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PROJECT ROSHNI - VILLAGE

Reaching & Establishing the Last Distribution Leg of the HCCB System, i.e., the Village to increase Rural Penetration

Classified - Internal use

Rural Opportunity
75% of India s population in Rural Areas Most MNCs that came into India post 1999 targeted Urban Indian Middle & Upper Middle Class Segment to earn more Revenues Rural India accounts for 70% of Toilet Soap Users and 38% of Two-Wheelers purchase of India Very low Per Capita Consumption of CocaCola in Rural Areas Estimated at 3.7 at an India Level and at a 1 at JAMPAT Level compared to an 11 at an India Avg. of PCC With its low consumption and large population, the rural market represents a significant opportunity for penetration and a critical ground for market dominance
Classified - Internal use

51% of Total Disposable Income lies in Rural Areas Agricultural Outputs in India have increased by 25% in a span of 10 years

Source:- Economics and Political Outlook Source:Date:- 9 March 2010 Date:-

*Source: BP JAMPAT 2011

Unit Demographics & Distribution Snapshot

135,945,000
2010 Projected Population (Based on Census Data 2001)

114,178,000
RURAL - 84.0%

21,767,000
URBAN - 16.0%

6,64,64,000
APL (48.9%)

6,94,81,000
BPL (51.1%)

46,724 Villages
No Roads (54.8%)

34, 924 Villages


No Electricity (40.9%)

14
Division HQs

63
District HQs

146
Sub Div. HQs

811
Blocks

3344
5000+ Pop Vill.
5K + Village Coverage
2678 VILLAGES

85,328
Villages
Tot. ural Coverage

223
Distributors

1101
53k OUTLETS 1085 AMCs
PPO : 482 VPO : 141 PCC : 12

AMCs

21k OUTLETS

3096 VILLAGES
PPO : 3658 VPO : 220 PCC : 1

U BAN COVE AGE

100%

U AL COVE AGE

13%
PCC 2.8

35% CHILLED AVAILABILITY


PPO 1830

5% CHILLED AVAILABILITY
VPO 161

Classified - Internal use

Rural Market Scenario


Rural Market means stretch of thousands of sq. kms. It means getting distributors/AMCs to travel 50+ kms to reach 4-5 shops with drop sizes not more than 1 Case A typical village retail environment consists of 4-5 Kirana Shops (stripped down version of mom and pop stores), the size of such stores varies depending on the size and pop density of the village where they serve. The bulk and heavy weight of Coke Products, besides the two-way distribution system makes the Rural Distribution very strained and underproductive as compared to other FMCG Cos. Like HUL, ITC, Dabur, Parle, Nestle, etc.
Classified - Internal use

Existing Distribution N/W of HCCB, JAMPAT in Villages


***********Rural Market (5K+ Village Coverage)************ No. of +5K Pop. Villages 131 1076 314 1334 148 97 244 3344 Current Service Status 125 805 211 1126 109 96 206 2678 Current No Service Status 6 271 103 208 37 1 38 664

ASM

No. of Districts 8 14 8 10 8 5 3 56

No. of Blocks 67 152 106 176 44 20 48 613

AMC Service in 5K Villages 66 318 46 146 65 60 36 737

J.K.Choudhary Jayanto chaki Moinuddin Abbasi Prashant Kumar Rajesh Singh Shashi B Kumar Subhrata Acharya TOTAL

Classified - Internal use

Existing Coverage Villages


737 AMCs Cover 3344 Villages in terms of making stocks available in these villages There is no definitive distribution model of Stocks getting supplied from AMCs to these villages In several cases, it is the village retailers who pick up stocks from AMC points Net result of all these gaps Overcharging, which leads to reduced consumer incidence
Classified - Internal use

No. of AMCs covering these Villages - 737


80% Covered

We are present in 2678 Villages


3% of Total

3344 Villages having 5000+ Pop 85328 Villages in JAMPAT

PROPOSED PROJECT ROSHNI VILLAGES


Village 3

Village 4 Village 2

ROSHNI Village

Village 5 Village 1

Classified - Internal use

OBJECTIVES OF THE PROJECT ROSHNI VILLAGES


1. To study the coverage of HCCB in Villages in Bihar 2. To study the existing distribution model from Plant to Village 3. To study gaps & opportunities in the distribution and coverage of HCCB in villages 4. To develop a model of distribution that enables HCCB to reach to and activate its last leg of distribution, i.e., the village 5. To create a sample of villages that can be activated, basis their distributability, reachability and potential 6. To create a model of activating these villages with the presence of Coca-Cola products 7. To encash on the enterprising spirit of women in villages, to support the distribution and activation models developed as a part of the project
Classified - Internal use

Current Situation - Distribution


Most AMCs depend on some non mechanized vehicle like Thelas to distribute our products. Maximum radius that they can cater to is around 5 Km. Not viable for AMCs to distribute over longer distances. Terrain difficult and not enough motivation to make the product available at these places.

