7 Rural Marketing Mix in Bhutan: An FMCG Perspective 2013 IUP. All Rights Reserved.

Rural Marketing Mix in Bhutan:

An FMCG Perspective
* Senior General Manager, Sales, PepsiCo Holdings India Pvt. Ltd., Kolkata 700107,
West Bengal, India. E-mail: devnarayan.sarkar@gmail.com
** Assistant Professor, Management Education Centre, Heritage Institute of Technology,
Kolkata 700107, West Bengal, India. E-mail: gpareek76@gmail.com
Dev Narayan Sarkar* and Gagan Pareek**
Almost all large consumer goods companies operating in Bhutan actually operate
through their Indian offices since India has a free trade agreement with Bhutan.
Bhutan has a unique rural market structure, and the 4Ps (Product, Place, Price
and Promotion) and 4As (Awareness, Availability, Affordability and Acceptability)
of rural marketing are also governed by unique regulations formulated by the
Government of Bhutan. Bhutan is 69.1% rural, and rural marketing becomes
the most important subject for marketing in Bhutanin fact, if Indian census
benchmarks were applied to the Bhutan demographics, the percentage of rural
population would be beyond 90%. This present study is the most comprehensive
ex post facto qualitative and quantitative study of the 4Ps/4As of rural marketing
in Bhutan. The research tool used is a qualitative survey of the national distributors
operating in Bhutan and of some wholesalers in each district of Bhutan, followed
by a quantitative analysis of the associations between the factors. Absolutely
no literature is available on rural marketing in Bhutan, and this paper aims to
advance that body of knowledge from a practitioners point of view.
Introduction
Bhutan has an indigenous population of 634,982 (of which rural population is
438,871) and is very sparsely populated with only 18 people per sq km (PHCB,
2005). The population, including the non-Bhutanese, is 672,425. In contrast to
this, the Indian census defines any area with less than 400 people per sq km as
rural (also 70% of adult male population should be engaged in agriculture and
there should not be any municipal board). As per PHCB (2005), 69.1% of population
of Bhutan reside in rural areas. Though the percentage of rural population in Bhutan
seems almost same as that of India, the point to note is that Bhutan Census
board has a less stringent criterion for classifying a place as Urbanthe urban-
rural classification used in the PHCB (2005) is according to the classification of the
The IUP Journal of Management Research, Vol. XII, No. 3, 2013 8
Department of Urban Development and Engineering Services (DUDES) and is not
based on any standard criterion. If we use the Indian standard criterion, Bhutan is
considerably more rural. Hence, Bhutan can be termed as a predominantly rural
country and rural marketing is very important for the country. The rural marketing
tools and challenges are presented in Table 1.
Rural marketing does not exist as a
proper academic or research discipline
in the western world. Though there are
some Indian books and articles on rural
marketing, there is almost nothing
written on rural marketing in Bhutan, a
seamless neighbor to India. Since there
is no material on rural marketing mix of
Bhutan, this paper aims to develop
scholarly material on rural marketing
mix.
The scope of Fast Moving Consumer Goods (FMCG) distribution in rural Bhutan
is best represented by Figure 1 describing the domain of rural marketing in rural
marketing theory presented by Jha (1988). Anything produced in rural and supplied
to rural falls in the unorganized sector; anything produced in urban areas and
supplied to rural areas falls under consumer goods distribution (which is the scope
of this paper); anything produced in rural and supplied to urban areas falls under
agricultural marketing, artisan products and cottage industry; and anything
produced in urban areas and supplied to urban areas is outside the purview of
rural marketing. FMCG marketing in the rural markets of Bhutan falls in the realm of
urban to rural marketing quadrant as highlighted in Figure 1.
Table 1: Rural Marketing Tools vs.
Marketing Challenges
Marketing Marketing
Tools Challenge
Product Acceptability
Price Affordability
Place Availability
Promotion Awareness
Source: Kashyap (2005)
Figure 1: Classification of Rural Marketing
Rural
Produced in
Urban
Unorganized Sector
(Farm and Non-Farm)
Supplied to
Rural Urban
Agricultural Marketing,
Artisan Products,
Cottage Industry
Consumer Goods
Distribution (Scope of
this paper)
Not in the Realm
of Rural Marketing
9 Rural Marketing Mix in Bhutan: An FMCG Perspective
Geography and Demography of Bhutan
Bhutans geographical area is comparable to Switzerland, Denmark, Netherland
and Taiwan but it lags behind in terms of per capita income and Human Development
Index (HDI) ranking. Bhutan, officially the Kingdom of Bhutan, is a landlocked state
in South Asia, located at the eastern end of the Himalayas and bordered to the
south, east and west by the Republic of India and to the north by the Peoples
Republic of China. Bhutan is separated from the nearby country of Nepal to the
west by the Indian state of Sikkim, and from Bangladesh to the south by the
Indian states of Assam and West Bengal. The total area of the country has been
reported as 38,394 sq km. Bhutan has a population of 634,982 as per its 2005
census and is very sparsely populated with only 18 people per sq km and is
predominantly rural (PHCB, 2005). The population, including the non-Bhutanese,
is 672,425. Bhutan is divided into 20 dzongkhags (districts) (Figure 2), administered
by a body called the dzongkhag Tshogdu. In the vast majority of constituencies,
rural gewogs (village blocks) are administered by bodies called the gewog Tshogde
(Wikipedia, 2012).
