*100+10*60=3500 TOTAL SALE=39900

Red colour digits represent the A category outlets

Green colour digits represent the B category outlets

Blue colour digits represent the C category outlets

MARKET SAHRE OF BAD=(Sale of BAD/total sale)*100=(26200/39900)*100=66%

MARKET SHARE OF CLINIC ALL CLEAR=(3500/39900)*100=9%

MARKET SHARE OF H&C=(10200/39900)*100=25.56%

NAZIRA MARKETMARKET SHARE OF H&C=(Sale of H&C/Total sale)*100 =(4400/18620)*100 =24%MARKET SAHRE OF BAD=(12820/18620)*100 =69%MARKET SHARE OF CLINIC ALL CLEAR=(1400/18620)*100 =7%

DERGOAN MARKET(Total outlet covered in the Dergoan market =40)MARKET SHARE OF H&C=(Sale of H&C/Total sale)*100 =(710/3610)*100 =20%MARKET SAHRE OF BAD=(2600/3610)*100

=72%MARKET SHARE OF CLINIC ALL CLEAR=(300/3610)*100

= 8%

MARKET SHARE OF H&C=(Sale of H&C/Total sale)*100 =(1320/12570)*100 =11%MARKET SAHRE OF BAD=(Sale of BAD/total sale)*100

=(10600/12570)*100 =84%

MARKET SHARE OF CLINIC ALL CLEAR=(650/12570)*100 =4%

From the above calculation it is found that Bajaj almond Drops is the market leader.

Analysis regarding quantity of perfumed hair oil (H&C),Bajaj Almond Drops)purchased with Monthly salesoftheoutlet: I have made a cross tabulation of quantity perfumed hair oil purchased&their monthly sales in the outlet.After that I have made chi-square test assuming the null hypothesis:-there is no significant between quantity purchased by the retail outlet & monthly sales of the respective outlets

9)Analysis regarding quantity of perfumed hair oil (H&C),Bajaj Almond Drops)purchased with Monthly sales of the outlet: I have made a cross tabulation of quantity perfumed hair oil purchased&their monthly sales in the outlet.After that I have made chi-square test assuming the null hypothesis:-there is no significant between quantity purchased by the retail outlet & monthly sales of the respective outlets.For hair&care(H&C)Quantity purchased for H&C * Monthly sales

Interpretation From the above the chi square test it is found that the value of Pearson Chi-square is 0.000,which is less than 0,01,thus rejecting the hypothesis we can conclude with 99 percentconfidence level that there is a significant relation between the monthly sales in the outlet &the quantity purchased for H&C. The contingency coefficient which is found to be .574 is more than 0.500 and less than1. This indicates that the relationship between the variables selected very strong. And significance level of 0.01 indicates that the relationship holds true.

Chi-Square Tests

80.774a 10 .000

72.265 10 .000

57.779 1 .000

164

Pearson Chi-Square

Likelihood Ratio

Linear-by-LinearAssociation

N of Valid Cases

Value df

Asymp.Sig.

(2-sided)

10 cells (55.6%) have expected count less than 5.The minimum expected count is .43.

a.

Symmetric Measures

.574 .000

164

Contingency CoefficientNominal by Nominal

N of Valid Cases

ValueApprox.

Sig.

Not assuming the null hypothesis.a.

Using the asymptotic standard error assuming the nullhypothesis.

b.

Cross tabulation

Crosstab

Count

47 4 51

34 18 1 53

24 8 4 36

1 7 2 10

1 3 1 5

3 6 9

107 43 14 164

0 to 6

6 to 12

13to 18

19 to 24

25to30

31 to 36

quantitypurchasedfor h&c

Total

Below Rs2000

2000<sales <= 4500

4500 <sales

Monthly sales

Total

Crosstab

Count

21 21

16 3 1 20

30 8 3 41

21 21 3 45

19 13 4 36

2 5 7

107 47 16 170

0 to 6

7 to 12

13 to 18

19 to 24

25 to 30

31 to 36

quantitypurchasedfor BAD

Total

Below Rs2000

2000<sales <= 4500

4500 <sales

Monthly sales

Total

From the above cross tabulation it is seen that retailers having their monthly sales below 2000 mostly purchase 13 to 18 pcs.The retailers having income level more than 4500 usually purchase31 to 36 pcs. The retailers having monthly sales in between2000&4500 most purchase 19 to 24 pcs of Bajaj Almond Drops.Thus it can be concluded that a retaler having high monthly sales going to purchase more pcs.

From the above cross tabulation it is seen that retailers having their monthly sales below 2000 mostly purchase 0 to 6 pcs&6 to 12 pcs,13 to 18 pcs.The retailers having income level more than 4500 usually purchase31 to 36 pcs.thus it can be concluded that a retaler having high monthly sales going to purchase more pcs.

Important observation

It is seen from th both the cross tabulations that retailers having monthly sales in between 2000&4500 purchase more 19 to 24 pcs of bajaj almond drops than Hair &Care.

Test for one way anovaThere is no significant difference in the the mean ratings given by the consumers in the different skus of H&C.

ANOVA

Preference level of the hc users

28.500 2 14.250 8.845 .008

14.500 9 1.611

43.000 11

Between Groups

Within Groups

Total

Sum ofSquares df

MeanSquare F Sig.

INTERPRETATION

Since the significant value is less than0.001,we can said that there is a significant difference between the ratings given by the H&C users in the different skus of H&C.