Classified - Internal use

PROCESS FLOW
Conclusion Returns for Roshni representative Selection of Roshni Representative Identification of Potential Villages on the basis of nearness to AMC & Pop Potential
Classified - Internal use

Action Plan ROSHNI


Action Plan

1. Roshni margin of Rs 10 to increase the penetration of Coca Cola., 2. Open and activate Roshni points which would be the landmark outlet of the village. 3. Selection of Roshni points. 4. Resource plan and Potential.

Classified - Internal use

Proposed Marginal Structure


Rs 26 per case Rs 10 per case Rs 6 per case Rs 12/case

Retailer

Manufacturing Location AMC Roshni Point Distributor Why Rs 10


1. Lower volumes hence higher margins required to make distribution viable. 2. Convenient figure and ensures easy calculations.

Depot

We aim at reaching the last leg of distribution


Classified - Internal use

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Selection of Roshni Points


Viability factors Population > 5000 Criteria for Roshni points Reachability factors Villages presently not in our distribution network. Nearness to AMC s Market.(Radius of 5-20Km )

Mapping of all potential villages to be done. Villages within this range are distributable villages which would be our focus in initial phase.
Classified - Internal use

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Focus and Scale


Pilot phase 200 Villages in which we are not present 620 Villages satisfying >5000 population 3169 Villages in Bihar 39032

Classified - Internal use

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Mapping Process-An example


We begin with district Jehanabad(16 AMCs). All villages with population greater than 5000 and not in our distribution system checked.(In Jehanabad we look at 10 villages from this district).

Distance of one such village Goasi checked with all AMCs present in that district.

Found at a distance of 10.5 Km from Kako AMC. Hence potential Roshni point.
Classified - Internal use

Tin Board

Activation plan

Umbrella

Total: Rs 2500 Wall Painting

3 tier rack

Classified - Internal use

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Resource Plan
1) Activation Cost
Activation Roshni Outlet Total NOs. Cost/ Total Outlet Cost 620 2500 1550000 620 2500 1550000
A) Activation Cost

Roshni Outlets

Customized Tin Board 3 tier Rack Painting Umbrella Total

400 2500

2) Minimum Investment by Roshni representative


Minimum 5 GOD Ice Box Total 1950 550 2500

Classified - Internal use

Potential
Bihar and Jharkand:13.5 crores Total Sale:1.1 crore cases Avg :12.2 persons/case Patna:45 lakh pop Sale:17.8 lakh(Avg 2.53 persons/case)

Classified - Internal use

Selection of Roshni Didis


Pitching Representative Profiling

Appoint a Roshni Associate a


company s representative who interacts with Roshni Didis. Has good knowledge of rural Bihar and the project

Ability to make an initial


investment of Rs 2000-3000 Preference for past business skills Should have good convincing skills.

Recruitment process Shortlist candidates NGO provides based on our profiling. Conduct interview and do a reference check.

Piloting
In initial phase we will begin with 200 villages.

Classified - Internal use

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Training Process for Roshni Didi Advantages of Training


Company Overview Reduction of Roshni Didis mistake Performance improvement Preparation for entry in a new field Enhance motivation and self confidence Brand Awareness

Price Awareness

Execution

Classified - Internal use

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Returns for Roshni Didi(Invests in 5 cases)


Rotates it 30 times in a year Retails at Rs 26 per case Revenue earned:Rs 5400

ROIC=116%

Minimum investment 5 GOD

Roshni s Margin:Rs 10 Total Margin:Rs per case 36 per case

Initial investment: Rs 2500

Classified - Internal use

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If she distributes extra 5 cases in nearby villages


Rs 5400 from retailing 5 cases plus Rs 10 Roshni margin

ROIC:55%

Total Investment =Rs 4450

Total revenue=R s 1500 Total Revenue=Rs 6900

Classified - Internal use

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Win Situation for Roshni Didi


A Roshni Didi earns Rs 6900 from us if she distributes and Rs 5400 if she retails only. Annual Income of a villager varies from Rs 9375 to Rs 5375(India Govt. Annual Report 2009-2010)

*source: rgvnindia.org/
Classified - Internal use

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Win situation for company too


Untapped potential profitable markets reached. Increase in sales and revenues.

Potential

Visibility and Brand awareness increases.

Improvement in Activation level.

Company s distribution system strengthened.

Classified - Internal use

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Project ROSHNI-Village works on a win- win formula for both the company and the ROSHNI-representative.

Classified - Internal use

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THANK YOU
Your Queries are welcome
17-Jul-11 SJMSOM, IIT Bombay Classified - Internal use