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CENTRE FOR POST GRADUATE STUDIES

NATIONAL INSTITUTE OF RURAL DEVELOPMENT


(An Organization of the Ministry of Rural Development, Govt. of India) RAJENDRANAGAR, HYDERABAD 500 030 INDIA http://www.nird.org.in

REPORT ON

RURAL PRODUCT MARKETING


OF THE PRODUCT - AGARBATTI IN NIRD & Surrounding Areas

Prepared & Submitted By: CHANDRANSHU DHARMENDER MAREN AWMAKO NIRMAL KUMAR PANKAJ

PGDRDM Batch 3 August2010 July2011

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CONTENTS
S.No 1 1.1 1.2 1.3 1.4 1.5 2 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 3 3.1 3.2 3.3 3.4 3.5 4 TOPIC EXECUTIVE SUMMARY / INTRODUCTION Indian Context Purpose of Study Objective Limitations Market Potential RESEARCH DESIGN & METHODOLOGY Tools Primary Data Secondary Data Collection Sampling Frame Sampling Method Limitations Area of Survey Statistical Analysis CONSUMER RESEARCH Mandal Profile Major Brands in the Market Area of Survey Purchase Points of Agarbatti Consumer is willing to buy a new brand of Agarbatti or not? RETAILER RESEARCH PGDRDM III Page No 4 5 5 5 5 6 7 8 8 8 9 9 10 11 12 13 14 15 15 17 18 19 Page 2 of 38

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4.1 4.2 5 5.1 6 6.1 6.2 6.3 6.4 6.5 6.6 6.7 6.8 7

Retailer Research Willingness To Trade New Brand Of Agarbatti? BUDGET / FINANCE Finance For The Market Research MARKETING STRATEGY PLAN Place Market Segmentation Brand Name Product Specifications & Pricing Packaging & Labelling Promotion Benefits Distribution Channel CONCLUSION ANNEXURES REFERENCES

20 21 22 23 24 25 25 25 25 26 26 26 27 28 29 33

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1. EXECUTIVE SUMMARY

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INTRODUCTION
1.1 INDIAN CONTEXT The size of the incense sticks industry in India about Rs 1000crores a year growing at 7% p.a. Exports- Rs 300 crores. Current industry consumers spend estimated at over Rs. 900 crores per annum. In India Agarbatti market is huge. Agarbatti is sold both in rural parts of country as well as in urban counterparts. Agarbatti market is driven by tradition and religion. More than half of world's Agarbatti supply is exported by India. Indian Agarbatti export is touching Rs 220 crore mark. There are about 10,000 Agarbatti manufacturing units in the country including tiny, small and medium, besides another 200 well-established ones having over 50 branded Agarbattis. Nearly 12 lakh people are directly or indirectly employed by the industry. India is exporting a wide range of Agarbattis or incense sticks that have natural, exotic fragrances extracted from jasmine, sandalwood and rose. 1.2 PURPOSE OF STUDY
a) To find out consumption pattern of Agarbatti among the consumers residing in and

around NIRD, Hyderabad


b) To introduce a new brand of Agarbatti into this target market

1.3 OBJECTIVE
a) To study the Agarbatti business in Rajendranagar Area of R.R. district (A.P.) and

develop a cluster based approach for Agarbatti stick production and its marketing b) To identify the potential customer segments in market
c) Competitor Analysis of Agarbatti players in the region / area

d) Formulate a comprehensive marketing strategy for the brand 1.4 LIMITATIONS


a) Respondents might not give proper details and might provide lesser cooperation PGDRDM III Page 5 of 38

2010-11 b) Time period for the area to be covered was limited

c) Many traders did not reveal their exact transactions and did not cooperate properly
d) Language Barrier (may be)

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1.5 MARKET POTENTIAL India is the worlds largest producer of incense sticks (Agarbatti). In 2003, an estimate by the Planning Commission of India valued the annual domestic market for incense sticks at US$400 million, with a yearly growth rate of 20% annually. Agarbatti is used for both religious purposes as well as home fragrance purposes. In addition to this large domestic market, the international demand for incense sticks too is growing rapidly. Indias size of the domestic bamboo economy is estimated at Rs 2043 crores by the Planning Commission. The Market potential is, however, estimated at Rs 4463 crores, which could grow to Rs. 26,000 crores by 2015.