Objectives of the Study
This paper is an ex post facto qualitative study of the 4Ps (Product, Place, Price and
Promotion) and 4As (Awareness, Availability, Affordability and Acceptability) in rural
marketing in Bhutan. The research tool used is a qualitative survey of the national
distributors operating in Bhutan and of some wholesalers in each district of Bhutan,
followed by a quantitative survey of 100 wholesalers on the factors identified
through the qualitative survey. The survey is followed by a correlation analysis of
the association between the factors with calculation of Pearson correlation
coefficient and two-tailed measure of significance. This research paper is the first
of its kind on rural marketing in Bhutan and is supposed to make the reader aware
of the nuances of rural marketing in Bhutan.
Figure 2: Districts of Bhutan
The IUP Journal of Management Research, Vol. XII, No. 3, 2013 10
Qualitative Analysis
Promotion/Awareness
Many of the conventional promotion methods followed in India are not even allowed
by regulation in Bhutan. For example, the dealer boards and glow-sign-boards
which are visible above almost every shop in India are not allowed in Bhutan.
Rules there dictate that the dealer boards have to be green in color and sport only
the details of the establishment and should not carry any promotional message.
Hoardings, banners, posters, etc., which are the mainstay of Indian rural marketing,
are not allowed in Bhutan to preserve the environment and the skyline. Hence,
the major methods of localized rural promotions are out of consideration in Bhutan.
One important method of promoting ones products is through a retailer and
wholesaler meet which is fairly manageable in Bhutan owing to the low number of
wholesalers and retailers: around 190 wholesalers and 4,000 retailers (research
estimate from a survey of national distributors in Bhutan). So, on an average,
meetings could be held in each district with 210 invitees each (20 districts). Often,
the department of trade holds product exposition fairs in Paro and Thimpu and
invites companies to demonstrate or sample their products to the wholesalers
and retailers. The government provides this support since it wants its citizens to
use good world-class products.
The media available in Bhutan is sparse and is mostly untapped by Indian
companies operating in Bhutan or even by Bhutanese corporations. After a five-
year spurt of dizzying growth, the question now is: What seems to be stifling the
Bhutanese medi a? Ask around and you get one common response
advertisements (Raj, 2011). Most media in Bhutan survive on government
advertising. And 80 to 90% of the advertising comes from government. The private
sector is not yet heavily into advertising and branding and is losing on a cheap
advertising media. The government offices simply distribute ads unmindful of
whether they reach the intended target. Sonam Pelden (2011) says that
announcements meant for the yak herders come to the English newspapers that
do not go to Merak, Sekteng, Laya and Lingzhi; and Radio, which is popular among
illiterate rural population, is not used as a channel. The public fund, in the process,
is misplaced, or rather misused.
The print media in Bhutan includes: Kuensel, a newspaper of a government-
owned corporation, circulating six days a week in dzongkha and English; Bhutan
Times, Bhutan's first government-authorized privately-owned newspaper; Bhutan
Observer, private newspaper; Bhutan Today, an English daily newspaper; Business
Bhutan, the first financial newspaper of Bhutan; Drukpa, a monthly news magazine;
and The Journalist, a weekly English newspaper.
The broadcast media includes: the Bhutan Broadcasting Service, a radio service
broadcasting in short wave nationally, and on the FM band in Thimphu (BBS SW and FM)
11 Rural Marketing Mix in Bhutan: An FMCG Perspective
reaching all of Bhutan; BBST TV (the national TV channel), reaching almost all 20 districts;
and Global TV programming reaching people in 46 towns and urban settlements.
The online media includes: Kuensel Online, the first online newspaper; B-Mobile,
Bhutans telephone service on phone; Facebook, YouTube and Hi5 are Internet
sites with wide appeal in Bhutan; Kuzoo.net, website of a 24-hour radio station
Kuzoo FM (Figure 3).
The most popular media in rural Bhutan is the short wave radio channel of the
Bhutan Broadcasting Service (Raj, 2011). This channel should be used by the Indian
companies operating in Bhutan to reach the rural population. Since the population
of Bhutan is low, demonstrations held in villages is also a good and cost-effective
method. After all, only 4.38 lakh rural citizens have to be covered.
In rural India, folk art forms are used as a means to promote products. The same
can be applied to rural Bhutan. The most dominant folk music forms in Bhutan are
Zhungdra, Boedra, Zhey and Zhem, Tsangmo, Lozey and Rigsar (Wikipedia, 2012). A
popular performing art in rural Bhutan is the Cham dance. A short promotional
message delivered by the artiste or by a promoter during the performance of these
art forms in rural markets would be instrumental in spreading awareness about the
products. This is something akin to promotional messages in rural India during
performance of the various folk art forms like baul, kirtan, katha, nautanki, etc. (Table 2).
Figure 3: Complete List of Media in Bhutan
Media in Bhutan
Print Media Broadcast Media
Online Media Kuensel
(Newspaper)
Bhutan Times
(Newspaper)
Bhutan Observer
(Newspaper)
Bhutan Today
(Newspaper)
Business Bhutan
(Business
Newspaper)
The Journalist
(Newspaper)
Drukpa (Magazine)
Bhutan Broadcasting
Service (Radio - SW
and FM)
Bhutan Broadcasting
Service
(TV channel)
Cable TV
The IUP Journal of Management Research, Vol. XII, No. 3, 2013 12
Place/Availability
Rural distribution in India generally follows a hub and spoke model which helps in
breaking bulk and increasing penetration into interior villages through a network
of spokes which are located in the rural areas. Many companies in India also try to
reach villages through direct distributors or through van routes but the more
successful Indian companies operating in rural markets use the hub and spoke
model (Figure 4).
