How Coca Cola Conquered Rural India .

A humiliating loss of 400 Million USD in the 2000 and a

flat 2001 made Coca Cola India (CCI) rethink and reinvent its strategies
in India. The flat sales in the urban areas made it clear for the CCI that
they would have to shift focus to the untapped rural markets. Sanjeev
Gupta, the deputy president of Coca Cola India realizing the potential
of the rural market, restructured the strategies and targeted the
common man of the village which resulted in a spectacular growth of
65 % in urban areas compared to the 33 % growth in rural areas.

What brought this turn around? What change in

strategies did CCI implement to strike a success ratio of this
magnitude? “The answer lies in three A’s says of rural marketing”
Sanjeev Gupta :

1) Affordability
2) Acceptability
3) Availability

Affordability : The first ‘A’ focused on product pricing . The average

income of a rural worker is 42 $ a month. Coca Cola launched a 200 ml
bottle for just Rs.5 ( 10 cents ) , a affordable amount on the pockets of
the rural audience.

Acceptability : The advertisement with the tag line - 'Thanda Matlab

Coca-Cola ' was targeted at rural and semi-urban consumers. The
series of Amir Khan Ads on hill station acting like a nepali and those in
a Punjabi ‘ Yaara da Tashan’ were a great success and an important
aspect focusing on acceptability. Except TV ads, CCI also concentrated
on 47,000 hatts (weekly markets) and 25,000 melas ( fairs ) held
annually in various parts of the country.

“ Yara da tashan Ad featuring Amir Khan”

Availability :
 The third ‘A’ focused on strengthening its distribution
network there. Rural India meant reaching 6,27,000 villages spread
over 32,87,263 square kms; it meant getting distributors to travel 200
kms to reach five shops with drop sizes of less than a case. It realized
that the centralized distribution system used by the company in the
urban areas would not be suitable for rural areas. In the centralized
distribution system, the product was transported directly from the
bottling plants to retailers. However, CCI realized that this distribution
system would not work in rural markets, as taking stock directly from
bottling plants to retail stores would be very costly due to the long
distances to be covered. CCI started making a hit list of the potential
villages from various districts. To ensure full loads, large distributors
(Hubs) were appointed, and they were supplied from the company's
depot in large towns and cities. Full load supplies were offered twice
weekly against payment by demand draft. On their part, the hubs
appointed smaller distributors (Spokes) in adjoining areas. The smaller
distributors undertook fixed journey plans on a weekly basis and
supplied against cash. The distributors also hired rickshaws (cycle
operated vans) that travelled to villages daily. At another level, the
problem of low working capital of the small retailer was addressed
through smaller drop sizes. It was possible to have smaller drop sizes
because of the higher service frequency of the hub and spoke model.

CCI’s success on India’s vast, rural markets is a lesson

on how to grow an untapped market. It is an indication that if an MNC
does its home work right and gets the right distribution mix, then it
need not restrict itself to India’s urban middle class.