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) Why CCI should invest in rural? What are the opportunities in rural markets for CCI?

CCI should invest in rural market as Rural India has got huge potential for growth. As they India lies in villages. As compared to 16,297 towns across India which are Urban, rural village is 638,588. As per data available from Census 2011 still Indias 70 % of population comprises of rural population. So there is huge mass residing in rural India, and this can be exploited for CCI growth and they should make investment in rural market. Rural India has great potential and which has been increasing over the years. Around 50% of Indias GDP comes from rural markets. Although per capita income of rural market is just 9,481 INR as compare to urban market which is 19,407 INR, but rural consumption rate is very exciting and which is expected to grow by 5.1% CAGR in next two decades. Also, rural consumption is expected to grow from 9,688 INR to 16,701 INR in next decade. Rural household income bracket of 90,000 INR is expected to grow to 200,000INR by 2025. Also, rural deprived population is going to reduced by 29% of total population. If I see the confectionary market it has penetration of mere 10 % in rural market as compared to urban market which is way ahead with 75% penetration. Above points are supporting by argument that CCI should look to exploit this opportunity in rural market. 2) What are the barriers for CCI to distribution in rural markets? The main barrier for CCI to distribution in rural market was geographic vastness. Since the time the company was formed it has built Route to Market (RTM) which was based on direct and indirect channel. The RTM which CCI formed has huge dependency on distributors, wholesalers and retailers. The demand for confectionary was increasing and CCI did not have effective channel to make available it product on retail counters of rural market. 3) Describe confectionary market in India. How is the market different in urban and rural India? Indian Confectionary market has revenue of around 6.5 Billion INR with annual growth rate CAGR of 12%. It is expected to grow to 11 Billion INR by year 2014. Confectionary market volume is 193 million kg and is expect to grow to 264.4 million kg by 2016.In confectionary market basically there are Two type of player, unorganized confectionary manufactures and organized manufacturers. Unorganized manufactures use local raw materials with cost advantage over organized or large manufacturers and thus supply 35 % of confectionary, whereas large players like Nestle and CCI source raw material from across the globe with brand image in their mind and high quality. Large player have to compete with small or local players on price which they do by relaying of increase market penetration with help of RTM. Confectionary market is divided into a) Chocolates b) sugar candies and c) gums. They have growth are as follows 20%, 5% and 9% respectively. Market share for the products are as follows chocolates 46 %, sugar candies 34% and gum 20%. Indian confectionary market is basically driven by two factors, offering to the customers and driving growth of the company. Candy and gums are available in 5 million outlets so easily available to consumers as compare to chocolate which has only 1.7 million outlets. Confectionery penetration in urban market was 75% as compared to rural market which was just 10% in year 2010. In rural market penetration of sugar candy was 15% as compared to chocolates which has about 2%. Still distribution of confectionary product relay on kirana stores which add to 76% of sales through them, convenience store 13.5% paan/beedi stores 10%. Consumption of confectionary per capita in India was as low as 20gm only, whereas western world is much ahead of this. In India western states consumption was 32% followed by Northern Indian states 28%, south India 23% and then eastern India 17%. Normally sugar candy was impulse purchase whereas chocolates where planned purchase. Urban population was driven by brand and quality whereas rural population is driven by price. 4) Does the case have any hero (case protagonist), a dilemma or potential solutions?

The CCI case has dilemma. At this point of time nobody is clear what RTM model CCI should adopt to increase its penetration in rural market. 5) identify the criteria on the basis of which evaluation and comparison of alternatives (or potential solutions) for distribution should be made? The criteria for selection distribution channel to be made are:Reach ability: The penetration of the network should be till consumers. The model to be efficient enough to send product from factory to consumers with minimum loss of time. Cost: The model should be cost effective to maximize the profit. Sustainable: Model should be sustainable enough in long run and should be self running when the activation phase is completed. 6) Evaluate the alternatives for distribution on the basis of chosen criteria and find out which among the available options is best for CCI. One the basis of my above criteria, CCI should have mix and match kind of model:Superstockist model: This is the most reliable model which CCI can adopt. With this model they can increase the reach by 63% remaining which earlier they had only 37%. They should build their model keeping Superstockist in mind as they will be the supply line to product availability for Haats and micro traders. Micro Entrepreneurs Mobile traders: These people will also going to play vital role in CCI penetration to rural market. These people will play important role to carrying the product from super stockiest to consumer. Also, they are can play important role in product awareness in rural markets. This could be very cost effective model. Micro entrepreneurs Self help group (SHG): As the socio-economic condition of rural women are changing. More and more rural women are getting literate. CCI should look for empowering rural women with micro finance. This will be again cost effective and sustainable model for CCI