DISTRIBUTION

STRATEGY

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 INTRODUCTION
• Availability determines volume and market
share
• Challenge : Reaching 6 lakh villages and
feeding a retail network of over 35 lakh village
shops
• 68% of rural markets still lies untapped due to
inaccessibility.
• Some successful regional brands : Ghari
detergent, Anchor toothpaste, Gemini Oil
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 Problems faced in rural distribution:
• Large number of small markets
• Dispersed population and trade
• Poor road connectivity
• Multiple tiers – higher costs
• Poor availability of suitable dealers
• Low density of shops per village, high variation in
their concentration
• Inadequate bank and credit facilities for rural
retailers – poor viability of retail outlets

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• Poor storage systems
• Highly credit-driven market, low investment
capacity of retailers
• Poor visibility and display of product
• Poor communication of offers and schemes –
poor reach of media

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 Coverage Status in Rural Markets
• Rural – any location with a population of less
than 50,000
• 50% of rural population resides in 1 lakh off
large villages ( 2000+ population)
• Account for 60% of rural wealth
• 2.3 lakh tiny villages (<500 population) –
hardly any shops
• Distribution becomes uneconomical towards
smaller towns

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 Channels of Distribution
Five layers of distribution channels for movement of
products from company depot to interior village markets:

Layer Channel Partner Location

Layer 1 Company depot/ C&FA National/State level
Layer 2 Distributor/ van operator/ District level
super stockist/ rural distributor
Layer 3 Sub-distributor/ Retail stockist/ Tehsil HQ, towns
Sub-stockist/ Star seller/ and large villages
Shakti dealer
Layer 4 Wholesaler Feeder towns,
large villages,haats
Layer 5 Retailer Villages, haats
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 Rural Distribution System
• Wholesalers
• Retailers
• Mobile traders
• Vans
• Weekly haats

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 Wholesaling
• 70% of rural market – beyond reach of direct
marketing
• 50% rural consumption through wholesalers
• Speculative rather than distributive
- insufficient product availability
- urban areas – most concentration on
retailers - wholesale distribution less
-companies neglected rural markets

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 Rural retail system
• Rural retail spread
- Rural India - 65% retail outlets in country
- 35 lakh retail outlets spread over 6 lakh villages
- High distribution cost
* geographical spread
* low volumes per outlet
- Average monthly sale per shop < Rs. 5000
- restricts variety and range of products stocked
- 58% of villagers prefer to buy from haats rather than
shops coz of better price, quality and variety
- Availability of shops in villages is poor
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Rural premises:
- infrastructural constraints
* lack of sufficient space
* inadequate power supply
* lack of proper storage system
- financial constraints
* inadequate funds
* unwillingness of banks to extend loans
- low retail space per capita – <100 sq.ft area
- travel and transport costs

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 Rural retail shelves
• Filled with local and regional brands – higher margins and
longer credit periods
• Less variety of brands available
• Number of brands per product category decreases
towards smaller villages
• Ensure visibility on shelves
• Product stocking – cluttered &disorganised
• Slow moving products – dust covered
• Absence of proper racks, display box, stand
• Strategies: provide display & storage systems

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 Vans
• Salesman loads van with stocks from nearest
stockist or company stock point
• Works around surrounding markets
• Then moves to next stock point – journey
cycle
• Used for both sales & promotions
• Eg.: Everyday , J.K. Diary
• Effective but expensive
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 Mobile Traders
• Direct to home, unorganised distribution
• Daily need products – mostly local brands –
detergent, cosmetics, personal care,
garments, footwear
• Carry products on bicycles, mopeds, handcarts
• Deep reach
• Good rapport with clients
• Mostly sell fakes and local brands

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 Haats/ Shandies
• Oldest marketing channel in India
• Profile of haat visitors and purchase behaviour

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 BEHAVIOUR OF CHANNEL

• Credit facilities to customers

• Pricing by channel
• Reason for stocking a product / brand
• Seasonal pattern of stocking
• Information source and influence on retailer
• Purchase source for the retailer
• Purchasing cycle
• Channel promotion
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PREVALENT DISTRIBUTION MODELS

RETAIL WHOLESALE

VAN/SUBSTOCKI FEEDER TOWNS

ST WHOLESALE
AND RETAIL

RURAL
MARKET

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 MARKETING
DISTRIBUTION MODEL 1

