Distribution Channels | marketing | BoP
Match Point: How to Reach Rural Markets
Question: Which manufactured consumer product has the deepest market penetration in rural India?
Answer: Matches
In fact, 97% of rural households purchase matches on a monthly basis. Matches are a unique product because of their high, constant demand and low price point. Their ubiquitous presence provides fascinating insights into India’s rural distribution networks, and offer potential ways to inform and interact with India’s relatively untouched market.
Several innovative businesses with rural focus have floundered because either their message or their products failed to reach the end-user. One of the largest barriers to introducing new products into rural markets is the lack of reliable distribution channels. Matches, however, have probably the most pervasive distribution network of any manufactured consumer product in India; they find their way to every village and nearly every household, regardless of how remote or how poor.
What is more interesting is that most of India’s matches are manufactured in southern Tamil Nadu, and are sold as far away as Jammu and Kashmir. To understand match distribution in India is to understand India’s most basic, underlying distribution system. How do they reach the end-user? How many distributors do they go through? How long does it take? How much margin is added to the price of the box of matches each time it exchanges hands? Understanding how matches reach the rural consumers from Kashmir to Kerala can provide valuable insights for scaling up other products and services.
Matchbox distribution can be relevant for product piggybacking, whereby manufacturers hitch a new product to established distribution channels. Piggybacking is becoming an increasingly common way to deliver products and services to the base of the pyramid, allowing for a broader reach in rural areas at a reduced cost. Are there any products or services that can piggyback on matches?
In remote rural communities, where television, radio or even street names are almost non-existent, relaying information is a pressing issue. Matchboxes may contain the solution. The typical designs on most matchboxes in India show only the manufacturer’s logo and some text about the contents. What if that space was used to relay information? Imagine the possibilities of spreading new health/educational information or advertising to 97% of rural families on a monthly basis. Simple pictorial designs would pique interest and accommodate India’s vast differences in literacy rates and languages. Awareness of important topics such as the installation of chimneys to reduce smoke inhalation or cleaning and covering water containers to prevent stomach ailments could be spread to households across India, and potentially save lives.
Matches’ universal presence in rural villages provides unique opportunities to reach and interact with India’s underserved market. By tracking their distribution from manufacturer to end-user, we can assess the potential for piggybacking additional products and for designing innovative messaging of crucial information. Sometimes, taking a closer look at even mundane objects can spark innovative solutions and approaches to serious challenges.
Richard Woodbridge is a member of the Rural Market Insight team at the Centre for Development Finance, a division of the Institute for Financial Management and Research.
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10 Comments on “Match Point: How to Reach Rural Markets”
Thanks for the post. It will be interesting to learn the process or methodology that the matchbox companies used to build these wide and deep distribution networks. Do you have any insights that you can share?
This concept is simply brilliant. The idea of tracking the most penetrative consumer good in rural markets, tracing it from production to consumption, and potentially using it not only to learn how to get into rural markets but for relaying information is ingenious! Richard, I must thank you profusely for sharing this insight. I’m really going to take this to heart.
Great post! As a product company looking at innovative ways to distribute a new product (and concept) to the rural market, there certainly is a lot to learn from the match distribution. It might be hard for D.light to piggyback solar lanterns on matchboxes but its worth exploring and applying the learning to other products worth piggybacking on.
Question remains, where does on get the answers to some of the good questions you raised about the margins and movement with in the match distribution?
Richard,
Excellent post! We are actually working on this right now! My company, Frontier Markets, is working with Manufacturers to better understand rural distribution. We are currently collaborating with MFIs and Kirana Shops to understand their reach to rural households and how to build a more organized network to deliver products to rural households. Would love to talk to you further about your thoughts on distributon.
@Richard & @Ajaita Shah, talking about piggybacking/complementary products to matchboxes are biddis (indian cigarrettes) that are sold by the packet or as singles. And Kirana shops are the best places to look at these. I was looking at this exact mechanism to deliver mechanized agricultural products. And the idea I had was to look into delivery of fuel since every maching requires. At first I thought that kerosene would be the best fuel (an analogy to matches). But in rural agricultural markets, kerosene was not available, instead it was diesel. So, I think when looking for piggyback distribution, one should seek out the appropriate product and its delivery network.
I would be very interested in discussing these issues. Cheers.
@Mitesh – I completely agree; in fact, Airtel and Nokia are doing that right now with their products in rural india. telecom operators setting up systems in Rural india makes it necessary for phones to be able to use that service. In peri-urban India, every bop household has a mobile phone, which is catching on in rural india as well. We are piggybacking on the MFI model for access to marketing – and as for distribution, on the local stockists whom have kirana customers – - they currently supply 10-50 products within the FMCG line which can increase significantly if we market and push products like sanitary napkins and other OTC products.
I have really enjoyed reading everybody’s responses on this topic, and am happy to discuss with anyone who is interested.
I actually got the idea while analyzing the 2004-05 National Sample Survey Consumer Expenditure data for a project I was working on. According to the data, approximately 1.3 Billion boxes of matches are purchased in rural India on a monthly basis.
As of now, I do not have any further insights on the match distribution network. Tracing the network would probably require first, identifying a handful of brands and their places of origin. Second, tracking their distribution from both ends of the supply chain (manufacturers can provide information about their buyers, and Karina shop owners could provide information about their supplier). Then it is a task of connecting the middlemen, tracking quantities, price and contacts.
Currently, I am unaware of anyone tracking this information or making it public. It may be that the manufacturers have no control over where their products end up going. I hope further investigation of it will uncover critical rural distribution nodes throughout the country which could be used as market insertion points for new products. Any thoughts on this?
One fun test would be to partner with a match manufacturer and have them print a new logo. Then, with the help of field researchers, time how long it takes between the first bulk sale and when the matches start showing up in rural shops.
@Ajaita & @ Mitesh, I agree with your comments about piggybacking. Companies must be careful to find the appropriate product(s) to follow, and also provide the complimentary education/marketing to deliver the necessary value messaging.
By the way, I found a great photo album of Indian matchboxes by Matt Lee if anyone’s interested: http://www.matt-lee.com/index.php?/photos/indian-matchboxes/
Everything dynamic and very positively!
http://www.goarticles.com/cgi-bin/showa.cgi?C=2167423
It’s a wonderful insight. At the time when virtually every company in India is looking to enter in rural market, these innovative ideas are a real eye opener.