DISTRIBUTION IMPEDIMENTS FOR ANY MARKETER TO REACH RURAL CONSUMERS ARE 1)LACK OF TRANSPORT FACILITIES 2)LACK OF PUCCA ROADS

CONNECTING TOWNS TO VILLAGES 3)LARGE DISTANCES BETWEEN VILLAGES 4)LACK OF PROPER RETAIL OUTLETS 5)LACK OF MASS MEDIA INFRASTRUCTURE.. BUT IF ONE OBSERVES CLOSELY AT THE CHARECTERISTIC FEATURES OF THE RURAL MARKET , IT WILL BE CLEAR THAT DISTRIBUTION WILL NO LONGER BE A PROBLEM. THE PERCIEVED PROBLEM IS ONLY A MISCONCEPTION OF THE OLDTIMERS WHO ARE NOT AWARE OF THE CHANGING SCENARION IN THE RURAL AREAS AND THE POTENTIAL OF THE EXISITING OUTLETS. CHANNELS OF DISTRIBUTION : THE FOLLOWING FIGURE DEPICTS PRODUCT MOVEMENT ROUTES THRU THE INTERIORS. LEVEL LEVEL A LEVEL B CHANNEL MEASURE COMPANY DEPOT REDISTRIBUTION STOCKIST C&F AGENTS , SEMI WHOLE SALERS , RETAILERS SEMI WHOLESALERS , RETAILERS ITINERANT TRADERS VANS , PETROL BUNKS SEMI WHOLESALERS , RETAILERS , CO OP SOCI RETAILERS , VANS , SALES NGOs , GOVT AGANCIES. PLACE NATIONAL / STATE DIST HQS

LEVEL C LEVEL D

TEHSIL HQS ,MOFUSSIL TOWNS HAATS , LARGE VILLAGES.

LEVEL E

VILLAGES

RETAILER CHARACTERISTICS 1)RURAL MARKET SPREAD :RURAL MARKET COMPRISES SMALL DISPERSED VILLAGES, INFREQUENT RETAIL OUTLETS AND LOW OFF TAKE PER RETAILER.

HUGE DISTRIBUTION COSTS DUE TO GEOGRAPHICAL SPREAD & LOW VOLUMES RESULTS IN A BARRIER TO THE ENTRY OF PRODUCTS IN THE RURAL MARKET. TO BUILD VOLUMES ONE HAS TO INVEST IN DISTRIBUTION . BUT HIGH COSTS IS A SERIOUS IMPEDIMENT. AS THE DISTRIBUTION EFFORTS REMAIN UNVIABLE FOR A LOMG PERIOD OF TIME , THE MKTG EFFORT IS IN EFFECT A CAMPAIGN TO BUILD VOLUMES AND HENCE TO BE TREATED AS INVESTMENT AND NOT EXPENDITURE. ENTRY INTO RURAL MARKETS REQUIRE LONG TERM PERSPECTIVE RATHER THAN SHORT TERM GAIN. 2)RETAIL PREMISES :IN RURAL VILLAGES BUSINESS IS CONDUCTED FROM OWNED PREMISES. RETAILING IS A PART TIME CHORE. HIGH COSTS INCURRED ON TRAVELLING AND TRANSPORT. 3)RETAIL SHELF:A STUDY CARRIED OUT BY ICICI INDICATES THAT PRODUCTS LIKE TOILETRIES, COSMETICS, PACKAGED FOOD STUFFS(BISCUITS, SWEETS, TOFFEES, AND PACKAGED VANASPATI), PACKAGED TEA , BIDIS , STATIONERY ITEMS USED BY SCHOLL CHILDREN , MATCH BOXES AND KEROSENE LAMPS / LANTERNS WERE THE POPULAR ITEMS IN INTERIOR VILLAGES. 4)STOCK TORNOVER :THE AVERAGE VALUE OF STOCKS PER PRODUCT CATEGORY IN THE INTERIOR VILLAGES IS ABOUT A THIRD OF THAT IN THE FEEDER VILLAGES. THE AVERAGE VALUE OF STOCKS OF ALL PACKAGED GOODS IN INTERIOR VILLAGES WAS ABOUT A FOURTH OF THAT IN FEEDER VILLAGES. THE MONTHLY OFF-TAKE FOR PACKAGED PRODUCTS WAS SLIGHTLY MORE IN FEEDER VILLAGES AS WAS COMPARED TO INTERIOR VILLAGES. THE STOCK TURNOVER RATIO (STOCK LEVEL TO MONTHLY TAKE OFF) FOR TOILETRIES IN INTERIOR VILLAGES WAS MUCH LESS THAN THAT IN FEEDER VILLAGES.

