Coca Cola India (CCI) reentered the Indian soft drink market in 1993 after its exit in 1977 due to various issues. In the early 2000s, CCI started focusing on the rural markets. This decision was not surprising due to the stagnant growth and flat sales in the urban areas. With more than 128 million households, rural population is nearly three times urban population.
The major obstacles faced by CCI were the poor rural infrastructure, erratic power supply, different consumption pattern, preference for traditional beverages, and the price of the beverage.
In order to overcome these problems and obstacles, CCI came up with the rural marketing strategy based on 3 A’s - Availability, Affordability, and Acceptability
Availability: CCI realized that the centralized distribution system used in urban areas will not work in rural markets, as taking stock directly from bottling plants to retail stores would be very costly due to the long distances. The company instead opted for a hub and spoke distribution. Under this system, stock was transported from the bottling plants to hubs and then the stock was transported to spokes which were situated in small towns. These spokes fed the retailers catering to the demand in rural areas. CCI also changed the type of vehicles used for transportation. The company used large trucks, medium commercial vehicles, and rickshaws for transportation, based on distance.
Affordability: In order to make coke affordable to the rural population and to close the gap between traditional beverages, CCI introduced a new 200ml bottle, smaller than the traditional 300ml bottle and priced it at Rs.5. CCI also introduced Sunfill, a powdered soft-drink concentrate available in a single-serve sachet of 25 gm priced at Rs.2 and mutiserve sachet of 200 gm priced at Rs.15.
Acceptability: To increase the acceptability of the product, CCI started advertising heavily on Doordarshan with the “Thanda Matlab Coca-Cola” tagline, positioning itself as a generic cold beverage. Due to the lack of electricity and refrigerators in the rural areas, CCI also started providing low-cost ice boxes for new outlets and thermocol box for seasonal outlets.
The initiative and the strategy of CCI turned out to be very successful, with around 80%of the new drinkers coming from rural markets. Its rural market penetration increased from 13% to 25% in the year 2001 to 2003. Thus, CCI was able to identify its potential market, appreciate its different needs and designed a marketing strategy which takes care of the peculiar needs of its target market. It positioned its product in the mind of the rural customers so as to ensure the acceptability of the product and reaped the benefits in the form of increased consumption and revenue.
The major obstacles faced by CCI were the poor rural infrastructure, erratic power supply, different consumption pattern, preference for traditional beverages, and the price of the beverage.
In order to overcome these problems and obstacles, CCI came up with the rural marketing strategy based on 3 A’s - Availability, Affordability, and Acceptability
Availability: CCI realized that the centralized distribution system used in urban areas will not work in rural markets, as taking stock directly from bottling plants to retail stores would be very costly due to the long distances. The company instead opted for a hub and spoke distribution. Under this system, stock was transported from the bottling plants to hubs and then the stock was transported to spokes which were situated in small towns. These spokes fed the retailers catering to the demand in rural areas. CCI also changed the type of vehicles used for transportation. The company used large trucks, medium commercial vehicles, and rickshaws for transportation, based on distance.
Affordability: In order to make coke affordable to the rural population and to close the gap between traditional beverages, CCI introduced a new 200ml bottle, smaller than the traditional 300ml bottle and priced it at Rs.5. CCI also introduced Sunfill, a powdered soft-drink concentrate available in a single-serve sachet of 25 gm priced at Rs.2 and mutiserve sachet of 200 gm priced at Rs.15.
Acceptability: To increase the acceptability of the product, CCI started advertising heavily on Doordarshan with the “Thanda Matlab Coca-Cola” tagline, positioning itself as a generic cold beverage. Due to the lack of electricity and refrigerators in the rural areas, CCI also started providing low-cost ice boxes for new outlets and thermocol box for seasonal outlets.
The initiative and the strategy of CCI turned out to be very successful, with around 80%of the new drinkers coming from rural markets. Its rural market penetration increased from 13% to 25% in the year 2001 to 2003. Thus, CCI was able to identify its potential market, appreciate its different needs and designed a marketing strategy which takes care of the peculiar needs of its target market. It positioned its product in the mind of the rural customers so as to ensure the acceptability of the product and reaped the benefits in the form of increased consumption and revenue.
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