Some Guiding
Factors
Dzongkhag Folk Performing Art No. of Art Kuensel Newspaper
(District) Forms for Promotion Forms Circulation
Bumthang 0 360
Chhukha Miritsemoi Zhey 1 1578
Dagana 0 0
Gasa Zhungdra, Kabney, 4 0
Goen Zhey and zhem
Ha Bonghur Zhey 1 0
Lhuentse 0 112
Monggar 0 259
Paro Zhungdra, Boedra, 4 1082
Woochupai Zhey
and zhem
Pemagatshel 0 55
Punakha Zhungdra 1 343
Samdrupjongkhar 0 418
Samtse 0 329
Sarpang 0 417
Thimphu Zhungdra, Wang 3 3457
Zhey and zhem
Trashigang 0 465
Trashiyangtse 0 0
Trongsa Nub Zhey 1 0
Tsirang 0 170
Wangdue 0 0
Zhemgang 0 90
All Dzongkhags 9,135
Source: Wikipedia (2012); Newspaper Circulation from Rapten (2012)
Table 2: Promotion/Awareness Factors
Promotion/Awareness Factors
13 Rural Marketing Mix in Bhutan: An FMCG Perspective
Bhutan is a highly regulated market and every establishment has to acquire
unique licenses for each kind of activity in the supply chain for rural markets
(Bhutan Micro Retail, Wholesale Trade Regulations, 2006). Moreover, there are
only three entities authorized by the government as National Wholesalers, to
distribute goods into rural Bhutan: Food Corporation of Bhutan (FCB), Tashi
Commercial Corporation (TCC) and Damchen Agency (DA). All these entities have
headquarters based in Phuentsholing (in Chhukha district) in Bhutan which is
just across the border from Jaigaon in West Bengal. No other entity is available in
Bhutan for official distribution of FMCG (or any other products) in the small country.
Unlike in many other countries, the same entity cannot sell to wholesalers as
well as retailers. The licenses for the two activities are kept separate by the
government. An entity authorized to sell to licensed wholesalers can only do that
while the licensed wholesalers further sell stocks to retailers. Many would feel
that the rural distribution structure is very similar to the hub and spoke model
which is operated by many FMCG companies in rural India. But the biggest
difference is that some of the spoke depots (branches) in Bhutan are also owned
by the national distributors and managed by their employees, often designated
as branch managers. Other third party wholesalers are also used as spokes for
intensive rural distribution and the most unique feature is that these spokes are
common between all the three national distributors.
In very rare occasions, a licensed wholesaler visits India (across the porous
border) and buys stocks directly from a distributor or a CFA in India. An example
of one such entity is Gelephu Grocery which is based in Gelephu, Bhutan (just
across the border from Bongaigaon in Assam). For most practical purposes, Bhutan
rural distribution has only one modality, the one shown in Figure 5. The total
wholesale and retail trade in Bhutan is Nu 3,752.6 million (Statistical Yearbook of
Bhutan, 2011).
The officiating Director General of the Department of Trade (DoT), Dophu Tshering,
said that DoT conducted a study which showed that the three main national
distributors supply adequate essential items to retailers across the country, from
Phuntsholing to all dzongkhags: Tashi Commercial Corporation (TCC), Damchen
wholesale agencies and Food Corporation of Bhutan (FCB) (Dorji, 2012).
Figure 4: Standard Rural Distribution Structure in India
Factory CFA Superstockist/Hub
Consumer
Rural
Retailer Substockist/Spoke
The IUP Journal of Management Research, Vol. XII, No. 3, 2013 14
The Tashi Commercial Corporation (TCC), part of the Tashi Group, Tashi Consumer
division is the largest distributor of consumer products in Bhutan under the umbrella
of Tashi Group of Companies with a turnover of more than Nu.1000 million (Ngultrum
1 = 1) dealing with distributorship of more then 77 multinational companies. Initially,
Tashi had a monopoly in the distribution business. TCC has a fleet of 44 vehicles
for distribution of consumer goods. Van marketing is conducted regularly to reach
the essential commodities to the remotest part of the country for the convenience
and benefit of the consumers (Tashi website, 2012). TCC imports only from India
and the supply has been consistent (Dorji, 2012). The imports are mainly done
from the Indian multinational companies like: Hindustan Lever Limited, Amul, Nestle
India Ltd., Henkle SPIC India Ltd., Eveready Industries (I) Ltd., Johnsons & Johnsons
Ltd., Parle Products Ltd., Britannia Products, Colgate-Palmolive India Ltd., Joyco
India Pvt. Ltd., Marico Industries Ltd., Perfetti Van Melle India Pvt. Ltd., Cadbury
India Ltd., Godrej Consumers Products, Dabur India Ltd., Reckitt Benckiser India
Ltd., Bisk Farm, Glaxo SmithKline Consumer Healthcare and United Breweries.
The Damchen Agency (DA) is the second largest distribution entity in Bhutan owned
by Yab Ugyen Dorji. Damchen distributes products from the following FMCG companies
in Bhutan: Sula Vineyards, Nestle India Ltd., Britannia New Zealand, PepsiCo India,
Shree Parag Edible Oil, S K Industries, Joyco India Ltd., Parakh Food Ltd., and Amul.