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1. RESEARCH DESIGN AND METHODOLOGY

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METHODOLOGY
The market we are focusing on is RajendraNagar Area in and around NIRD Campus. In order to fulfill the above objectives the following supporting studies were done: a) Consumer Survey was done using a standard questionnaire in order to analyze consumer expectations and behavior b) Interaction was done with five traders (Shopkeepers) to understand and analyze the market conditions and demand of the consumers c) Secondary research was done in order to better analyze the competitors products and strategies 2.1 TOOLS Interview schedule was adopted for whole sellers and the consumers in the target area. The sample will be selected in such a way that all the Agarbatti trade channel (IN/OUT) members are covered comprehensively. The Interview Schedule (Refer Appendix 1) comprises of various exhaustive questions which were posed to the sample consumers and traders in order to know the generalised preferences and patterns according to which the product marketing strategies mentioned below were designed. 2.2 PRIMARY DATA Primary data was collected by conducting survey in the target area selected for study. The survey was conducted with the help of two structured questionnaires. Different questionnaires were formulated for the different components of the value chain, i.e. traders and the consumers. The area covered was NIRD campus and surroundings in RajendraNagar area of R.R. District of Andhra Pradesh state. 2.3 SECONDARY DATA COLLECTION

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Due to lesser resources secondary data collection was restricted and is not very exhaustive. It was limited to gathering various project related data from internet and other mediums.

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2.4 SAMPLING FRAME: The sampling frame is selected on the basis that these are the people who play main role in marketing Agarbatti:a) The Agarbatti Consumers

b) Traders c) Transporters d) Middleman/contractors e) Perfuming Unit 2.5 SAMPLING METHOD 2.5.1 SELECTION OF AREA The area was selected on the basis of the market we are targeting. We have targeted our Agarbatti sales in and around NIRD Campus of RajendraNagar Area of R.R. District (A.P.). As per our observation and estimation, the total number of households in the RajendraNagar is 9001000 (approximately). Assuming the average number of family members in each and every household is 5 and therefore the total population of this Rajendranagar comes to 4600 5000. 2.5.2 SELECTION OF RESPONDENTS The factors considered in the determination of the sample size are 3 viz..,. Religion, age and seasonality (festival time) and by the strata method we found the sample size as 5000/48, this gives the sample size as 104 and making it into a round figure 100 individuals. 100 Households and 5 traders is the final sample size which was being considered by us for the survey. In this market study we will treat each individual as a representation of one household and therefore we made the sample size as 100 households. The middleman/traders were also interviewed to get a proper idea of the size of the market and the Agarbatti value chain.
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2.6 LIMITATIONS Questions were framed indirectly to get the best possible data. Due to few festivals in the month of study / survey we might not be able to collect / estimate appropriate data relevant to festival season.

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2.7 AREA OF SURVEY Rajendra Nagar Area of R.R. District

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2.8 STATISTICAL ANALYSIS The data was analyzed by using MS-Excel software. The data is presented in terms of numbers, tables and graphs throughout this .

Survey_Data_Main.x lsx

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1. CONSUMER RESEARCH

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INTRODUCTION
Consumer research is an important and necessary part of market research as it provides an organisation an opportunity to take proper steps to maximize consumer satisfaction. The interview of the consumers of the target area gave us visibility about their demand patterns. Various patters of daily usage, festival usage, purchase points, etc. 3.1 MANDAL PROFILE Our market concentration is the Rajendranagar which is 26 km far away from Hyderabad Rajendranagar is the mandal headquarters and also the municipality which comes under the Rangareddy district. A total of 14 village gram panchayaths are under the Rajendranagar, constituting a total population of 1, 43,184. In the town of Rajendranagar approximately there are about 1000 households and the average family members is the 5-6 which makes the total population of Rajendranagar town to approximately 6000. Rajendranagar town is the financial, economic, political and educational town of Andhra Pradesh. Approximately 30% of the total population of Hyderabad are employed in the formal sector and generally the urban population generally has a higher purchasing power. The rising average income is leading to greater demand for high-value processed food. We are in the process of introducing a new brand of pickle to Rajendranagar town which is the hub of educational institutions and the households and also for the students living as bachelors and therefore we have selected a small town with varied sectors living together in a relatively small market.

