Rural Marketing Strategies, Distribution Strategies

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Rural Marketing Strategies, Rural Marketing Strategies, Distribution Strategies Presentations By Rajendran Ananda Krishnan,

Transcript of Rural Marketing Strategies, Distribution Strategies

Rural Marketing

Rajendran Ananda krishnan.

Rural Marketing- Distribution strategy

Topics to be covered

Distribution strategy : Accessing Rural Markets, Coverage Status in Rural markets, Channels of Distribution, Evolution of Rural distribution Systems Wholesaling, Rural Retail System, vans, Rural Mobile Traders The last mile distribution, Haats/Shandies, Public Distribution SystemCo-operative societies behavior of the channel, Prevalent Rural Distribution Models Distribution Models of FMCG Companies, distribution model of Durable companies, Distribution of fake products, Emerging Distribution Models Corporate-SHG Linkage, Satellite Distribution, Syndicated distribution, ITCs Distribution Model, Petrol Pumps and extension counters, barefoot agents, Agricultural agents, Agricultural input dealers, Other channels, ideal distribution model for Rural

Challenges in rural Distribution

Large number of small marketsDispersed population and tradePoor road connectivityMultiple tiersPoor availability of suitable dealersLow density of shops per villageInadequate banks and credit facilitiesPoor storage systemLow investment capacity of retailersPoor visibility and display of products on rural shop shelves.Poor communication of offers

Distribution Strategy

Ensuring Reach & Visibility The thing which is critical, is to get the Stock Keeping Unit right, as rural retailer cant afford to keep many different SKUs. In such an environment, being first on the shelf in the product category and developed a privileged relationship with the retailer is a source of competitive advantage to consumer good companies.Reaching upto Mandis, Towns, Semiurban centres Organizations can cater to rural needs for consumer durables, clothes, kitchen equipment and agri-input by making their products available upto feeder towns, semi-urban centers or mandis.Targetting larger villages There are only 85000 large villages out of more than 6,38,000 villages. But they have 40% of the rural population and 60% of total consumption.Understanding of Peak seasons Peak season times in rural parts are Festivals, harvest and marriage seasons. Bulk of the demand for the consumer durables concentrated during these times. The rural consumers are in shopping mood and have the cash for the same at this time. Organizations have to ensure that their products are available at these times.

Delivery vans Company delivery vans which can serve two purposes; they can take the products to the customers in select rural areas and also enable the firm to establish direct contact with them and thereby provide an opportunity for promotion.Collaboration for Distribution Various organizations with comparatively lesser distribution reach can collaborate with organizations that already have achieved high penetration levels in rural areas. For eg. P&G had tie-ups with Godrej, Marico Industries and now its planning one with Nirma for distribution of Camay soaps.Converting unorganised sector manufacturers into distributors Small scale manufacturers have good knowledge of the territory and have good sales network. Organizations like Exide are attempting to convert these small scale manufacturers to become their dealers.Companys own Distribution Network Project Shakti of HUL is one such example.

Distribution Channels in Rural India

Use of cooperative societies There are over 4 lakh co-operatives operating for different purposes like marketing, credit and dairy cooperative in rural areas. For eg. Farmers Service Co-operative Societies function like a mini super market for rural consumers where they sell soaps, detergents, cloth, seeds, fertilizers, pesticides etc. at economical and reasonable prices. Since these societies have necessary infrastructure for storage and distribution, companies may contact these societies to sell their products.

Use of Public Distribution System In India, the Public Distribution System is well organized. There are about 4.37 lakh fair price shops operating in the country. Since the PDS outlets cover the entire country they can be utilized for marketing consumable items and low value durables in rural areas.Utilization of Petrol Pumps These petrol pumps, in addition to petrol/diesel, oil and lubricants are also selling consumables such as soaps, detergents, biscuits etc, particularly on the highways. These bunks may also think of stocking certain consumable agricultural inputs like fertilizers, seeds and pesticides.

Agricultural input dealers There are about 2,62,000 fertilizer dealers in the country. During off season most of the dealers dont have business, hence the companies may try to motivate them so that they can sell other products also during their free time.Shandies/ Haats/ Jathras/ Melas Shandies are periodic markets which operate in a weekly cycle. They offer a ready distribution network and are steady, cheap and appropriate. Haats can be used effectively for distribution, demonstration and sampling of daily need products. Melas work best for introducing new brands and building brands through the organization of events at the venue.

Accessing Rural markets : Coverage Status in Rural Markets

Marketers have to ensure the reach of their product to retail outlets, and they also need to motivate retailers to stock their product or brand.50% of the rural population resides in the 1 lakh odd large villages. These villages are connected by all-weather roads and they account for 60% of rural wealth.At the other end are 2.3 lakh tiny villages, which have hardly any shops.HUL, Eveready, ITC etc are the companies that have the most deeply penetrated rural distribution system just about cover the retail network up to the 2000+ population villages.

Rural distribution Channels

Five layers of distribution channels for the movement of products from the company depot to the interior village markets.


Channel partner


Layer 1

Company depot / C&F A

National/state level

Layer 2

Distributor/van operator/ superstockist/ rural distributor


Layer 3

Sub-distributor/ retailstockist/ sub-stockist/ star seller /Shaktidealer

TehsilHQ, towns and large villages



Feeder towns, large villages,haats

Layer 5



Channels of Distribution




Fake Goods


Bulbs& Tubes

Company manufacturing plant

Companymanufacturing plant

Food Corporation of India


Company manufacturing plant

Company Manufacturing plant

Company Depot

Wholesaler (city)




Zonal Offices

Wholesaler (small town)



District office





Retail outlets

Exclusivedealers/ dealers

Fair Price Shop

Retailers (villagehaats, mobile traders


Exclusive dealer/ retail outlets







Evolution of Rural Distribution Systems

Historically, the rural distribution system has included wholesalers, retailers, mobile traders, vans and weekly haats.In the feeder markets, retailers act as wholesalers and vice versa to sell to small retailers who come from surrounding villages.Some town retailers send their salesmen to villages to book orders and supply goods to these small retailers.


50% of rural consumption is still routed through wholesalers because they are located in nearby feeder markets, which are frequented by village retailers to replenish stocks.Indian wholesaler is a trader rather than a distributor and therefore tends to support a brand during periods of boom and withdraws support during periods of slump.Rural markets were neglected by most companies due to the low density of retail outlets and the small off-take per retailer. Wholesalers based in feeder towns took advantage of this situation as village retailers found it convenient to buy from these places. This resulted in the hold of the market by these wholesalers, who often indulged in trade malpractices in the channel.

Rural Retail System

Rural India accounts for 65% of retail outlets in the country. The logistics of feeding the 35 lakh retail outlets spread over 6 lakh villages is a tough task.The high distribution costs due to geographical spread and low volumes per outlet act as a barrier to the entry of products in rural markets.The average monthly sale per village shop is less than Rs. 5000, which restricts the variety and range of the products stocked.Since a significant portion of the sale is on credit, it puts most village shops in a self-limiting sales cycle.Despite the same product being available in the village shop, 58% of