Figure 5: Rural Distribution Structure in Bhutan
Manufacturing Plant
in India
CFA in India
(Mostly in Siliguri)
Bhutan National
Distributors Depot
Co-Packing Plant
in Bhutan
Spoke Depots
Owned by National
Distributors
Other Common
Authorized Wholesalers
Acting as Spokes (B2B)
Government Licensed Wholesale Shops
and Establishments
Rural Retailers
Rural Consumers
Note: CFA: Carrying and Forwarding Agent; B2B: Business to Business; Bhutan National
Distributor: Tashi Commercial, Damchen and Food Corporation of Bhutan (only
3 exist).
15 Rural Marketing Mix in Bhutan: An FMCG Perspective
Food Corporation of Bhutan (FCB) is the only government agency involved in
distribution of FMCG products. FCB operates wholesale distributorship of consumer
goods under dealership arrangement with principal companies in India/3
rd
countries.
FCB manages the distribution through a network of centrally and strategically located
infrastructures throughout the country and with a team of experienced staff (Food
Corporation of Bhutan, 2010). FCB distributes products from the following FMCG
companies: HUL, Nestle India, Glaxo SmithKline Healthcare Ltd., Agro Tech Foods
Ltd., Colgate Palmolive India Ltd., Nippo Batteries Ltd. (Indo National Ltd.), Henkel
SPIC India Ltd., Amul, Marketing Feder. Ltd., Aza Tea Packaging Company, Shubham
Industries Ltd., Herbal & Hygiene Products and Parle Products (P) Ltd.
As seen from the above examples, there is no concept of exclusivity in
distribution in Bhutan. Most notably, Nestle and Amul products are distributed by
all the three entities. Every FMCG company has contracted at least two of the
three entities for distribution in Bhutan. The no exclusivity concept extends to the
common wholesalers which act as spokes.
Price/Affordability
Bhutan figures on the United Nations list of 41 least developed countries and is one
of the worlds most vulnerable economies (Wangchuk, 2011). This list is based on
certain criteria which include per capita income, standards of living and human
resources, and economic capacity and resilience. Agriculture and forestry provide
the main means of livelihood for over 60% of the population. The economy, although
aligned with India through trade links, is still underdeveloped due to the countrys
rugged terrain and other geographical constraints. The industrial sector is largely
dependent on cottage industries and other small scale ventures. The UNDP HDI
(UNDP, 2011) also indicates the relative poverty in a predominantly rural country.
Hence, the rural marketing challenge of affordability (against the marketing tool of
price) is of primary importance to the marketer interested in this country.
Most companies operating in Bhutan through their Indian offices maintain price
parity with Indian rural markets. Though Bhutan presents a great opportunity for
geographical pricing (higher prices in the captive geography to recoup the higher
costs of distribution), most companies choose to keep the prices same owing to the
considerable difficulty in manufacturing a separate batch for Bhutan with a special
price. For example, HUL, P&G, Nestle and Dabur have all kept the prices exactly the
same as in Indian markets. Also, most companies want to penetrate the rural markets
in Bhutan before they start fishing for higher profits. Another considerable challenge
in implementing a differential pricing would be the fairly porous border between
Bhutan and India which would cause an infiltration of stocks illegally from India into
Bhutan if any company tries to implement a differential pricing (Figure 6).
Another factor influencing pricing in Bhutan is the recent western influence owing
to the introduction of cable television. Even rural citizens aspire for global brands
The IUP Journal of Management Research, Vol. XII, No. 3, 2013 16
and prefer occasional use of a global brand rather than the more regular use of a
watered-down brand or product.
Another perspective of affordability is the Bhutan Consumer Price Index which
reflects changes in the cost to the average consumer of acquiring a basket of
goods and services that may be fixed or changed at specified intervals, such as
yearly. This index shows rapidly rising prices in a 90% rural market and it is the
responsibility of the consumer goods companies to introduce smaller priced packs
which is lacking in Bhutan. Most companies are selling larger sized packs in Bhutan
(as per qualitative survey) and need to introduce smaller packs to keep the products
affordable (Figure 7).
Figure 7: Bhutan Consumer Price Index
131.6
105.3
78.9
52.6
26.3
0.0
1980 1984 1989 1993 1997 2001 2006 2010
Source: International Monetary Fund, International Financial Statistics and data files
Figure 6: Factors Behind Price Parity with Indian Rural Markets
Difficulty in Producing Small
Quantity of Differential Pack
Price Parity in Bhutan Rural
Threat of Infiltration from India
Through Non-Official Channel
Need to
Penetrate
Free Trade
Agreement
17 Rural Marketing Mix in Bhutan: An FMCG Perspective
Product/Acceptability
Not long ago, the Buddhist kingdom of Bhutan was a simple nation suspended in
medieval ways of life and consumerism was an unknown word. Few tourists were
permitted and television was not allowed. And then, a decade ago, Bhutans king
allowed television and then the Internet, which introduced a passion among the
people for a different way of life, and for new products. Consumerism was born in
Bhutan and companies based in India rushed in to satiate the hunger for branded
goods. Most products available today in rural Bhutan are exactly the same as those
available in rural India. Moreover, the rural Bhutanese today aspire for global brands.