COMPANY

C&FA

DISTRIBUTOR DISTRIBUTOR
(RURAL) (URBAN)

SUB- WHOLESALER WHOLESALER

DISTRIBUTOR

RETAILER RETAILER RETAILER RETAILER RETAILER

(RURAL) (LOCAL) (SATELLITE (URBAN) (URBAN)
MKT)

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 CHARATERISTICS
• Rural distribution separated from urban distribution
• Company appoint a sub distributor(SD)under rural distributor(RD)
• Owing to poor road networks & low volume per outlet, RD covers a
large area
• DM1 model focuses more on RD’s & SD’s rather than the wholesale
channel and has large no. of points appointed in the rural areas as
locations are scattered. This ensures that companies products reach
maximum no. of areas
• Advantages include better monitoring, price discipline and control
over the sale and distribution of products
• Companies prepare PJP’s (Permanent Journey Plan) – six working
days. Outlets are covered only fortnightly
• No. of outlets covered in a day is 30 – 40 of which 15 – 20 are
productive Eg. HLL
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 DISTRIBUTION
DISTRIBUTIONMODEL
MODEL 2 2

COMPANY

C&FA / DEPOT

DISTRIBUTOR

WHOLESALER

RETAILER RETAILER
(LOCAL)

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 CHARATERISTICS
• There is no separate channel for rural distribution
• Minimises distribution costs, allowing companies to offer better
margins to distributors and other channel partners (fewer)
• Companies with limited no. of SKUs and high sales volume adopt
this model
• It is also preferred by new entrants who lack infrastructure
required to have wide distribution network
• Example: Priyagold biscuit, Nirma (Shakti detergent, Nirma soaps,
Camay & other toiletries)
Issues:
• Coverage, No SD to cover interior parts

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 NIRMA DISTRIBUTION
NIRMA SYSTEM
DISTRIBUTION SYSTEM

NIRMA Ahmedabad

DEPOT Hyderabad, Kolkata, Kanpur

DIRECT DISTRIBUTOR
At district level

SUB DISTRIBUTOR/BIG WHOLESALER At Tehsil level Covers 300-

400 outlets
directly

WHOLESALER RETAILER WHOLESALER RETAILER

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DURABLE GOODS COMPANIES DISTRIBUTION SYSTEM
-1

LG

DEPOT

NEW RURAL DISTRICT OFFICE

C&F AGENTS WAREHOUSE

EXCLUSIVE DEALERS MULTIPLE DEALERS

CONSUMER

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 MARKETING
DURABLE GOODS COMPANIES DISTRIBUTION SYSTEM
-2

PHILIPS

DEPOT

DISTRIBUTOR STOCKIST
(URBAN) (RURAL)

RETAILER RETAILER
(URBAN) (RURAL)

CONSUMER

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Retail outlets are not able to sell more durables because:
• They lack variety
• Transport costs increase the prices (The net landed cost of a 21-
inch Color TV is Rs. 1000 more compared to the price offered by a
dealer in the city)
Rural buyers prefer to buy from city stores because:
• More choices are available
• It is possible to get competitive prices through bargaining
• Rural buyer can see many options, visit several shops and check
different prices
Problem:
• To generate volumes, companies give huge discounts to the big city
dealers, which results in price differences and put the rural retailer
at disadvantage

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 NIRMA DISTRIBUTION
DISTRIBUTION SYSTEM
OF FAKE PRODUCTS

MANUFACTURER

WHOLESALER IN BIG
CITY

WHOLESALER IN
SMALL TOWN/KASBA

HAAT VILLAGE MOBILE

RETAILER RETAILER TRADER

CUSTOMER
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Channels of distribution:
Channel 1: Manufacturers to wholesaler/retailer in big city or small
town, or directly to customer
Channel 2: Wholesaler in big city to wholesaler in small town/kasba

Channel 3: Wholesaler in small town /kasba to village retailer/mobile

trader/haat
Fakes reach consumers through the following channels:
• Small kirana shops located within the village
• Big shops generally located on the main road
• Door-to-door visits by salesmen who pose as company
representatives
• Salesmen in local trains and buses
• Mobile traders
• Haats
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 EMERGING DISTRIBUTION
MODELS.

