Recently, we decided to be active on social media and updated Facebook cover photos. A subscriber from Mangaluru commented that your product is not available anywhere here. The fact is it is available at many outlets in Mangaluru. 

But he has a valid point: it is only available at a few shops where he has tried it. I replied that we are working hard to place the products in as many shops as possible. How is it so hard to place the products? Because of objections by retailers. Retailers need more shelf space, inventory budget and intention to promote any product. So, they will only sell those brands that are fast-moving. Here are the standard ways they object to our salesman when he tries to sell.

• No response – This is common when you are not interested in what the salesman is offering.
• No consumer demand – retailers will take the pain to stock a brand only that has consumer demand
• The price is high. He needs to earn a decent margin and compete with other retailers.
• Low margin or MRP – He wants MRP to be printed higher to offer a significant discount to consumers yet earn a decent margin.
• Credit – Retailers are habituated to purchasing on credit from local distributors and will object to anyone with cash and carry terms
• Oil is yellow/not pure—His imagination of pure coconut oil is extracted from Ghani/Chekku and is clear white; anything else is considered not pure.
• New brand—He is not interested in selling new brands because he is unsure about consistent supply and has to work hard to promote them to consumers.
• Dictating terms – He is already getting the product from another source. He would like to exploit a new supplier by dictating terms like discount and credit.

These are some of the common objections which may be presented in different ways. It is up to the salesman to answer these objections skillfully to earn a sale. In the coming posts, we will answer these objections.

#EarthDay is a day of gratitude to Mother Earth & a day to reiterate our firm resolve to keep our planet clean & green.

— Narendra Modi (@narendramodi) April 22, 2017

April 22nd is celebrated every year as Earth Day. To me personally, it is special as it is also my birthday. I resolved last year to contribute my bit to preserving the planet for the next generation. I focused on two aspects: water conservation and planting trees to increase green cover. In this post, I will discuss the measures taken over the last year to conserve water.

Water Usage

At the Cocoguru factory at Kallarpe, Puttur, we use about 1.5 lakh litres of water monthly. We were lucky to get good water through the borewell and have used it as the only water source for all our requirements. Water is used for steam generation (35%), hot oil cooling (25%), watering plants (10%) and the remaining 30% for the canteen, washing, and toilets for 30 employees. We made an effort to carefully collect the usage data to find ways of managing water.

Water Conservation Tactics
We thought of conserving water in 3 directions.
1.Minimise water usage. Awareness was created among people to minimise wastage.
2.Use waste water effectively. Use used water where fresh water would have been used instead.
3.Source water from an easily recyclable source than a borewell. Rainwater, stream water and open wells are the sources worked on for supplying water. Use bore well only if water from all other sources is not available.

Waste Water
Water from steam condensation and drinking water use are the sources of wastewater. Many tree saplings and vegetable-yielding plants were planted on available land. Wastewater is distributed to irrigate those plants. It not only saves water but also avoids draining of waste water to stream causing water pollution.

Water Sources
Rain Water – It rains continuously for 4 months from June to September. Then, rainwater is collected from the building roof and is directed to use.
Stream Water – Water runs off the earth surface in a stream adjacent to our plot till the end of December. Building a check-dam across it in November extends the availability of stream water by another month. So, stream water is available for 4 months from October to January. Water does flow in full force during rainy season but it is not needed.
Open Well – A well is dug for about 15 feet depth near the stream, it collects shallow groundwater and are easily rechargeable. Water is available even in summer for 2 months i.e. February and March. The check-dam retained water recharges the open-well and all other aquifers nearby making the ground water-rich.
Bore Well – That leaves borewell water required for only 2 peak summer months of April and May. To keep the borewell in useful running condition, it is also used around the year in small quantities for canteen drinking water.

Expenses – 80,000 for open well, 40,000 for rainwater collection and usage system, 30,000 for check-dam, 15,000 for waste water irrigation system. Total of 1.65 lakhs. With these steps, the borewell water usage is reduced to 1/6th of last year.

The price premium of coconut oil packs has been increased to about 10% compared to other mass brands in the market and is at par with a premium brand.

We have a sales officer, Mr Nandakishora, who has strong opinions about pricing and is in favour of traders.
While discussing he said, “We have reached the final stage of our pricing evolution, haven’t we?”.
I countered, saying, “No, there is still a long way to go!”.
He was worried, “With great difficulty, we have increased the price premium to this stage, and you still want to increase it further?”
I swayed his concerns, “From now it is not going to be about increasing the price but about fine-tuning it as per our marketing strategy. Because after so long, we have control over our pricing.”

How did we reach here?
November 2014 – 1 Rupee Premium – Association was formed and prices were fixed by them. We used to supply to shops directly with our own vehicles.
January 2015 – 2 Rupees Premium – Then we changed from van sales to distribution system. Distributor was given at association wholesale rate which was 3 rupees discount to retailer rate. With 2 rupees premium, we gave distributor 5 rupees margin.
July 2015 – 3 Rupees Premium – This was because the Association decided to reduce the wholesale discount by 1 rupee to just 2 rupees. We retained distributor margin by increasing retailer price.
November 2015 – 5 Rupees Premium –The Association was tending to keep the price low to discourage price rule violations.

It was not very smooth with every price increase. We lost a couple of distributors, a few wholesalers and many retailers. Even those who continued buying from us raised serious questions. I used to get very nervous before making decisions. But bold decisions had to be made, and that is what made me an entrepreneur in the first place. By now, everyone had adjusted and was expecting further price moves from us. We were left with only loyal customers; retailers kept our brand only to give to those who asked for Cocoguru. Still, this customer base was substantial to help us survive. We gained confidence as these are the customers who we have rightfully earned.

April 2016 – 6 Rupees Premium –. To supply to distributors we introduced as super stockist and his margin of 1 Rupee was added to price.

By now, the Association stopped fixing the price as the members had already stopped strictly following the prices. Fearing a price fall due to competition, we still had to increase our price premium to survive. Weekly price fluctuations were another big problem to tackle as they disturbed members of our trade channel. This meant we could not reduce prices immediately; we had to give 1 week’s notice to distributors before reducing the price. A couple of times, we didn’t reduce the price even after 1 week, and hence, the premium increased from 6 to 7 to 8 to 9, back to 7 or 8 and then to 10. While our competitors change prices weekly, we don’t change our prices unless there is a major change in raw material cost.

This has enabled the distributors to purchase confidently without worrying about price fall after their purchase. We have successfully differentiated ourselves from competition and I can peacefully enjoy my Sunday without worrying about their price. Now, we have gained great control over our price, we will fine tune it further.
Two thoughts on “Yet another price increase.”