Sewing machine major Usha International realised it was not tapping into its biggest market, the rural consumer. A review of the consumer durable firm’s distribution network revealed that although the company’s products were available in small towns at sub dealer retail points, the company’s direct distribution network was limited to only 25 per cent towns which had a population of more than 1 lakh.
There were new markets that had developed in these small towns, and the company realised to its dismay that it did not have enough representatives to showcase its utility products like household and kitchen appliances, fans, engine pump sets, electric pumpsets, etc.
``Many consumers in villages and small town dealers tend to flock to these markets for their consumer durable requirements,'' said Dinesh Chhabra, CEO, Usha International. ``We also wanted to garner accurate consumer insights through own direct representation in these markets, which have developed in these small towns,'' he added.
In order to understand the existing network in these geographies, a pilot was launched and a small team was constituted to spend three months in the Gorakhpur region of eastern Uttar Pradesh. The aim was to visit all the towns which had a population below 1 lakh, and gather market intelligence on the market potential, brand share, and the primary distribution network.
The research was insightful. It showed that 95 per cent consumers prefer to purchase from small towns, instead of travelling long distances to larger towns, and that rural consumers were aware of most brands and their availability, but were not ready to compromise on either price or quality.
Noting that rural consumers have become brand conscious, Chhabra said the company realised ``it was necessary to have an authorised representation in the small town markets with proper brand representation.''
New initiative
On the basis of these insights, a strategic rural initiative was launched in UP in April 2013, called `Project Sampark'.
``The aim was to reach out to consumers in 6,48,000 villages of India and 7,500 small towns, that are home to 76 per cent of India’s population. We also wanted to ensure brand presence and product availability at the last mile,'' said the CEO.
Through Project Sampark, the company has reached out to over 400,000 households. Over the next one year, it plans to conduct over 2,000 rural haats, and reach 10 lakh rural customers.
The company has also appointed a specialised team of `rural business officers' to do an in-depth study of the rural markets, and set up a network of authorised retail dealers (ARD) stocking all Usha products.
``We also plan to appoint over 3,600 ARD’s by the end of March 2016. This initiative has helped market and display our brand in remote markets and consolidate our footing,'' said the CEO.
Bigger market share
Within one year of the project's inception, UP east grew to the numero uno location in terms of sales growth, from the tenth position among sixteen locations, last financial year. ARDs are actively engaged in promoting Usha's products by strategically tying up with other companies, and undertaking development activities like haats, melas and working with self help groups.
``ARD's are appointed in every small town, and trained in product features so that they can recommend the right product to consumers,'' said the CEO. ``They act as a one-stop shop for consumers at these towns, where consumers can find representation of all product lines,'' he added.
Stating that Usha has a first mover advantage through 1,600 retail points in Maharashtra, MP, Chattisgarh, UP and North Eastern States, Chhabra said the company possibly has the largest ARD network for a consumer durable firm in India.
``To service these 2 lakh plus consumers, the company has extended its service centres to these geographies. Incidentally, sewing machine penetration in India is still at 4 per cent, but it affords us a huge potential to expand our business,'' said the CEO.
By the end of next year, the company aims to have a total of 4,500 ARD’s in its network, with plans to expand into 12 more states. The CEO pointed out that the primary network has also started feeling the advantage of the initiative, and sales of Usha products have increased by almost 40-42 per cent.
Rural India would continue to remain the focus for some more time for the company, which aims to cover all 7,500 towns. The rural business team has also identified another set of 800 places in rural India, which have the potential and are the business hubs for many villages and rural consumers. That would be the next target for Usha International.