PRER2010_103079 2

BRANDITS

Contents
TARGET CUSTOMER & BUYING BEHAVIOUR..................................................................................3

NEEDS OF THE RURAL CUSTOMER.....................................................................................................3

COMPETITOR ANALYSIS.......................................................................................................................4

COMPANY ANALYSIS............................................................................................................................5

POSITIONING OF BPCL...........................................................................................................................5

LEVERAGING THE EXISTING NETWORK...........................................................................................6

BUSINESS MODEL...................................................................................................................................6

BRANDING................................................................................................................................................9

GLOSSARY..............................................................................................................................................11
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Bharat Petroleum Corporation Limited wants to expand its distribution network to rural areas to
capitalize on the high growth potential in rural India. To decide on the initiatives by the
company, some major influencing factors have been analyzed to suggest recommendations.

TARGET CUSTOMER & BUYING BEHAVIOUR

To come up with the target customer for BPCL the Indian rural customers have been segmented
according to their demographic, geographic and psychographic profiles and on the basis of
parameters like their financial conditions, living conditions and purchase habits. The target
customer profile is shown in the Fig1. A typical rural customer does not see a high difference
among brands as long as they get what they want to fulfill their needs (Brand-insensitive, price-
sensitive). They also do not take a lot of efforts to determine the product type and quality (Low
Involvement), so the target customers’ behaviour will be habitual-buying behaviour as suggested
in Fig2.

Fig 1. Target Customer for BPCL Fig 2. Buying Behavior of Target Customer

NEEDS OF THE RURAL CUSTOMER

With urban markets getting saturated and rising rural incomes the focus of marketers has shifted
to large untapped rural markets. Understanding the needs of the rural customer and designing
products and services tailor-made for them is a must for making a significant impact on rural
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masses. Fig 3 discusses various needs of a rural customer and analyzed if these can be met
efficiently.
Fig 3. Needs of the Target Customer
Needs Rationale Can it be
satisfied?
Value-for-Money  Rural customer generally falls in low-income Yes
category
 Villagers search for products which are durable
and require less maintenance
Emphasis on functionality  Focus on functions rather than status Yes
 Product should perform as expected
Financial Schemes  Seasonal income hence need credit schemes Can be provided
Regional Promotions  Villagers have different dialects since they Yes
mostly know only mother-tongue
Localized distribution  Would like to purchase from the people they Difficult as
channels know as they trust the local communities BPCL is
relatively new
Agriculture related products  The means of livelihood is agriculture and Yes, can be
allied services done by tie-ups
Less paper-work  They are not much educated so want less paper Yes
work in financing and credit schemes

COMPETITOR ANALYSIS

In the rural areas there are mainly two players who have set-up similar services in the non-fuel
domain. Fig4. gives an analysis of IOCL and HPCL and the limitations of their business models
in detail.
Competitors F eat ures P ain Point s
Indian Oil Corporation  Kisan-SevaK endr as- non -fuel r eta il  Non-fuel r etail is separate
Limit ed1  Local de aler s  Villagers ha ve to go at
 Educational programs aime d at gi ving se parate places f or their
fa rmer s insights to agricultur e needs
Hindust an Petroleum  Petrol pumps as “Hamara Pumps”  Locate d at Highways, not
Corporations Limit ed2  Later on Kisan Vikas Kendr as in t he centr e of villages
 Toilet s, fi lte red drinking wa ter  No l ocal distribution
 Product off er ings - f ertilize rs, seeds, f arm
equipme nts, pesticide s and gener al
merchandisi ng.

1
http ://ww w.io cl. com/ Me diaCe nte r/Archiv eNew s.aspx ?Fold erName =Media&FileNam e=me d3778
2
htt p://www.mahindrafi nance.com/pdf/press_releases/100405HPCL%20and%20M ahindra%20Finance
%20tie%20up. pdf

Fig 4. Competitor Analysis

We would recommend BPCL to work upon these shortcomings while remaining at parity with
the offerings provided by the two competitors.
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COMPANY ANALYSIS

Having dealt with the initiatives by the competitors in rural segment, we are in a position to
analyze the company BPCL to decide whether its foray into the rural markets is profitable or not.

