Wednesday, September 03, 2008

Colgate's Suraksha Chakra growing strong in rural India

Rapid change in lifestyles, improving infrastructure and rising income have altered consumption patterns not only in urban but also in the rural areas. Growing demand for high-quality personal care products has been one of the main reasons for the shift in consumption patterns. In the past, product marketing has remained primarily an urban phenomenon, but in recent years due to the increasing education levels and increased awareness created through media, the rural market has been growing as well. Increasing brand consciousness and expanded disposable incomes are jacking up the appetite for these products.

Companies have long realised that to increase sales volume they will have to reach outside big cities. In several categories, rural India accounts for the lion's share. Rural households form around 72% of the total households in the country. Spending in this segment is growing rapidly and consumption patterns are closing in on those in urban areas.

Today, no consumer goods company can afford to forget rural market which is a very big part of the Indian consumer market. You cannot build a brand presence in India until you have the strategy for reaching the villages. Companies that have figured this out are doing better in villages than cities. The potential is huge for companies that develop effective rural marketing strategies. Up-gradation of products is being witnessed on fast-emerging consumption pattern in rural areas. Local and branded products are getting replaced by national brands and low priced by high priced.

Several European and US companies have been making inroads into rural India for years. Among the U.S. firms, Colgate is one such company that has made considerable headway. The company has been long known to dukaandaars and merchants in rural India.

Colgate is one of the leading providers of scientifically proven oral care products in India, including toothpastes, toothpowder and toothbrushes. The company is spending on advertising according to its market share and leadership position it enjoys and is conscious about what it costs.

For marketing to rural consumers, you need to persuade them to try and adopt products that they may have not used before. A company like Colgate has to convince people to change to toothpaste instead of using neem twigs to clean their teeth, which was the traditional practice. This is difficult to do and requires patience and investment by the company. It's not like getting someone to switch brands.

Rural India presents huge opportunity for the company to grow its market. Therefore, Colgate continues to focus on expanding its rural distribution. They keep conducting various programmes with massive rural sampling and seeding exercise for Colgate, targeted at non-users and infrequent users of dentifrices.

In rural areas, people use neem and other substances for cleaning their teeth. Even after keeping the products low priced, people were not willing to use the toothpaste. Hence, Colgate conducted a research to show that neem sticks don’t do much for oral health as they only massage the gums, which even a toothbrush can do. For upgrading these users to use toothpaste, which also generates demand for toothbrushes and to penetrate deeper into rural households, Colgate is constantly conducting oral care awareness programmes. It also actively participates in local festivals.

Colgate resorted to keep their products low priced than its arch-rival, Hindustan Lever. As a result, Colgate Gel, Total, etc. are priced marginally lower than similar offerings from HLL. Colgate's dominant position in toothpowder and lower-priced products has helped in increasing sales. This is significant as rural market growth rates for FMCG products have been higher than urban market over the past years.

Colgate has been also quite active on the new products front. The company launched Cibaca Top and Colgate Herbal, two low-priced brands targeted at the semi-urban market. Colgate's low price offers have also helped to enhance usage levels. The shift in consumer preference from gel-based to white toothpastes, has also worked in Colgate's favour, since the company has traditionally been the market leader in this segment.

Colgate’s commitment to deliver superior quality products and their aggressive investments in brand building has been well received. To be continually rated as one of the top brand in an increasingly competitive environment, is a reaffirmation of the trust, loyalty and confidence reposed in Colgate by millions of consumers across India. Today, every second user of toothpastes uses Colgate and one out of every three toothbrush user’s brushes with a Colgate toothbrush.

With rapidly evolving consumer preferences, Colgate has been spearheading changes across different product categories through a series of product innovations. The company has launched a series of superior quality oral care products with trend-setting innovations at affordable prices. It includes technologically advanced toothpastes, a herbal toothpowder and a series of specialty designed toothbrushes. All these products are having strong consumer acceptance.

Today, Colgate has become an essential part of daily oral hygiene and therapeutic oral care. It is one of the most widely used and recommended brands by dentists.

Gandhi, the father of modern India, believed that the country's future lay in her villages. These days, every major business group that plans to move into the hinterland would agree. However, the level of affordability in rural India is low. For consumers to buy products, you have to first put more money in their pockets. Create a virtuous circle of raising rural incomes which leads to increase in consumption. This new business culture I am talking about is not charity or philanthropy. It is about doing business with social benefits. It will help us to sustain the economy and bring in lots of human satisfaction to all of us. You can't think of success just in financial terms. Getting goodwill and recognition in the rural market is also not a small asset for any company.


Arual said...

Has Colgate's increased usage improved dental health for the Indian people? Is it actually better than what they were already doing?

I worry about the tendency to sell products to a market that simply doesn't need it because it improves a company's bottom line--something that P&G have been doing with disposable diapers in both China and India, where people generally practice elimination communication/infant pottying and supplement with cloth diapers.

They're putting their bottom line before the welfare of the consumers or the planet, and I have to question if this isn't also the case with toothpaste/brushes in India. If they didn't suffer from dental caries under their current system, why sell them something for a problem they don't have?

Patrick Roupin said...

@ Arual. You are somewhere right by questioning the necessity of using toothpaste/brushes in India. But more than the practical aspect modern dental care is a social aspiration. In fact what was earlier a social aspiration has become a norm in urban India. That's the case of toothpaste, diapers but also mobile phone, shampoo, etc.