The value of FMCG products sold by the three national distributors in Bhutan is
kept confidential by Tashi and Damchen but FCB had declared the value and mix
from 2006 to 2009 in its booklet published during the 16
th
SAARC Summit (Food
Corporation of Bhutan, 2010). That tabulation gives us a good idea of the kind of
FMCG products which dominate the Bhutan rural markets (90% of Bhutan is rural).
Packaged food appears to be the largest FMCG category and this fact has been
supported by the qualitative survey (on-depth interviews) conducted by the
researcher at Tashi and Damchen also. No wonder that Nestle and Amul products
are being distributed in Bhutan by all three national distributors and Nestle is a
more prestigious company to distribute than even HUL in Bhutan. This is also owing
to the fact that Bhutan is still not self-sufficient in food products and the citizens
need packaged food products to tide over food shortages.
No FMCG company has yet focused on specific products for Bhutan and are
probably not wanting to customize for a market comprising of only 0.67 million
citizens (smaller than most small towns in India like Howrah). However, many
Bhutanese companies are introducing homegrown products and appealing to the
national pride of citizens to start using national products rather than imported
ones e.g., Tai Industries Limited sells Druk 10000 beer, Druk squashes and other
packaged food products.
The government of Bhutan discourages tobacco products and hence, the second
largest FMCG in India, ITC, is all but absent from Bhutan rural markets. Realizing
the grave dangers and damaging effects of tobacco use on health, longevity and
quality of life, Bhutan has actively promoted antitobacco campaigns at both the
national and international levels. The country has won numerous commendations
and awards for its efforts and was among the first to sign the global framework
convention on tobacco control. On December 17, 2004, Bhutan became the worlds
first nation to national assembly. Smoking also is now restricted to private areas.
Quantitative Analysis
The research tool used is a qualitative survey of the national distributors operating
in Bhutan (General managers of Damchen and Tashi were interviewed) and of
some wholesalers in each district of Bhutan followed by a quantitative survey of
The IUP Journal of Management Research, Vol. XII, No. 3, 2013 18
100 wholesalers on the factors identified through the qualitative survey. The survey
is followed by an analysis of the associations between the factors. Data on the
4Ps/4As is given in Appendix (Tables A1 to A4) and an analysis of the correlations
was requested from SPSS Statistics Desktop 20.0 software and the output has
been analyzed for factors determining which districts have the highest potential
for FMCG marketers. A ranking of potentials of the 20 districts have also been
enumerated using the various factors (Appendix Table A5).
Correlation Between Place and Price Factors and Within
Themselves
Retail intensity is highly correlated with the total number of spokes in
each district (total of national distributor branches and the wholesalers
acting as spokes).
Retail intensity is highly correlated with UNDP HDI (Table 3).
Correlation Between Place and Product Factors and Within
Themselves
Total spokes as well as the retail intensity is highly correlated to the per-household
annual consumption. It is to be expected that the household consumption should
influence the number of retailers since demand influences supply (Table 4).
Correlation Between Place and Promotion Factors and Within
Themselves
Total spokes as well as retail intensity is highly correlated with the circulation of
Kuensel (the largest circulated newspaper by a wide margin). No doubt media is
Table 3: Correlation Between Place and Price Factors
and Within Themselves
Correlation Total Retail Intensity Employed UNDP Human
Spokes (Retailers per 000 Development
Households Index
in 000)
Total Spokes Pearson 1 0.787** 0.216 0.394
Correlation
Sig. 0.000 0.361 0.085
(2-tailed)
N 20 20 20 20
Retail Intensity Pearson 0.787** 1 0.293 0.606**
(Retailers Correlation
Households
Sig.
in 000)
(2-tailed) 0.000 0.210 0.005
N 20 20 20 20
Note: ** Correlation is significant at the 0.01 level (2-tailed).
19 Rural Marketing Mix in Bhutan: An FMCG Perspective
driving consumerism, and retail intensity is following consumerism in the districts
of Bhutan. Folk art forms naturally have no correlation with anything else since
there has never been any attempt to tap them for rural awareness activities. The
researcher intends to try it out in Bhutan like numerous companies have successfully
tapped Indian folk arts for rural awareness programs in India (Table 5).
Correlation Between Product and Promotion Factors and
Within Themselves
Per household consumption is highly correlated with newspaper circulation
(represented by the circulation of Bhutans dominating newspaper, Kuensel). Media
seems to drive consumerism (Table 6).
Correlation Between Price and Promotion Factors and Within
Themselves
No significant correlation found between price and promotion factors. But newspaper
circulation and HDI seem to be correlated. Hence, both of these can be used to develop
a factorial grid of which would indicate potential rankings of a district (Table 7).
Correlation Between Price and Product Factors and Within
Themselves
Household consumption is highly correlated to UNDP HDI. This is expected and simply
means that a more developed district will have a higher consumption (Table 8).
Table 4: Correlation Between Place and Product Factors
and Within Themselves
Correlation Total Retail Intensity Per Household
Spokes (Retailers Consumption
Households (Nu)
in 000)
Total Spokes Pearson 1 0.787** 0.583**
Correlation
Sig. (2-tailed) 0.000 0.007
N 20 20 20
Retail Intensity Pearson 0.787** 1 0.722**
(Retailers Correlation
Households
in 000) Sig. (2-tailed) 0.000 0.000
N 20 20 20
Per Household Pearson 0.583** 0.722** 1
Consumption Correlation
(Nu)
Sig. (2-tailed) 0.007 0.000
N 20 20 20
Note: ** Correlation is significant at the 0.01 level (2-tailed).
