Driving further down country roads
24 October 2002
Ahmedabad: The fast-moving consumer goods (FMCG) segment in India is going rural with a vengeance.
The lead is being taken by the country's largest FMCG company, Hindustan Lever (HLL). The Rs 11,000-crore behemoth has indicated that it is enhancing its rural penetration, despite the higher costs this would entail.
Says HLL chairman M S Banga: “This exercise may not pay in the immediate future, but will definitely give long-term dividends. Incidentally, over 50 per cent of the sales of HLL's fabric wash, personal wash and beverages are in rural areas. And we see a future in going rural in a major way.“
The improved agricultural growth is expected to boost rural demand, though not at too sizzling a rate. Moreover, the price drop in personal products, after the recent excise duty reductions, is also expected to drive consumption. “Better agricultural yields will give farmers more spending power, making the rural markets bullish,“ says an analyst.
As a result, HLL has planned a rural marketing programme that is expected to result in a marked growth in the consumption of the company's products in the rural market. HLL will adopt a three-pronged marketing strategy - new price points, sizes and awareness campaigns - for its detergents and soaps segment to augment rural growth.
The goal is to reach 2,35,000 villages, up from the current 85,000; 75 per cent of the population, up from 43 per cent today; and a message reach of 65 per cent, up from the current television reach of 33 per cent. The company is expressly aiming at reaching villages with populations less than 2,000. The rural penetration exercise is going to be complemented by a 15-per cent hike in advertisement expenditure.