Marketers are innovating new cost effective

approaches to reach markets.
Objectives:
Maximize existing infrastructure.
Ensuring participation and economic
sustainability of all stakeholders

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 CORPORATE- SHG LINKAGE
• 10-15 women organized by govt bodies.
• To boost the self worth among women.
• Loan assistance from rural banks for setting up
of income generating enterprises.

• Rapid Growth provided an opportunity to

establish a path breaking distribution model
through the linkage of the groups for
marketers.
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 TTK PRESTIGE PRESSURE COOKER CASE

• Stagnating Sales and declining returns.

• Company saw SHG women as an opportunity
to enter to the rural market.
• Meetings were organized with the group .
• Interested women were chosen as dealers and
demo cookers were given to present at the
SHG meetings.
• Women dealers also visited other potential
buyers and booked orders.
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 Satellite Distribution Model.
(HUB & SPOKE SYSTEM).
Stockists are appointed in major towns and feeder
towns.
Retailers in feeder towns get attached to these
stockists.
Manufacturer supplies goods to stockists.
Functions performed by stockists include
Financing, Ware housing, Sub distribution.
Volume done by retailers varies due to location,
capacity etc.
Over a period of time some retailers will be
elevated to stockists points. 30
Pioneers in Satellite Distribution
model

COKE & PEPSI

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 SYNDICATED DISTRIBUTION
Distribution is posing a major problem for a
new company to penetrate to Rural market.

Two or more companies come together to form

a syndicated trading organization to jointly
distribute a collective group of household
products by sharing costs.
Small company should not deal in the same
products that the big company deals
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 JK Diary Case
• JK diary launched a WHITENER DIARY TOP in
50 gm. sachets priced at 6.50 Rs targeting at
Rural customers.
• To cover the interiors a van was hired(125 Km
*25 Days) @6Rs Per Km.
• Since JK diary has only a single product they
shared the travelling expense with three other
companies targeting at rural customers.

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Problems with syndicated Distribution.
• Markets for the coverage of two companies
are different.
• Terms of Payment are different.(Cash by one
company & credit by other company).
• Salesman of only one company accompanies
the van: ( Pushes his companies products &
does not make serious efforts to collect the
payments of other companies).

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 ITC’s DISTRIBUTION MODEL.
• Reached Rural Consumers through its e-
Choupal model for backward and forward
linkages for its agri related business

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 NYKS Haat DISTRIBUTION MODEL
• Nehru Yuva Kendra Sangathan.
• Hires young people as National Service
Volunteers (NSV) for 2 years with 2000Rs stipend.
• NSV is assigned with 15-20 villages :organize
events and create good rapport and credibility
with villagers.
• After 2 years Existing NSV retire to give way to
fresh NSV’s.

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 PROJECT DISHA- CASE.
• MART selected500 ex volunteers to promote
company Brands(COLGATE).
• Volunteers will be provided with all
facilities( bicycles, umbrellas, storage boxes, T-
shirts,etc).
• Volunteers buy stock from nearby sub stockists and
sells at near by Haats and village Shops on the way.
• Average sales of 1000Rs Per day.
• Result is that Company got benefited from this .
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 AGRICULTURE INPUT DEALERS.
• 2,62,000 fertilizer dealers in country.
• Fertilizer companies have retail outlets within
a range of 5 Km.
• Marketers found the possibility of selling their
products through these outlets.

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 PETROL PUMPS & EXTENSION
COUNTERS.
• 60% of 12000 Petrol pumps in INDIA is located
on Highways close to villages.
• Selling of food Products & toiletries through
these outlets.
• Exploring possibility of selling agri inputs &
LPG cylinders from these outlets.

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 OTHER CHANNELS.
• HERO HONDA Company reported emergence of
Unofficial channel of distribution.
 (Village Mechanics, Real Estate Agents &
Shopkeepers).
 Take the Bikes in 2’s or 3’s from company
Dealers.
 Display them outside dealer’s Premises and will
close the sale.
 Paper work left to the Dealer to complete.
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 IDEAL DISTRIBUTION FOR RURAL.
• Per Capita Sales=Annual Sales/Market Population..