STRENGTHS WEAKNESSES
• Strong Market Position • Not much experience in Rural
• Strong product portfolio :: Gas, petro products, markets
aviation, fleet • No existing network of distributors/
• In house plant and R&D capabilities tie-ups with fertilizers, seed producers
• Growth Rate • No experience of merchandising
• Navratna PSU
• Penetration of LPG 20% compared to 83% in • Competition by HPCL and IOCL
urban areas. • Lacking first mover advantage
• Rajiv Gandhi Gramin LPG Vitrak- can tie-up with
the vision 2015 of 75%
• Requirement for Agri-equipments
•Diesel for tractors
•Green revolution
OPPORTUNITIES THREATS
Fig 5. SWOT Analysis of BPCL

From Fig4 it is clear that BPCL has substantial strengths as compared to its weaknesses in the
rural domain. There are huge opportunities in the rural markets and negligible external threats or
regulations. Hence we suggest BPCL to go forward into this attractive domain. A business model
is explained in the later part by utilizing its existing network and taking care of the issues
discussed above.

POSITIONING OF BPCL

Points of Parity Provision of non-fuel retail services along with diesel and petrol
Points of difference Multiple new services like Prepaid card and use of Kisan Credit Cards
with one contact, On-time quicker service, Reliability, Convenience
Value Proposition Organization the delivers one stop solution for all needs at doorstep
Fig 6. Positioning of BPCL
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Unique Selling Proposition

The major selling proposition of the initiative would be that the outlets would cater to all the
needs of the villagers. This ensures that the relationship established with customers is not just
transactional or one time sales but a long term partnership.

LEVERAGING THE EXISTING NETWORK

BPCL has existing mobile retail outlets in the north — in the interiors of Panipat and Barailley
which are basically an extension of petrol pumps but less expensive. The existing network of fuel
stations in rural areas would be upgraded to modern outlets which cater to the non-fuel needs
of the rural people as well.
The augmented products and services available at the retail outlets would encompass:

Fig 7. Product and services at Retail Outlets

The branding of outlets would be done by nation-wide and local level marketing as well as
promotions.

BUSINESS MODEL

Based on the different needs like value-for-money, functionality, local distribution derived from
the secondary research of Indian Rural population the Business attributes and service domains
can be designed below:
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The target segments would be:

1. Farmers – Male, Fuel purchase, Agriculture Products, Financing Schemes

2. Housewives – Female, Daily need products, Lamps, Burners, stationery

Features of the initiative

 The enhanced product and service portfolio ensures that the outlets become a one stop
solution provider for whole family needs.
 The rollout needs to be in a phased manner to ensure that implementation issues are sorted
out at initial stages itself. The initiative should start from Punjab and Haryana states with
most prosperous rural areas.
 Many of the services would be provided through tie ups with service providers thus reducing
the upfront investment from the dealer.

Features of the offerings

The offerings from the outlets will be such that they meet the basic points of parity in the
industry as well as differentiate Bharat Petroleum’s outlets from the competitors. The Fig7
explains the business model taking these points into consideration. The blue box in the figure
explains the differentiators provided by BPCL. They offer value to the customers and also have
potential for revenue growth.
Products/Services Rationale Tie- ups
Fuel: Diesel and Petrol  Core product  Selection of dealer from the
 Higher sale local area
Seeds, pesticides, fertilizers  Rural market size of agro  Government organizations
and agro needs products: Rs. 45000 crore like National Seeds
 Basic need of farmers organization, Godrej Aadhar
Tools, Auto spares  Rural market size of 2/4 wheelers:  Automobile companies like
Rs. 8000 crore Maruti, Hero Honda
Daily needs like grocery  FMCG Rural market size: Rs.  Tata Kisan Sansar, Godrej
and personal care 65000 crore Aadhar, FMCG & commodity
 Caters to aspirational values companies
 Increases footfall
Cooking stoves and lamps  Electricity issues in rural areas  Local and national suppliers
 Transition from Kerosene to LPG
for cooking1

1
http://www.thehindubusinessline.com/2008/11/09/stories/2008110951040500.htm
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Stationery for children  Literacy level: 59%  National retailers like

 Increased focus on ‘Sarva Shiksha Navneet, Classmate, Camlin
Abhiyan’
Air for vehicles  Complements core activity
Internet  Usage growth rate: 30% p.a.2  ITC echoupal, sify
Financing Schemes  Huge investment in farming  Major banks or financing
equipment groups
Recharge: Telephone  Annually 18% growth in rural  Major telecom players in rural
DIFFERENTIATOR subscribers3 space like BSNL, Airtel,
Vodafone, etc.
Banking Services  42 million rural households avail  Major banks keen on rural
DIFFERENTIATOR of banking services expansion like SBI, Bank of
 ATMs or extension counters Baroda
Credit Card Transactions  41 million Kisan credit cards  Kisan Credit Cards, Payment
issued Gateways
Water and Toilets  Basic convenience  Sulabh (optional)

Fig 8. Business Model for Retail Outlets

Grameen Card

Farmers generally have seasonal income. They have money generally after the harvesting season.
To ensure that they can easily spread out their purchases throughout the year, Bharat Petroleum
needs to provide a ‘Gramin Card’. This will act as a prepaid card which can be recharged with
some amount. This card can then be used by the customer to make transactions at the outlet
throughout the year.

