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An army of mobile traders could help companies sell to seemingly inaccessible rural markets.
You probably know that there are 6,30,000 villages in India. But did you know that about 5,00,000 of them are accessible to marketers of consumer products-only if they knew how to marshall the army of mobile traders who ply these villages? So what's stopping them from doing so? you ask. The problem lies in figuring out who all make up this breed of mobile traders and how their 'business model' works. What, however, is known is that these traders will sell anything from a one-rupee rattle to cosmetics to soaps to toys to utensils. Now, with penetration through the organised retail route reaching near-saturation levels, the challenge for marketers such as Hindustan Lever Ltd (HLL), ITC, and Colgate-Palmolive is not just penetration, but also increased usage of their brand vis-à-vis the category. And this is where the mobile trader can help. A recent feasibility study on using mobile traders in rural distribution by Marketing & Research Team (MART) for HLL, reveals that just about 19 per cent of an estimated 400,000 mobile traders carry original brands of cosmetics and toiletries. But what is revealing is that a quarter of them are willing to stock branded products, given the right margins. What it means for FMCG marketer is an opportunity to reach 75 lakh rural households, twice a week. Almost half of all mobile traders in north are women. On an average, a mobile trader visits five villages per week, covers around 75 households, and interacts directly with at least 500 women. An average consumer's one-time purchase from these mobile traders varies between Rs 25 and Rs 75, with as much as 30 per cent of it going to consumer products. ''They can be effectively used to sell smaller pack sizes,'' adds Pradeep Kashyap, President, mart. The only stumbling block: the Indian marketer's tendency to deal only with large, organised trade channels. -Shailesh Dobhal M&A
These days when Subir Bose sits down at the breakfast table, the question he must ask himself is not whether to have cereals or cornflakes. Rather, the question that the CEO of Berger Paints probably mulls over is what company to have for lunch. Lovelock and Lewis, an accounting firm, has already been given the brief by Bose to scout for a suitable paints company to buy. ''There's plenty of opportunity in the paints business to grow through acquisition, especially given the presence of several small-time players, who are finding the going extremely tough,'' says Bose. While Bose would not tell who's on his radar, BT reckons there could be two: Jenson & Nicholson, and Shalimar Paints. An industry laggard for years, Berger is now moving into top gear. An 11 per cent growth in turnover took the company's gross income to Rs 562 crore in 2000-01, and net profits, virtually flat through 1999-2000, spurted 20 per cent to Rs 28.49 crore. The strategy for growth is now three pronged: grow inorganically, expand into the automotive and industrial paints business, and penetrate the rural markets. While expansion through acquisition is based on opportunities, the industrial paints segment is planned. Berger now has its own plant (acquired from ICI) and wants to leverage its licensing agreements with Nippon Paint company of Japan and DuPont Performance Coatings of Germany in the automotive coatings business to get into the OE segment. ''We are already looking to more than doubling our marketshare in this sector from the current level of around 6 per cent to around 15 per cent,'' Bose says. Almost 10 years after Asian Paints revolutionised the industry by penetrating rural markets through innovative packaging, Berger is ready to create its own niche in this highly price-sensitive market. A brand new range of Jadoo Cem, Jadoo Emulsion, and Jadoo Synthetic Enamel has been developed especially for the rural market. The stress has been on longevity and low maintenance of the paint. While the paint market is showing a fairly stagnant trend, Berger is hoping to increase its current capacity of 82,000 metric tonnes by a further 10 per cent. The fact that Berger is today the No. 2 paints company in the country (it overtook Goodlass Nerolac last year) with more than a 25 per cent marketshare has prompted new ambitions. ''We are now confident of our abilities and ready to up the ante,'' claims Bose. And while Berger has never been blessed with iconic advertising like Gattu of Asian paints, or Goodlass' Tiger, it is ready to step up its advertising too. The chosen medium is television, and the association with weather bulletins on the satellite channels is, Bose says, already giving the company plenty of penetration, and the company hopes that the dealer-led rural promotion will give it a firm foothold in rural India. -Debojyoti Chatterjee Executive
Tracking
Until recently, he was touted as one of the future heads of Cadbury India. But he got out of that race when he joined Dabur Healthcare as Vice-President healthcare. And now Deepak Sethi is making a big move straight to the hotseat as coo at Apollo Tyres. But whether or not the ex-Leverite can burn rubber at Apollo is what we will have to see. Meanwhile, it doesn't look like Dabur will have to go far to find a replacement for Sethi, given that it has Shyam Sunder (the ex-SmithKlineGlaxo marketing whiz kid) already in the stable. Amit Sharma country head of Motorola in India is moving to Hong Kong in a regional role, and is being succeeded by Motorola Networking head, Pramod Saxena. And K.L. Muralidhara of AmEx takes additional charge of the company's travel related services. He also heads the personal finance services group. Ever wondered what happened to the high-profile ice cream head at HLL, Naresh Ponappa? Well from what we hear, he has resurfaced as a counsellor in the venture capital firm Connect Capital. There are a lot of exits happening from ITC these days. The latest is Santosh Nair, head of greeting cards marketing. Nair has made a big move and is now become general manager of marketing and product development for Ford India in Chennai. FOREIGN INVESTMENT It was supposed to showcase India's commitment to reforms. But today, the $3-billion, 2184-mw Dabhol Power Project promoted by energy major, Enron Corp., is going nowhere. Enron has already indicated its desire to exit by November, and also announced a price tag ($1 billion). A few buyers including the new entrant, Tata group, and the US energy company AEs, have evinced interest. But in this war of words and exchange of legal threats, the question that's going unanswered is this: just what kind of a fate awaits Dabhol? Our reading: it's in a temporary state of coma, and unless someone can work out a feasible pricing mechanism or convert the dollar linkages into rupee ones, it may continue to be in a limbo. It is also essential to work out a realistic estimate of capacity and take a hard look at the need to have an LNG terminal as a part of Dabhol's own company structure. The use of LNG will make the project prone to fluctuations in the oil market. One of the advantages of an Indian company emerging as a buyer of Enron's stake, especially Tata Power, may prove to be a fairly workable solution. First of all, Tata Power has its own networking both in terms of production and distribution. Besides, it is planning to add another 1,000 mw to its existing capacity of 2,200 mw. The absorption of Enron's capacity may prove slightly difficult, but if the Tatas are able to sell surplus capacity to other power-hungry states, Dabhol may still be a winner. However, one of the key issues will be whether the guarantees provided by both the Central and State governments to Enron will hold good for the Indian buyer as well. Without these guarantees and subsidy it will be near impossible to manage the white elephant at least in the short-term. -Debojyoti Chatterjee
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