India is one of the top 5 economies in terms of purchasing power parity and third largest consumer market according to world economic forum report. The WEF report suggested that the consumer spending in india is expected to grow from USD 1.5 trillion to almost USD 6 trillion by 2030.
Thanks to innovative government schemes and growing digitization, it has become easier for startups as well as established companies to expand their horizons in India fairly quickly. FMCG companies like Sattviko, Epigamia, Bombay Shaving Company are testaments to the opportunities in the market.
India’s middle class is made up of approx. 350 million Indians, that’s roughly the size of the entire US population. That is a huge opportunity up for grabs.
What this means for you as a brand manager is the need to understand India’s market. If you were to place yourself in any market area, there are a few things you would notice. There is a large consumer population and this population is diverse. You will hear locals hurling and bargaining in their local tongue. Any shop is flooded with at least 5-7 competitive products in the same product category. These shops are spread in all corners all around. It’s chaotic and unorganized. Yet, if you want to make your presence marked, you need to build your strategy around India’s diaspora.
The Traditional approach of increasing the workforce to reach out to the outlets is expensive. Mismanaged distribution causes leakage of products from the supply chain. Missing out on outlets is equivalent to losing market share. With the FMCG industry having one of the highest workforce churn rate, it critical to have a customer relationship management or a CRM system. A CRM solution helps reach out and manage everyday sales activities and increase productivity by reducing lag in the workflow caused by tedious admin tasks. A proper system helps track SKU’s and collects data from customers and the market, especially one such as India’s.
To further understand how a CRM solution fits into the equation of India’s market, let’s first understand the elephant in the room – India’s market.
Let’s discuss a few reasons why these challenges arise in India and how CRM tools are effective at solving those problems.
India is, without a doubt, one of the most diverse countries in the world. In terms of area size, India is the 7th largest country in the world that holds a staggering amount of 133.92 crore people in it (According to World Bank data from 2017). Because of such a large collection of people residing in India, the demographics, preferences, language, religion, work culture, and almost everything varies widely from area to area.
The Workforce from every area has its unique behavioral patterns, even though they may be from neighboring states. Any business strategy designed to work with a workforce must cater to these idiosyncrasies.
If we take a look at a salesperson who has to go door to door, we can find a huge difference in the way they operate in a city and a village. We would see differences such as traveling habits, working habits, methods of interaction, and so on. Because of such detailed diversity, it is important to have a CRM that encapsulates a variety of industries, of variety of scales and methodologies.
Large chunk outside urbanization
More than 65% of the area in India is rural. Yet, Maryam Aslany of King’s College, who did a study on the anatomy of middle class found that 32% of the comfortable middle class and 23% of upper middle class are located in rural India.
These areas have low network connectivity, poor infrastructure, basic education, and a bias towards people they trust. To bring economies of scale, it’s important to build a stronger rural distribution network.
When you look at the Indian Market, urban stores, supermarkets, superstores form just tip of the iceberg. 90% of distribution and sales is performed through local Kirana shops. These are hyper-local stores. The need for a database of these stores is crucial to penetrate the Indian Market effectively. A powerful CRM captures details of all such stores and data on the interactions taking place with them. This is helpful in identifying high velocity products as well non performing deadweight products.
The market is run by middlemen
India is predominantly run by the private distribution systems. The distribution channel which forms the backbone of the supply chain in India is mostly focused around urban areas where the pressure of distribution resides heavily.
A product goes through different tiers before finally reaching the hands of the consumer. As such commission agents, del credere agents, consignees are important in the channel of distribution. This also runs the risk of inventory loss at any point without proper insight regarding goods available at any point. Companies write off a large amount as damaged and lost goods because of their inability to make note of such transactions. A holistic CRM makes this process of exchanging hands effortless as the data about the stocks, cost, and other important metrics are visible across the entire supply chain users.
An increasing level of Competition
As the barriers of trade lower and allow entrants, local companies are pitted against Large MNCs, with high funding, advanced technology, quality products, and skilled strategists. To their credit, many such companies opt to acquire or collaborate with local companies who understand the turf much better. Incumbent companies are being forced to exit the market with no innovation or strategy to promote their cause. The pressure to defend their piece of market pie is high for local companies.
In such a scenario, companies need to opt to streamline their business processes and venture into digitalization and mobile automation. Innovation that can help companies service value-added array of products, need to be delivered with proper monitoring to control leakage of revenue.
Since most companies are hooked on using traditional CRM, it is expected that new entrants will probably opt for the same. For well-established companies, opting for Peri CRM will allow them to outwit the competition because of fresh and out-of-the-box automation capabilities in Peri CRM.
Insights required to stay flexible
For a market like India’s, agility is the key to survival. A company needs to adapt to changing preferences along with the gamut of idiosyncrasies. Having insights from transactions is crucial to have a well-planned approach and long term strategy. Hit and trial in today’s India can be a formula to burn cash. A few areas that need analysis are: –
- Sale of SKU
This can be analyzed by examining the sale of the good and Stock keeping units (SKUs)based on:
- State or geographical area
- Product size
- Product variation
- Time or season
Analyzing these changes and trends and the cause for them should be the ultimate goal
2. Distribution channel assessment
Another insight that can be helpful in determining the most efficient channel of distribution. Plugging in the gaps and designing the tiers so as to optimize the flow of sales.
3. Competitive Trends
Competitive trends are also key data that can translate to actionable insight. It helps to assess the weak points and is useful to establish and iterate the course of action.
It’s important to understand the market mix of a particular area. Once you have enough data about the sales, processes, feedback, expenditure, etc.,you can extrapolate those metrics to make changes in your business strategy. Modern CRM must take the agile approach and constantly improve its Insights tool to enable its users to generate custom reports for understanding the response from an area to the fullest.
How does a CRM help?
Customer Relationship Management is a system that allows businesses to stay on top of transactions, movements and interactions happening between the three pillars of any enterprise— Product, Employee, and Customer. A CRM takes care of the following verticals of management: –
- Customer Management
- Employee Management
- Distribution Management
- Product Management
- Supply Chain Management
- Stock Management
- Territory Management
- Interaction Management
- Shelf Management
- Business Analytics
We know that the Indian market is very dynamic with a lot of factors affecting its movement. The changing landscape of the Indian economy demands a solution that can be tailored to accommodate India’s Market and its quirks. In addition to the generic challenges, an India specific CRM system must also mitigate challenges specific to India such as:
- Lack of internet connectivity
- Basic technical skills
- A vast network of middlemen
- Price sensitivity
- Actionable insights instead of a data dump
- SKU leaching
Peri CRM is one such homegrown customer relationship management (CRM) system that caters to these nuances. As Peri is designed specifically around the Indian way of doing business, it focuses on making the interface very minimalistic and easy to use. The cost entry barrier has been reduced help the field heroes of the country. With new and innovative methods coupled with robust automation, Peri aims to eliminate all of the problems when it comes to Customer Relationship Management in India.
If you want to know more about how Peri is an ideal choice for Indian CPG industry, read What makes Peri CRM ideal for the Indian Market.