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3.2 MAJOR BRANDS IN THE MARKET


1) Bangalore-based N Rangarao and Sons (owner of the Cycle brand), with some 1,800

million sticks per annum, have a very strong market presence in the `3-in-one'and market segment.
2) ITCs Mangaldeep now sells around 1,200 million sticks per annum. Now ITC also

making its strong presence in market by introducing 3in 1 and 5 in 1 packets which are giving multiple choice of fragrances in single packet.
3) Hari Darshan Sevashram Pvt. Ltd, Delhi 4) Shrinivas Sugandhlaya, Bangalore 5) Other branded players: Shalimar, Ambika

Figure: Agarbatti brand being used by the surveyed consumers 3.3 AREA OF SURVEY: As of 2001 India census, Rajendranagar had a population of 143,184. Males constitute 52% of the population and females 48%. Rajendranagar has an average literacy rate of 55%, lower than the national average of 59.5%. Our focus was on the area in and around NIRD which has population of 5000 approximately. From the survey we can deduce that the major festival celebrated in the target area are Diwali, Ganesh Pooja, Pongal, Ugadi, etc. Mainly the population is middle class families with average household income of Rs. 16000 per month. Diwali and Ganesh Pooja are the main festivals which approximately 90% of the surveyed families celebrate. In todays modern world, perfumed sticks are also used in houses and in other public places as air fresheners and/or mosquito repellents. The demand for Agarbatti is increasing both in the domestic and export markets because of the improvement in quality and increase in the types of products. Similarly, in our target area there have been mixed responses over the usage of Agarbatti Fragrance purpose is as important as Religious purpose.
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Figure: Pattern of Usage of Agarbatti in the target area

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3.4 PURCHASE POINTS OF AGARBATTI Out of the 100 customers surveyed 72 showed the preference of retails shops as their purchase point of Agarbatti for the household consumption. 12 preferred dealers point and 38 preferred Retail Super Markets for the same. The maximum customers are dependent on Retail shops and retail super markets in the vicinity for the supply of Agarbatti, so we need to focus on these retail business establishments for maximum sale in the target area. Supply of the Agarbatti needs to be multiplied especially during the festivals and auspicious occasions like Diwali, Ganesh Pooja, etc.

Figure: Number of different purchase points preferred by the sample consumers

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3.5 CONSUMER IS WILLING TO BUY A NEW BRAND OF AGARBATTI OR NOT? 68 percent of the respondents were willing to purchase a new brand of Agarbatti if the new brand satisfies their preference about the relevant attributes. 30 percent of the respondents were not willing to try new brand mainly because they are happy and satisfied with the current branded or unbranded product in use. Product differentiation needs to be done properly according to the respondents choice and preferences about the attributes. The remaining 30 percent can be lured to change their brand by giving proper incentives, offers with the new Agarbatti being marketed in the area.

Figure: Percentage of respondents willing to buy new brand or not.

It was found out from the survey data spread sheet that in normal usage 4.8 sticks per day per household is used in contrast with 18 sticks per day per household during the festival season.

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1. RETAILER RESEARCH

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4.1 RETAILER RESEARCH The target area RajendraNagar NIRD & surroundings have approximately 18-20 retail shops. The market survey study is carried out for 5 retailer shops present in the market. All these retailers sell Agarbatti. The brands of Agarbatti mainly sold by these retailers are: ITC Ltd. Mangaldeep, Durbaar Cycle Brand Ambika Lia, other local brands, etc.

