the latest inflation reports suggest urban inflation (CPI)  has cooled out at 105, while rural inflation is hot and roaring like a hungry lion at 109 from 108 in April. Show you that our desire to reach the rural consumer that took off well with small change satchets of shampoo, biscuits and toothpaste has reached another phase. At hand is the reality that small change in Indian currency has already lost value. I for one would not even bother anymore with one and two rupee coins, Just 5s, 10s and 20s. So I find it very reasonable that most consumer plays / consumption companies from HUL and ITC to P&G and Godrej are finding it difficult to roll out more small satchets of 2 and 3 rupees, even 5. 

I would infact suggest to the brand consultants to use the chance to cost their services to these satchets as well as they are not preliminary offers of any sort for trials as they were when launched a decade or more back. As the mainstay of rural consumers, they can now easily be priced at Rs 10 and 20 with some supplies for Rs 5 priced satchets of items that need to be consumed in smaller quantities

It would be radical, yes, but the expected loss in sales is not likely to happen much. Now that banking and insurance is also sold down  inrural areas in these denominations and 'entertainment' like tobacco and cigarettes can also not be priced lower, the offtake would infact continue to increase, easily first in value terms but also in volume terms. The extra margins if any need to be reinvested in the rural logistics chains that is driving all of us crazy. even Retail FDI is now a realty sooner than later because of the same blindsiding of supply chain efficiencies by some of the largest global distribution networks at HUL and ITC for one and it's time they got out of their 80s mode and walked into the 'new' millenium with heads held high

Posted via email from The Marketing Post