Events

These can include various camps which enable knowledge transfer to the rural customers and
provide convenience to them.

1. Service camps from automobile and consumer durable companies

2. Health camps to impart knowledge about hygiene or various diseases
3. Knowledge sessions for farmers to aid better agriculture practices

Benefits to the company

Agriculture is a seasonal business opportunity for sale of fuel, with major sales in harvesting
season. Addition of other agricultural products reduces the seasonality and ensures footfalls in
the outlets throughout the year. The benefits to the company include:
2
http://www.pcworld.in/news/internet-usage-rural-india-accelerating-34742010
3
http://www.watblog.com/2009/07/15/over-100-million-rural-mobile-subscribers-in-india-opportunity-for-mvas/
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 Higher revenue from fuel sales

 Tapping rural markets at a faster rate
 Long term relationship building with customers
 High motivation level of channel members

Benefits to the dealer

The addition of non-fuelproducts and services provides more revenue generation opportunities
to the dealer. This motivates them to perform better.

 The revenue from non-fuel retail remains with the dealer leading to higher revenues
 Reputation of working with a Fortune 500 company
 Lower investment costs
 Assistance from experienced company people

BRANDING

 Choice of Brand elements

o Name – Sarva-Seva-Grah stands for ‘A house where all the necessities are met’. The
outlet provides a host of items like fertilizers, seeds and general merchandizing such as
FMCG goods for the rural customers and hence the name goes with the concept.

o Logos & symbols – The logo of the service would show a

hut (a typical rural residence) under which a villager will be
sitting. It implies that the rural customer is safe with the
centre. Two hands holding a growing plant shows
happiness and prosperity and signifies the agricultural
linkedness. The logo of BPCL will be there at the bottom.

o Slogans – The tag line ‘Sampann Gram Ki Nayi Pehchaan’ further establishes the
connect with rural customers. It communicates the idea that the outlet would help the
villagers achieve high growth.
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o Endorsers – BPCL should tie up with the likes of Aamir Khan & Sachin Tendulkar who
are famous in villages for endorsement. Talking about a normal Indian who takes pride in
using it would ensure awareness among rural masses

o Brand Associations- The brand associations of the company BPCL could be utilized for
Sarva-Seva-Grah in the following manner:

Fig 9. Linkages between BPCL brand and favourable entities

 Appropriate Communication
Once proper branding has been done the message has to be communicated to the target
customers. Following table specifies the communication objectives and vehicles used to
achieve these objectives.

Communication Communication Vehicles/ Advertisements Promotions

Objective
 To maximise  Presence in Weekly and yearly (melas) fairs  Prepaid cards issued
reach  Road shows and ‘nataks’ to customers
 Through Pamphlets & WOM marketing  Discount on bulk
 To create purchase
 Print Media such as local and regional
Brand
magazines
awareness
 Flyers, classified column in newspaper
 To increase  TV and Radio Advertisements at local
impact of channels
advertising

 To create long  Maintaining high standard of product &  Gold and silver cards
term Service Quality-Continuous innovation in the to privileged
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associations platform & maintaining contacts with customers and

with rural servicemen membership status
customers &  Engagement with and between Customers-  On-time and doorstep
Distributors We propose ‘Sarva-Seva-grah’ to manage a delivery on call to
community of local villagers where customers privileged members
would know about the updates of the SKUs
present at the centres.
 Financial option for easy credit- Easy credit
schemes by tying up with financing institutions
to help the needy villagers
 Joint or cooperative promotion- By
establishing partnership between BPCL and the
local distributors.
Fig 10. Brand Promotion vehicles

GLOSSARY

Abbreviations
BPCL -Bharat Petroleum Corporation Limited
HPCL- Hindustan Petroleum Corporation Limited
IOCL- Indian Oil Corporation Limited
WOM- Word-of-Mouth
PSU- Public Sector Unit
SWOT- Strength Weaknesses Opportunities Threats
Terms Used
Habitual Buying Behaviour: Habitual buying behaviour occurs when involvement is low and differences
between brands are small.
Footfall: A measure of the number of people who walk past a store
Phased Manner: To plan or carry out systematically by separate intervals.
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