50%

33%

17%

H&C users50 ML 100ML 200 ML From the above

observation it can be said that 50 ml is the most preffered sku of H&C among H&C users.

Comparison of the Price lists of jasmine hair oils

Sku(parachute jasmine)

MRP R.M. RATE TO RETAILER PRIMARY SCHEME SECONDARY SCHEME NET RATE IN CARTON

50 ml 14 9% (14/1.09)=12.84 6 4 12.34

100 ml 29 9% (29/1.09)=26.60 6 4 25.61

200 ml 49 9% (49/1.09)=44.95 6 4 42.9

Bajaj jasmine Scheme Net rate

50 ml 18 10% (18/1.10)=16.28 5% [16.28-(16.28*5%)]=15.4

100 ml 34 10% (34/1.10)=30.90 5.20% [30.9-(30.9*5.2%)]=29.2

200 ml 65 10% (65/1.10)=59.09 5.20% [59.09-(59.09*5.2%]=55.9

SKU(Vasmol jasmine)

MRP R.M. RATE TO RETAILER SCHEME Net rate

20 ml 7 10% (7/1.10)=6.36 One piece free with one dozen

6.36-0.56=5.80

35 ml 10 10% 9.09 Do

50 ml 12 10% 10.9 Do

100 ml 26 10% 26.63 Do

Comparison of offersBRANDS Bajaj Jasmine Parachute Jasmine Vasmol Jasmine

sku If contains, then “Y”If don’t contain, then “N”

If contains, then “Y”

If don’t contain, then “N”

If contains, then “Y”

If don’t contain, then “N”

Consumer offer 20 ml N

35 ml N

50 ml N N N

100 ml N Y,20% extra N

200 ml N Y,20% extra

Trade offer 20 ml N

35 ml N One piece free with every one dozen

50 ml N N One piece free with every one dozen

100 ml N N One piece free with every one dozen

200 ml N N

Retail Margin 10% 9% 10%

Cash discount 1.5-2% 1.5% 2%

Market share of parachute jasmine Golaghat

Brand Averagemonthly sale,A

Average monthly sale B

Average monthly sale C

Monthly SaleAvailability in the different category

outlets*average saleParachute Jasmine

900 300 200 4*900+20*300+30*200=15600

BajajJasmine

200 150 60 3*200+20*150+20*60=4800

Vasmol Jasmine

500 170 80 2*500+20*170+20*80=6000

Total Sale=25400

Market share of parachute jasmine=61%

Market share of Vasmol jasmine=20%

Market share of bajaj jasmine=19%%

Red colour digits represent the A category outlets

Green colour digits represent the B category outlets

Blue colour digits represent the C category outlets

Findings from the other market it is sais that parachute is the clear market leader.

Recommendations

• Value for money:- Marico’s strategy when it comes to consumer offer should be improved.During my market study I have

found that the competitors offer involving a free FMCG product (soap)along with the hair oil is more alluring to consumers than offering 10% or 20% extra.

Thus Marico could explore a tie tie up with other FMCG segment &can offer both the product at a discounted rate.This step will create a better pull for the product in the market.

• Increase the market coverage In the rural market it has been found that the stockist does not have complete coverage of the area as

assigned to him due to lack of manpower&other financial problems.Marico could give assistance to such stockists by proving a part time sales persons ,so that he can cover every corner of his territory.This step will boost the sales for the Marico along with stokists.

• Incentives for retailers The awareness among consumers,as he is the sole point point of contact with the end consumers.In the

most cases I have found that the retailers promote or takes initiatives to sell a product which give him better profit margin as the brand awareness among consumer is very low.So they should strengthen the secondary schemes or trade offers among the reatailers &also provide better margins than competitors.

• Sales support The sales support provided by the Marico is very low to boost the sale for the product. Marico should take extra sale support initiatives to reinforce the sale. The main competitor of H&C ,bajaj almond drops is adopting aggressive promotions

in the retailers to boost the sale.On the other hand Marico is lagging in such cases.They should also give point of sale materials to retailers which will help to create consumer demand.

• Push strategy Parachute is clerarly market leader in the in terms sale availability in the coconut oi segment .So

Marico should adopt push strategy place their low selling items in the retail outlets along with their highest selling item Parachute.

• Increase in sku variety The sku variety perfumed hair oils of Marico is found low as compared to its competitors So they

should increase the sku variety of the product to capture the greater volume of customer. • Packaging The packaging of the perfumed hair oils is found as compared to its competitors especially bajaj

almond drops. They should modified the packaging of their perfumed hair oils to attract more customers towards their brand.

• Similer packaing adopted by its rival company Rival FMCG brands using the similer packaging as tool to confuse the consumer in the rural markets as

usually they pay more attention to the external packaging of the product. So there may be a chance or capturing Marico's market share specially in the coconut oil segment.

• Attractive USP Marico should come with unique selling proposition strategy with each product of the hair oil

category,,like its competitors ..because usp ,in case of hair oils is found very weak as compared to its competitors.

• By increasing the volume of potential customers From my market survey it is found that the potential users of coconut oils ae specially females&old

aged peoples.Marico shold target the childs to expand its market volume,because they hardly goes for using hair oils.they should be targeted with well planned promotional strategy.

• Promotion of hair oils in the haats,melas In the most of the market that I visited,has malas&haats in the evey weekend ,so the company should

adopt aggressive promotional campaign to allure the rural customers towards their brand.