The IUP Journal of Management Research, Vol. XII, No. 3, 2013 20
Table 6: Correlation Between Product and Promotion Factors
and Within Themselves
Correlation Kuensel No. of Art Per Household
Newspaper Forms Consumption
Circulation (Nu)
Kuensel Pearson 1 0.476* 0.675**
Newspaper Correlation
Circulation
Sig. (2-tailed) 0.034 0.001
N 20 20 20
No. of Art Pearson 0.476* 1 0.771**
Forms Correlation
Sig. (2-tailed) 0.034 0.000
N 20 20 20
Per Household Pearson 0.675** 0.771** 1
Consumption Correlation
(Nu)
Sig. (2-tailed) 0.001 0.000
N 20 20 20
Note: * Correlation is significant at the 0.05 level (2-tailed); ** Correlation is significant
at the 0.01 level (2-tailed).
Table 5: Correlation Between Place and Promotion Factors
and Within Themselves
Correlation Total Retail Intensity Kuensel No. of Art
Spokes (Retailers Newspaper Forms
Households Circulation
in 000)
Total Spokes Pearson 1 0.787** 0.935** 0.372
Correlation
Sig. (2-tailed) 0.000 0.000 0.107
N 20 20 20 20
Retail Intensity Pearson 0.787** 1 0.729** 0.438
(Retailers Correlation
Households
in 000) Sig. (2-tailed) 0.000 0.000 0.054
N 20 20 20 20
Kuensel Pearson 0.935** 0.729** 1 0.476*
Newspaper Correlation
Circulation
Sig. (2-tailed) 0.000 0.000 0.034
N 20 20 20 20
No. of Art Pearson 0.372 0.438 0.476* 1
Forms Correlation
Sig. (2-tailed) 0.107 0.054 0.034
N 20 20 20 20
Note: * Correlation is significant at the 0.05 level (2-tailed); ** Correlation is significant
at the 0.01 level (2-tailed).
21 Rural Marketing Mix in Bhutan: An FMCG Perspective
Conclusion
A good potentiality hierarchy of districts can be obtained by assigning equal weights
to the identified factors which appear to influence consumerism in the preceding
analysis. The weights are applied after normalizing all measures between 0 and
100. The factors used for ranking the districts are as follows:
1. Retail intensity (Availability Factor)
2. Spoke availability (Availability Factor)
3. Newspaper circulation (Awareness Factor)
4. Per capita household consumption (Acceptability Factor)
5. UNDP HDI (Affordability Factor)
Table 7: Correlation Between Price and Promotion Factors
and Within Themselves
Correlation Kuensel No. of Art Employed UNDP Human
Newspaper Forms per 000 Development
Circulation Index
Kuensel Pearson 1 0.476* 0.145 0.523*
Newspaper Correlation
Circulation
Sig. (2-tailed) 0.034 0.541 0.018
N 20 20 20 20
Note: * Correlation is significant at the 0.05 level (2-tailed).
Table 8: Correlation Between Price and Product Factors
and Within Themselves
Correlation Employed UNDP Human Per Household
per 000 Development Consumption
Index (Nu)
Employed Pearson 1 0.171 0.046
Per 000 Correlation
Sig. (2-tailed) 0.470 0.846
N 20 20 20
UNDP Human Pearson 0.171 1 0.682**
Development Correlation
Index
Sig. (2-tailed) 0.470 0.001
N 20 20 20
Per Household Pearson 0.046 0.682** 1
Consumption Correlation
(Nu)
Sig. (2-tailed) 0.846 0.001
N 20 20 20
Note: ** Correlation is significant at the 0.01 level (2-tailed).
The IUP Journal of Management Research, Vol. XII, No. 3, 2013 22
Any marketer who wants to tap the rural markets of Bhutan should penetrate
the district with higher ranking before going on to the next highest ranked district.
This is owing to the potential for sales as well as the ease of reach, the ease of
promotions and the latent consumption patterns in each district.@
References
1. Bhutan Living Standard Survey (2007), Bhutan National Statistics Bureau,
Royal Government of Bhutan (RGOB), December.
2. Bhutan Micro Retail, Wholesale Trade Regulations (2006), available at
www.trade.gov.bt, Last Updated July 30, 2010.
3. Dorji M (2012), Shops Across Bhutan Say Consumer Goods are Running Out
of Stock, The Bhutanese, May 19, available at http://www.thebhutanese.bt/
shops-across-bhutan-say-consumer-goods-are-running-out-of-stock/
4. Dorji P S S (2012), Opening the Gates in Bhutan: Media Gatekeepers and the
Agenda of Change, in Towards Global Transformation: Proceedings of the Third
International Conference on Gross National Happiness, The Centre for Bhutan
Studies, Thimphu, pp. 88-109, available at http://archiv.ub.uni-heidelberg.de/
savifadok/1387/
5. Food Corporation of Bhutan (2010), Domestic Marketing Sixteenth SAARC
Summit, April 28-29, Thimpu, Bhutan.
6. Jha M (1988), Rural Marketing: Some Conceptual Issues, Economic and Political
Weekly, Vol. 23, No. 9, pp. 8-16.
7. Kashyap P R S (2005), The Rural Marketing, 1
st
Edition, Dreamtech Press, New
Delhi.