Rural Markets are GOLD Mines which forced

marketers to come up with innovative ideas to
ensure the reach of their Products in these areas
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Communication Strategy

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 Introduction
• Advertising goes hand in hand with economic growth.
• Scenario has changed since economic liberalization.
• Influence of Electronic media is contributing to the growth of
rural aspirations.
• Communicating properly to the rural customers was the main
challenge for corporate marketers.
• Reaching out to the rural consumers also presented a great
challenge.
• Rural Communication is not a ‘peripheral activity’.

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 Challenges in Rural Communication
• Heterogeneity and
Spread
National Languages

16 Scheduled Languages

Languages with widespread Use: 47

languages used for primary education ,98 used in
print media,
71 used on radio, 13 used in films

Local Vernaculars:
Over 114 recognized varieties,
216 mother tongues with more than 10000 speakers were recorded
in 1991

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 Key characteristics of heterogeneous rural
markets
• Widespread geographical dispersion (6,38,000 villages) many
of them are still beyond the reach of media.

• Vast variations in levels of literacy.

• Literacy (Kerala 90%, Bihar 44%).

• Variations in reach of electronic media (Kerala 63%, Bihar

17%) and print media (Kerala 65%, Bihar 9%)

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 Therefore, the requirement is threefold

• To identify the most suitable medium to ensure maximum

spatial research.

• To develop region-specific consumer profiles to understand

the characteristics of the target market and

• To design the most effective and persuasive communication

and promotional strategies to induce the target audience to
buy the product.

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 Understanding the Rural Audience

There are two distinct sets of audiences in rural India:

• A growing number of educated, upwardly mobile, middle
class people with aspirations and high exposure to mass
media and with considerable purchasing power, in many ways
similar to their urban counterparts.
• The illiterate masses, who are poor and cannot be easily
reached through the mass media.
In terms of economic progress, rural India is divided into:
• Developed states (Punjab, Haryana, Kerala, Tamil Nadu,
Andhra Pradesh, Karnataka and Maharashtra)
• Underdeveloped or developing states (all other states)

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 A View of the Communication Process

The Communication Process Model

MESSAGE
SENDER ENCODING ----------------------- DECODING RECEIVER
MEDIA

NOISE

FEEDBACK RESPONSE

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 The receiver may not receive the intended message due to any
one of the following reasons:
• Selective attention: where the consumer may not notice the
stimulus provided.

• Selective distortion: where the message is deliberately

twisted so that the consumer hears what he/she wants to
hear and

• Selective recall: where the consumer retains only a small

fraction of the message that reaches him/her.

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 Developing Effective Communication

Developing effective communication involves five steps:

1. Profiling the target audience

2. Determining the communication objectives
3. Designing the message and ensuring the effectiveness of
the message
4. Selecting the communication channels
5. Designing the promotion strategy and integrating the
communication process

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 1. Profiling the target audience

The steps involved in designing an effective message for rural

consumers are probing and profiling the target audience. For
probing, the following questions should be asked:
• Who uses the brand?

• Who buys the brand, and why?

• Who decides which brand is to be bought?

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 Probing and profiling of rural consumers is done by examining
the following:
• Social classes and intentions
• Consumer receptivity
• Growing Brand Consciousness
• Lifestyles
• Buying roles
• Children
• Purchase needs
• Community and the personal-value proposition
• Value-for-money proposition
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 2. Determining Communication Objectives

• Once the target market has been identified, the marketer and
the communicator must decide on the desired audience
response.

• The ultimate response is purchase and satisfaction.

• Communicators try to put ideas into the consumer’s mind, to

change his attitude, and to get the consumer to act.

• The response-hierarchy AICDA model best summarizes this

communication strategy.

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 AICDA Model of Communication

.
Awareness Interest Conviction Desire

Action

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 Thus a marketer may seek one or more of the following
objectives:
• To bring about awareness among a certain percentage of the
target audience.

• To improve knowledge to generate interest.

• To strengthen the liking or preference for the product.

• To persuade the consumer to buy the product.

