Candy & Chocolate India (CCI) is looking to expand into rural markets which currently have only 10% penetration compared to 85% in urban areas. Potential solutions identified are superstockist model, haats (rural markets), van sales, micro-entrepreneurs and tying up with Indian Post.
The case protagonist is Sanjay Gupta who is evaluating these distribution options. Criteria for evaluation include meeting CCI's business objectives, utilizing limited resources efficiently, having a sustainable scalable model with minimal intermediaries.
An analysis of revenue projections for the options finds that the "haats" model would generate the highest estimated gross revenue of Rs. 89.5 crores and has the best
Candy & Chocolate India (CCI) is looking to expand into rural markets which currently have only 10% penetration compared to 85% in urban areas. Potential solutions identified are superstockist model, haats (rural markets), van sales, micro-entrepreneurs and tying up with Indian Post.
The case protagonist is Sanjay Gupta who is evaluating these distribution options. Criteria for evaluation include meeting CCI's business objectives, utilizing limited resources efficiently, having a sustainable scalable model with minimal intermediaries.
An analysis of revenue projections for the options finds that the "haats" model would generate the highest estimated gross revenue of Rs. 89.5 crores and has the best
Candy & Chocolate India (CCI) is looking to expand into rural markets which currently have only 10% penetration compared to 85% in urban areas. Potential solutions identified are superstockist model, haats (rural markets), van sales, micro-entrepreneurs and tying up with Indian Post.
The case protagonist is Sanjay Gupta who is evaluating these distribution options. Criteria for evaluation include meeting CCI's business objectives, utilizing limited resources efficiently, having a sustainable scalable model with minimal intermediaries.
An analysis of revenue projections for the options finds that the "haats" model would generate the highest estimated gross revenue of Rs. 89.5 crores and has the best
Candy & Chocolate India (CCI) is looking to expand into rural markets which currently have only 10% penetration compared to 85% in urban areas. Potential solutions identified are superstockist model, haats (rural markets), van sales, micro-entrepreneurs and tying up with Indian Post.
The case protagonist is Sanjay Gupta who is evaluating these distribution options. Criteria for evaluation include meeting CCI's business objectives, utilizing limited resources efficiently, having a sustainable scalable model with minimal intermediaries.
An analysis of revenue projections for the options finds that the "haats" model would generate the highest estimated gross revenue of Rs. 89.5 crores and has the best
Candy & Choclate India (CCI) started in 1970 with confectionary products and later added beverages as well. In FY 2011-12 CCI sales was ₹1300 Mil (confectionary @75%, beverages @10% and processed food@15%)
Mr. Sanjay Gupta (Director Sales and Mkt) and Naren Shah (Associate Director Sales and Mkt) look out for penetration in Rural Market and worked out potential solutions for increase in Reach.
→Why CCI should invest in rural? What are the opportunities in rural markets for CCI?
The rural marketing looks promising because of the following reason and opportunities
• Penetration in Urban market upto 85%
• Rural Market penetration is very less upto 10% • The size of the rural market is much higher than the urban markets, 68.8% of the country population reside in rural areas. • 50% of India GDP comes from rural market • As per Mc Kinsey rural consumption would accelerate by 5.1% CAGR in 2 decades of 2005-15 and 2015-25.
Opportunities:
• The per capita consumption of confectionary in India as low as 20 gm when compared to world average of 3000 gm, Europe 6500 gm and USA average 9000 gm. This is more severe in rural market of India. Hence providing a growth opportunity in Indian rural sectors. • The consumption and penetrations of chocolate is very low in rural market as compared to urban market. • The potential expenditure of rural market is higher than urban market. Thus, increase in income & consumers spending power provide a better sale opportunity for CCI products
→What are the barriers for CCI to distribution in rural markets?
• Only 33% villages have roads, 1.2% has rail connectivity.
• Tele density is 18.5% • In rural area, population is scattered and are at distant apart, also these areas are far from urban center. Therefore, distribution become very difficult and it becomes economically not feasible. • Density of retail shops is quite low in the villages which are having the population less than 10000, this contribute in increasing economic difficulties. • Education and literacy level of rural market is comparatively less than urban market, hence requirement of talent can’t be effective and efficient even they are cheaper. • Income of rural area is largely dependent on agriculture which is seasonal hence consumption of chocolate would tend to be seasonal only • Insufficient information of rural consumers about their behavior and consumptions pattern would add difficult for marketer to understand their spending patterns. →Describe confectionary market in India. How is the market different in urban and rural India?
• Organized confectionary market has growth of 6% and 12 % growth in value in the past. This is dominating by candies but growth of chocolate is high in comparison. • The reach of confectionary products has been excess to 5 mil retail outlet, most of them are Kirana stores • Chocolates are treated as gift items • Has 75% product penetration in urban market and 10% product penetration in rural market • The driver for urban consumers is brand and rural consumers are driven by price. • Sales comes in urban market for all price but sales come from value pack in rural market • Urban market is tapped and there is competition available but rural market is untapped
→ Does the case have any hero (case protagonist), a dilemma or potential solutions?
Yes, Sanjay Gupta is the hero in this case who has worked to RTM strategy for CCI with possible alternate solutions, also this case has potential solutions i.e.
1. Superstockist model 2. Haats 3. Van sales 4. Micro Entrepreneur- SHG 5. Micro Entrepreneur- Mobile traders 6. Tie up with Indian Post
as we have worked out to be Superstockist, Haats and SHG seems to be potential solutions.
→ Identify the criteria based on which evaluation and comparison of alternatives (or potential solutions) for distribution should be made?
Option chosen and potential solution must be workable and practical
• CCI business objective of building brand, enhancing the product reach, sustainability model and increase revenue. • To utilize limited resources of CCI, ease of operable model, growth with time for high cash flow, and the scalability. • Less intermediaries and overhead in distribution channel and hence increased in profitability.
→ Evaluate the alternatives for distribution on the basis of chosen criteria and find out which among the available options is best for CCI.
From the case given are the data: Retailer selling with margin 12.5 %, so billing price to the retail would be 0.875 Sub Stockist selling with margin 4.5 % on retail billing price, so billing price to the substokist would be 0.835Super Stockist selling with margin 2.0% on sun stokist billing price, so billing price to the superstokist would be 0.81
Option-1: Super Stockist Model
A Sub Stokist is getting, average per month = ₹10,000/-
Revenue for Sub Stokist per year = ₹10,000*12 =₹1,20,000/-
Number of chocolate candies sold by Sub Stokist per year with .0875 is the price =1,20,000/.875= ₹1,37,142
Number of Super Stokist in year 2012= 60 (10 Super stokist able to add per year)
Sub Stokist = 60 * 37 = 2,220
Candies sold by Sub Stokist =₹ 1,37,142*2220= ₹30,44,57,143