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4.2 WILLINGNESS TO TRADE NEW BRAND OF AGARBATTI?

Figure: Willingness of the trader to trade new branded Agarbatti? Increased Sales during Festival Season: January Pongal Oct November - Diwali, Id & other festivals October Ganesh Pooja

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2.BUDGET / FINANCE

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5.1 FINANCE FOR THE MARKET RESEARCH PARTICULARS UNIT UNIT COST Contract Payment for Surveyor (Self or outsourcing) Including all associated expenses Stationary (Prints, pen, clips, 500 Rs. per Rs.30NO OF UNIT 100 TOTAL AMOUNT (INR) 3500

survey/person 35/day

pin, etc.) Communication 250 Miscellaneous 1000 TOTAL 5250* Survey was carried out by the team members (or it could have been outsourced to any external agency on the basis of number of households to be surveyed). *Approximate data

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3.

MARKETING STRATEGY PLAN

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MARKETING STRATEGY PLAN 6.1 PLACE: Adilabad has been chosen as Place of production of Agarbatti as it is a tribal belt with adequate bamboo forest reserves and target sales area is NIRD and its surroundings. 6.2 MARKET SEGMENTATION: Our Product will be sold in Rajendranagar area of R.R. District in the first phase of operations. We will hire 4-5 young boy or girls for interaction with consumers (probably computer literate so that they can maintain and operate computers also). 6.3 BRAND NAME: SWARG The destiny of a Human Being. This brand name has been selected keeping in view that any household after lighting the Agarbatti will feel the spiritual power and will be able to concentrate on prayers in a better manner and might feel as if he / she is in heaven and meeting the god. 6.4 PRODUCT SPECIFICATIONS & PRICING: Looking at the surveys and responses to the questionnaires we will launch 3 Types (Quality wise) of Agarbattis namely: a) Super b) Medium c) Regular In four perfumes, namely: a) Lily b) Rose c) Jasmine d) Mogra e) Without perfume In five types of prices:
a) Mini Pack (Kabhi Kabhi) Rs.2 b) Regular Pack (Rozana) Rs.10 c) Thick (Bada) Rs. 25 d) (Extra Bada) Rs.40

e) Jumbo Rs.90
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Hence, we have a wide range of variety for the customer for his selection and needs. The product line can be modified from 60 as per the feedback at a later stage.

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6.5 PACKAGING & LABELLING: According to following criteria

Consumer Wealth Company & Brand Image Innovation Opportunities To avoid loss due to breakage of AGARBATTIs before & after sales

6.6 PROMOTION: False and deceptive advertising will be prohibited. Following promotional strategies will be followed: a) Banners b) Distribution of free mini pack with some of the regular household commodity (Bundling) c) Pamphlets
d) Painting on the walls or shutter of the kirana & general stores

Social marketing Use 50paisa to 1 Rupee from sale of each packet for social causes 6.7 BENEFITS: Various extra features as mentioned below will be implemented and continued according to the feedback and public response:
a) Free matchbox with every or two Agarbatti packet will help in increasing the sales

and attracting the customer b) Retailers will be given extra margin if they achieve certain targets. For example: For every 100 packets of Agarbatti sold the retailer will get a free gift, etc. c) In order to attract consumers and capturing the market during festival season schemes like lucky draw coupon can be put in the box and properly advertised This will help in attracting those 30% customers also who were not ready to change their Agarbatti brand.

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6.8 DISTRIBUTION CHANNEL

Figure: Pictorial View of the Distribution Channel

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1.CONCLUSION
Various sections of the report emphasize on the formulation of marketing strategy plan for selling a newly launched product Swarg Agarbatti in NIRD and surrounding areas in Rajendranagar, R.R Dist, AP. Section 6 tells more about various Marketing related concepts and strategy to be followed which is derived from the feasibility survey undertaken by our team. Overall, this plan tries to cater the needs of all the sections of the consumers especially middle class families which are prominent in number in NIRD campus and surrounding areas. Exhaustive product range and various offers associated with our product for prospective customers as well as the retailers will surely help us in fighting the competition with the big corporate Agarbatti manufacturers as well as local manufacturers. Also, continuous feedback tracking will surely enhance the capability and sales of the product Swarg.