8. Kuenselonline (2012), http://www.kuenselonline.com/circulation/. Accessed
on July 24, 2012.
9. PHCB (2005), Population & Housing Census of Bhutan, available at
http://www.bhutancensus.gov.bt/. Accessed on July 9, 2012.
10. Raj M (2011), Advertise This, Drukpa, January 1.
11. Rapten P (2012), Mass Media: Its Consumption and Impact on Residents of
Thimphu and Rural Areas, available at http://www.bhutanstudies.org.bt/
pubFiles/6.media.pdf. Accessed on July 31.
12. Sonam Pelden (2011), Where the Government Ad Money Goes, Bhutan
Obserrver, March 25, available at http://bhutanobserver.bt/3907-bo-news-
about-where_the_government_ad_money_goes_.aspx
23 Rural Marketing Mix in Bhutan: An FMCG Perspective
13. Statistical Yearbook of Bhutan (2011), National Statistics Bureau, Royal
Government of Bhutan.
14. Tashi Website (2012), http://www.tashigroup.bt/?page_id=39, as viewed on
July 11, 2012.
15. UNDP (2011), Bhutan National Human Development Report, United Nations
Development Program.
16. Wangchuk DT (2011), Per Capita in Bhutan Grows But it has not Translated
into Development, Business Bhutan, May 07, 2011.
17. Wikipedia (2012), Kuensel, http://en.wikipedia.org/wiki/Kuensel. Accessed on
July 30, 2012.
18. Wikipedia (2012), Music of Bhutan, available at http://en.wikipedia.org/wiki/
Music_of_Bhutan. Accessed on July 24, 2012.
The IUP Journal of Management Research, Vol. XII, No. 3, 2013 24
Appendix
Source: Statistical Yearbook of Bhutan (2011)
Bumthang
Chhukha
Dagana
Gasa
Ha
Lhuentse
Monggar
Paro
Pemagatshel
Punakha
Samdrupjongkhar
Samtse
Sarpang
Thimphu
Trashigang
Trashiyangtse
Trongsa
Tsirang
Wangdue
Zhemgang
All
Dzongkhags
Table A1: Demographics and Place/Availability Factors
16,116
74,387
18,222
3,116
11,648
15,395
37,069
36,433
13,864
17,715
39,961
60,100
41,549
98,676
51,134
17,740
13,419
18,667
31,135
18,636
634,982
2,870
14,482
3,485
727
2,290
3,001
7,348
7,118
2,937
3,387
8,363
11,634
8,211
19,689
10,813
3,764
2,739
3,651
6,227
3,379
126,115
1
3
0
0
0
0
0
2
0
1
3
0
1
2
0
0
0
0
1
0
14
6
25
6
1
4
3
9
17
4
7
11
10
17
40
8
2
3
4
11
3
191
7
28
6
1
4
3
9
19
4
8
14
10
18
42
8
2
3
4
12
3
205
Some Guiding
Factors
Demographics
P
o
p
u
l
a
t
i
o
n
H
o
u
s
e
h
o
l
d
s
Place/Availability Factors
T
o
t
a
l

N
a
t
i
o
n
a
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D
i
s
t
r
i
b
u
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r
s
(
a
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g

a
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)
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a
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S
p
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s
118
481
111
14
71
56
173
339
83
90
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204
347
1282
164
31
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225
69
4,216
R
e
t
a
i
l
e
r
s
41.1
33.2
31.9
19.3
31.0
18.7
23.5
47.6
28.3
26.6
26.7
17.5
42.3
65.1
15.2
8.2
22.6
20.0
36.1
20.4
33.00
R
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s

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25 Rural Marketing Mix in Bhutan: An FMCG Perspective
Appendix (Cont.)
Some Guiding
Factors
Table A2: Price/Affordability Factors
Price/Affordability Factors
Dzongkhag Employed Employed Per Household UNDP Human
(District) Persons per 000 Annual Income Development
(Nu) Index
Bumthang 5300 329 176516 0.707
Chhukha 41400 557 328741 0.668
Dagana 11400 626 503638 0.589
Gasa 1800 578 66396 0.631
Ha 6000 515 213763 0.686
Lhuentse 7200 468 696348 0.637
Monggar 19200 518 719019 0.629
Paro 19400 532 63157 0.681
Pemagatshel 5600 404 424286 0.676
Punakha 14200 802 252628 0.650
Samdrupjongkhar 8100 203 615377 0.610
Samtse 37200 619 757885 0.585
Sarpang 16200 390 314166 0.626
Thimphu 43500 441 38866 0.727
Trashigang 27000 528 474488 0.649
Trashiyangtse 9400 530 231576 0.616
Trongsa 6700 499 359510 0.673
Tsirang 13400 718 225098 0.658
Wangdue 17100 549 255867 0.656
Zhemgang 10900 585 856670 0.651
All Dzongkhags 321,000 506 372465
Source: UNDP (2011), Statistical Yearbook of Bhutan (2011)
Note: Household incomes are as per Wikipedia (2012) and converted to Nu using
exchange rate 56Nu=$1
The IUP Journal of Management Research, Vol. XII, No. 3, 2013 26
Appendix (Cont.)
