Subject: Sales & Distribution Management (SDM)
Roll No: EPGP-06-173
Name: Jayesh V Nair
Case: CCI- Last Mile Distribution Challenge
* Why should CCI invest in rural markets? What are the opportunities in rural markets for CCI?
The size of the rural market is much higher than the urban market as 68.80% of the population resides in rural India. 50% of the GDP comes from rural India and the income from the rural India is going to increase substantially in future. The per capita income of the rural population is going to increase to a great extend. According to the study by McKinsey the rural household in the annual income bracket of Rs 90000 to Rs 200000 will contribute ...view middle of the document...
As the rural population is scattered and distance too large it will be difficult for CCI to coordinate among the offices. It will be too time consuming and expensive for CCI to operate in these scattered areas of rural population.
The retail shops are not available at large in these areas so distributing the product will be a challenge of CCI.
The distribution expense will not be feasible for the company to operate in the rural areas. The company should set up the best mechanism of distribution to bring down cost after understanding the consumption behaviour of the population.
The company will also face problems as the literacy level of the rural population is very low compared to the urban population. CCI may not be able to get good talent to distribute and increase visibility of the product. The company will have to spend a lot on training and development.
As the economy of the rural India is mainly depended on agriculture the consumption of the product may be also seasonal. So the company will have to plan its marketing and distribution strategy in this line after proper study.
* Describe the confectionary market in India. How is the market different in urban and rural India?
India recorded a compounded annual growth rate of 12% and 6% in terms of volume. The unorganized confectionery market was estimated to supply 35% of India’s total confectionery consumption. The sale of candy has grown faster than the chocolates.
The main source of distribution has been through kirana stores to a large extend. Chocolates are treated as gift items so the perception about chocolates needs a repositioning in the rural markets. They have 75% in the urban marker and 10% in the rural market. So there’s a huge market potential in the rural segment.
The urban market is basically driven by brand and but the rural market is driven by the price. The rural market is very price sensitive to the products.
The sales in urban market are all about price and brand association. But the in rural market it’s driven by price and value for money packs.
The urban market is tapped and the completion level is very high due presence of many companies. But the rural market is untapped and few players are present in a scattered manner.
* Identify the criteria on the basis of which evaluation and comparison of alternatives (or potential solutions) for distribution should be made.
The company should evaluate and compare the...