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ANNEXURES
Part 1: CONSUMER QUESTIONNAIRE

CONSUMER QUESTIONNAIRE
Date: _ _ / _ _ / _ _ _ _ Serial Number: _ _ _ Name of Respondent.. Gender: A. Male B. Female Age: Address: Block: . Town/ City: . 1. Festivals you celebrate: A. Diwali B. Ganesh Pooja C. Id-Ul-Fitr D. Christmas E. Suggest any other ____________________________________________________ 2. Details of family members A. Younger Age Group (13-19 Yrs.) C. Old Age Group (>60 Yrs.) No. (..) No. (..) B. Adult Age Group (20-59 Yrs.) No. (..) 1. Earning members of the family 2. Monthly income of the family Rs... 3. How many Agarbatti sticks does your family use in a day? .. 4. During festivals how many more number of Agarbatti sticks does your family use? 5. Total amount spent on Agarbatti per month: ___No of Box * Price in Rs.___ 6. What type of Agarbatti do you use? A. Un-Branded B. Branded 1. Agarbatti Brand used? ______________________________________________ 2. Reason of using Un-Branded Agarbatti A) Low price B) Good Quality Availability PGDRDM III Page 33 of 38 C) Easy

2010-11 D) Any Others __________________________ 3. Please mention the purchase point for the Agarbatti packets: A. Dealers point B. Retail Shop C. Retail Super Markets D) Others ___________

1. Usage of Agarbatti A) Religious Purpose A) Rs. 2 B) Rs. 10 B)Fragrance purpose C) Rs. 15 - 20 D) Other ____________

2. Which size of packet do you buy?

If a new brand of packaged Agarbatti is launched in the market 3. Are you willing to buy the new brand? A. Yes a) If No, Specify the reason

B. No

______________________________________________________________________________ ______________________________________________________________________________ ______ b) If Yes, What are the attributes you are looking for in the new brand rank from 1 5, where 1 represents the highest value of rank and 5 the least. A) Low price B) Good quality C) Easy Availability D) Good smell E) Good packaging 1. Are you willing to pay any premium price A. Yes If Yes, how much? a) Upto Rs. 2 b) Rs. 2 to 5 c) Rs. 5 -10 d) Rs. 10 or more B. No

Thank You

Respondent Name & Signature Investigator Name & Signature

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Supervisor Name & Signature Data Entry Operator Name & Signature

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Part 2: TRADERS

QUESTIONNAIRE

Serial Number: Date & Time of Interview .. Q1.Name of Respondent.. Q2.Gender: A. Male B. Female

Q3.Do you sell Agarbattis? A. Yes. B No b) If no why? ......................................................................................................................... c) If yes which brands? Please list the main ones in order of customer preference 1. 2. 3.. 4.. Q4. Why do you think customers prefer number 1 in Q1 above? List the attributes below 1 2.. 3. Q5 What are the pricing of the different types of Agarbattis you sell ? A) Rs. 2 B) Rs. 10 C) Rs. 15 - 20 D) Other ____________

Q6. Should there be need to introduce another brand of Agarbattis, what do you think the manufacuter should do?......................................................................................................

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Q7 Where do you get your supplies from? (Name of place and distance).............................. . Q8. Which are the main festivals and which months do they occur when customers use more Agarbattis?.... Festival month

a).. b). c).. Q9. Current Margin (or incentives) being offered by the various Agarbatti suppliers: Brand / Company Name Margin (per packet) or other incentives

Thank You

Date .. Time of ending interview session Name of interviewer. interviewer Signature of

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REFERENCES
1. http://en.wikipedia.org/wiki/Rajendranagar 2. http://www.ncaer.org/ 3. http://itcportal.com 4. www.google.co.in

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