Table A3: Products Sold by Food Corporation of Bhutan
AGENCY 2006 2007 2008 2009 Total Contri- Highest
Business of FCB bution Selling
(in Million Nu) (%) Product
of the
Company
A S Herbal & Hygiene 0.7 0.8 0.9 1.1 3.5 0.5 Phenyl and
Products Bleaching
Powder
Agro Tech Food Ltd. 2.4 3.1 4.3 2.7 12.4 1.9 Cooking Oil
Aza Tea Packaging 5.1 6.0 7.1 9.4 27.5 4.3 Tea
Company
Bhutan Diary and 3.3 3.8 1.2 4.7 13.0 2.0 Milk Products
Agro Industries Ltd. and
Packaged Food
Colgate Palmolive 0.9 0.9 0.7 0.6 3.0 0.5 Dental Care
India Ltd. Products
Druk Agro Enterprise 1.8 0.6 0.4 0.8 3.7 0.6 Beer and Juices
Glaxo SmithKline 5.2 4.2 4.3 4.8 18.4 2.9 Packaged Food
Healthcare Ltd. and
Supplements
Gujarat Cooperative 20.5 29.8 24.8 24.5 99.6 15.5 Milk Products
Marketing Federation and
Ltd. Packaged Food
Henkel SPIC India Ltd. 9.4 10.9 14.0 16.8 51.2 8.0 Personal Wash
Products
Hindustan Lever Ltd. 26.4 17.8 17.4 18.1 79.7 12.4 Personal Care
Products
Indo National Ltd. 1.1 1.1 0.6 1.2 4.0 0.6 Nippo Batteries
Nestle India Ltd. 60.4 47.2 73.2 100.5 281.3 43.8 Packaged Food
Products
Parle Product Private 4.5 4.1 4.5 5.4 18.4 2.9 Biscuits
Ltd.
Reckitt Benckiser (I) 1.6 0.6 0.7 0.9 3.8 0.6 Homecare
Ltd. Products
Shubham Industries 6.7 5.3 6.1 4.8 22.9 3.6 Electrical and
Ltd. Auto Parts
Total 149.9 136.1 160.0 196.3 642.4 100.0
27 Rural Marketing Mix in Bhutan: An FMCG Perspective
Appendix (Cont.)
Some Guiding
Factors
Table A4: Product/Acceptability Factors
Product/Acceptability Factors
Dzongkhag Per Per Per Per Capita
(District) Household Household Household Consumption
Consumption Food non-Food (Nu)
(Nu) Consumption Consumption
(Nu) (Nu)
Bumthang 17814 7498 10316 3172
Chhukha 14922 5398 9524 2905
Dagana 11162 6147 5015 2135
Gasa 18890 9242 9648 4407
Ha 14375 5177 9198 2826
Lhuentse 8539 4596 3943 1665
Monggar 9633 4397 5236 1910
Paro 20954 6096 14858 4094
Pemagatshel 10013 5016 4997 2121
Punakha 17019 6364 10655 3254
Samdrupjongkhar 10662 4154 6508 2231
Samtse 8407 3873 4534 1627
Sarpang 11339 4797 6542 2241
Thimphu 27271 7899 19372 5441
Trashigang 9864 4739 5125 2086
Trashiyangtse 12241 6207 6034 2597
Trongsa 14138 6116 8022 2886
Tsirang 14003 5521 8482 2739
Wangdue 16264 7426 8838 3253
Zhemgang 10298 4394 5904 1867
All Dzongkhags 13,823 5,423 8,400 2745
Source: Bhutan Living Standard Survey (2007)
The IUP Journal of Management Research, Vol. XII, No. 3, 2013 28
Reference # 02J-2013-07-01-01
Appendix (Cont.)
Table A5: Ranking of District Potentials
Weight
20 20 20 20 20 100
(out of 100)
Dzongkhag Total Retail Kuensel Per UNDP Rating
(District) Spokes Intensity Newspaper Household Human of
(Retailers Circulation Consum- Develop- District
Households ption ment
in 000) (Nu) Index
Thimphu 25.6 13.9 48.0 11.7 6.6 21.2
Chhukha 17.1 7.1 21.9 6.4 6.1 11.7
Paro 11.6 10.2 15.0 9.0 6.2 10.4
Sarpang 11.0 9.0 5.8 4.8 5.7 7.3
Bumthang 4.3 8.8 5.0 7.6 6.4 6.4
Samdrup-
jongkhar 8.5 5.7 5.8 4.6 5.5 6.0
Punakha 4.9 5.7 4.8 7.3 5.9 5.7
Wangdue 7.3 7.7 0.0 7.0 5.9 5.6
Trashigang 4.9 3.2 6.5 4.2 5.9 4.9
Monggar 5.5 5.0 3.6 4.1 5.7 4.8
Samtse 6.1 3.7 4.6 3.6 5.3 4.7
Ha 2.4 6.6 0.0 6.1 6.2 4.3
Tsirang 2.4 4.3 2.4 6.0 6.0 4.2
Dagana 3.7 6.8 0.0 4.8 5.3 4.1
Pemagatshel 2.4 6.0 0.8 4.3 6.1 3.9
Trongsa 1.8 4.8 0.0 6.0 6.1 3.8
Gasa 0.6 4.1 0.0 8.1 5.7 3.7
Zhemgang 1.8 4.4 1.3 4.4 5.9 3.5
Lhuentse 1.8 4.0 1.6 3.7 5.8 3.4
Trashiyangtse 1.2 1.8 0.0 5.2 5.6 2.8