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 Message Design

Formulating the message require solving five

problems:
•Message content (what to say)
•Message structure (how to say it logically)
•Message format (how to say it symbolically)
•Context association (in what context)
•Message source( who should say it)

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 Message content

Three types of appeal:

• Rational appeals: appeal to the audience’s self
interest.
Eg. Messages showing product quality (Ramco
Asbestos Sheets)
• Emotional appeals: stir up positive or negative
emotions to motivate purchase
• Moral appeals: appeal to the audience’s sense
of what is right and proper
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• E g: There should be a difference of at least
three years between two children
• With rural consumers, functional elements
have stronger influence than emotional
appeal.
• E g: In the case of Lux, they look for pure and
mild( functional elements) and not on
glamour (Aspirational element)

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• Language: should be simple, direct, designed
in the local language. It should consider
traditional and cultural aspects

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 Message Structure

• Simple , short and self explanatory

• Pictorial presentation: Muscleman logo of
MRF Tyres, ‘Plus’ symbol of Clinic Plus
shampoo
• Disadvantage is that duplicate products will
cheat customers

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 Message Format

• Pictures, attractive expressions, short stories,

strong colors have more influence on rural
consumers
• Eg: Minto fresh ad

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 Context Association

• Marketers need to pay attention to the rural

environment dress styles, food habits and
cultural preferences
• It should draw a close identification with rural
audiences.

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 Message Source

Messages can be categorized in to three groups

• Likeable source: Amir Khan in Thanda Matlab
Coca-cola ad.
• Trustworthy source: word of mouth, includes
friends relatives, neighbors.
Eg (Markfed pesticides and insecticides)
• Expert source: Opinion leaders are according
to the product category
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• E g: Mistri( mason) for construction related
products like cement
• Villagers from an upper class will not accept
the views of Sarpanch belongs to lower caste
• Women Pradhans lack mass appeal or support
• Opinion leaders are rural youth, postman,
school headmaster etc

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 Communication Channels

Personal channels are divided into three

• Advocate channels: Consist of company sales
people. Eg: Dalmia Consumer Care has Rural
Sales Promoters to promote non tobacco bidi
Vardaan
• Expert channels: Masons
• Social channels : friends, family,neighbors

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• Non –personal channels carry messages
without personal contact. Includes mass
media, atmosphere, events, haats, jatras,
melas, folk media and mandis.
• An atmosphere is a packaged environment
that creates the buyer’s leanings towards the
product purchase.
• ( Chokhi Dhani), Shakti day

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 Promotional Tools

• Advertising
• Sales Promotion: Three characteristics.
Communication, Incentive, Invitation
E g. Discount coupon on Purchase of one Tata
Shaktee GC sheet.
Sampling: Lifebuoy Value proposition
• Direct Marketing : Direct mailers are the most
used tool in rural.
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E g: Videocon After Sales service-1800
mechanics and engineers visit villages twice a
week to assure after sales service.
• Personal Selling : Most cost effective tool.
E g: Project Bharat- covered 2.2crore homes.
In 2002 HLL launched a direct contact
programme Lifebuoy Swasthya Chetna-
covered 15,000 villages in 10 states

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 Factors in setting the Promotion Mix

• Pull strategy: Use sales force and trade

promotion to push the product through the
channels. Established players like HLL,
Britannia rely on Pull strategy
• Push strategy: Regional players like anchor
prefer Push strategy
• Product Life cycle stage : promotional tools
vary at different stages of product life cycle

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Creating Advertisements for
Rural Audiences

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• Understand The Mindset of Potential
Customers.
• Tricky, Clever ,Gimmicky Advertising doesn’t
work with Rural Audience.
• Combining Education with Entertainment is a
good method of targeting Rural Audience.
• Quickies do not register well with Rural
Audience.
• Employing ‘Slice Of Life ‘ Approach.
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 Scheme of Rural Advertising
Production

Last-Destination Adaptation: Rural dialect, Color, and Motif

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 Conventional Media

• Radio
• Television
• Cinema
• Print

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 Non-Conventional Media
• Wall Painting
• Folk Media- Folk Theatre
Folk Songs
Folk Dances
• Magic Shows
• Puppet shows
• Video Van

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 Melas
• Important feature of Indian rural life
• To commemorate important events and to
honour a deity.
• 25,000 melas held annually
• They have a strong commercial aspect

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 Rural Marketers Rule
• Target top 100 commercial melas

• Focus should be on melas that last longer

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 Mandis

• Seen in states like Punjab and Haryana

• Large network of over 7600 mandis

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 Personalized Media
• POP Dispalys

• Direct Mail

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Rural Media

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 Communication Strategies
• Launch of new product

• Launch of new brand

• Communication for an existing brand

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