THE LOW OFFTAKE , LOW STOCKS AND THE LOWER STOCK TURNOVER RATIO INDICATES THAT THE NUMBER OF PRODUCTS AND ITEMS STOCKED INS LOW IN INTERIOR VILLAGES. THIS EFFECTIVELY LOCKS UP THE RETAIL SHELF SPACE BY THE EXISTING PRODUCTS AND BRANDS LEAVING NO ROOM FOR NEW PRODUCTS AND BRANDS. .. VILLAGERS OFTEN DOUBLE UP AS MONEY LENDERS AND HENCE THEIR OCCUPATION FACILITATES MULTI PERSON INTERACTION IN THE CLOSED VILLAGE SOCIETY. AS ARESULT THE RETAILER PALYS A SIGNIFICANT ROLE: 1) VILLAGERS REPOSE A LOT OF TRUST ON THE RETAILER. 2) HIS VIEWS ARE ACCEPTED AND FOLOWED AS MAJORITY OF THE VILLAGERS AWARENESS AND MEDIA EXPOSURE LEVELS ARE LOW. 3) HIS ROLE OF AN INFLUENCE LEADER CANNOT BE UNDERMINED.HIS TESTIMONY PLAYS A VITAL ROLE IN PRODUCT PURCHASE PROCESS. 4) PLETHORA OF BRANDS AVAILABLE IN THE MARKET.HE HELPS IN IDENTIFYING AND SELECTING BRANDS. BEHAVIOUR OF THE CHANNEL : CHANNEL BEHAVIOUR DIMENSIONS EXAMINED INCLUDE 1)CREDIT FACILITIES TO CUSTOMER. EXTENSION OF CREDIT FACILITIES TO CONSUMERS IS COMMON IN INTERIOR VILLAGES.CREDIT FACILITY IS GIVEN ON ESSENTIAL COMMODITIES LIKE RICE , OIL ETC BUT NOT FOR PACKAGED GOODS. 2)PRICING SOME RETAILERS IN INTERIORS CHARGE MORE THAN THE MRP. THEY JUSTIFY OVERCHARGING BY POINTING OUT THAT THEY SPEND MORE TIME AND MONEYTO FETCH THE PRODUCTS FROM RETAILERS. FESTIVAL DISCOUNTS GIVEN BY MANUFACTURERS TO WHOLESALERS AND RETAILERS ARE RARELY PASSED ON TO THE CONSUMER. 3)REASON FOR STOCKING A PRODUCT OR BRAND. RURAL RETAILERS STOCK A PARTICULAR ITEM USUALLY BCOZ THE CONSUMERS REQUEST IT ,AND TO A LESSER EXTENT BCOZ OF THE WHOLESALERS PUSH OR BCOZ A COMPETITOR STOCKS THE ITEMS. 4)INFORMATION SOURCE AND INFLUENCE:THE WHOLESALER IS THE MOST IMPORTANT SOURCE OF INFORMATION FOR THE RETAILER. THE WHOLESALER IS ALSO THEMOST IMPORTANT INFLUENCE ON THE RETAILER.

THIS MEANS THAT THE MARKETER SHOULD MOTIVATE THE WHOLESALER TO GET THE RETAILER IN THE RURAL MARKET TO STOCK ITS PRODUCTS MORE SO FOR NEWER PRODUCTS. 5)PURCHASE SOURCE:RETAILERS IN INTERIOR VILLAGES ARE NOT VISITED BY AGENTS OF DISTRIBUTOR . THEY VISIT FEEDER VILLAGES ONCE OR TWICE A MONTH TO BUY THEIR STOCK RETAILERS IN FEEDER VILLAGES PURCHASE ITEMS LIKE COSMETICS, TOILETRIES, DETERGENTS AND PACKAGED FOOD STUFFS FROM AGENTS OF DISTRIBUTOR WHO VISIT THEIR SHOPS AT REGULAR INTERVALS AND DELIVER THESE ITEMS. IMPLICATION IS THAT MARKETERS HAVE TO ENSURE THAT THE PRODUCTS ARE DELIVERED AT THE FEEDER VILLAGES. EFFECTIVE PROMOTIONS TO RETAILERS AND WHOLESALERS IN FEEDER VILLAGE IS NECESSARY FOR PUSHING THESE ITEMS TO RETAIL OUTLETS IN THE INTERIOR VILLAGES. 6)CHANNEL CREDIT:SMALL RETAILERS IN INTERIOR VILLAGES MAKE PURCHASES IN CASH WHILELARGE RETAILERS IN FEEDER MARKETS BUY ON CREDIT. 7)CHANNEL PROMOTION :RETAILERS IN INTERIOR VILLAGES DO NOT AVAIL OF DISCOUNT SCHEMES AS THEY PREFER NOT TO STOCK MORE. INFACT DISCOUNT SCHEMES SHOULD BE TARGETED TO RETAILERS IN FEEDER MARKET AS THEY APART FROM CARRYING STOCKS TO CATER TO THEIR REGULAR CONSUMERS THEY ALSO CATER TO THE NEEDS OF THE RETAILER IN THE INTERIOR VILLAGES. PROMOTION BY THE RETAILER :IF THE RETAILERS GIVEN GOOD COMMISSION ON THE PRODUCT SOLD AND CREDIT IS EXTENDED ON THE GOODS SOLD TO THEM ,THEY WILL ONLY BE TOO HAPPY TO RECOMEEND BRANDS. ******SATTILITE SYSTEMS & PROBLEMS OF DISTRIBUTION PLEASE REFER BOOK ON MR RAMKISHEN FROM OUR LIBRARY. FOR PHYSICAL DISTRIBUTION REFER THE ABOVE BOOK.

THE RURAL CONSUMER LOOKS FORWARD TO MARKETS AND FAIRS THAT ARE HELD AT REGULAR BASIS IN VILLAGES. HAATS:47000 HAATS HELD THROUGH OUT THE COUNTRY. THEY ARE WEEKLY OR PERIODIC MARKETS. PEOPLE ASSEMBLE AT A PARTICULAR PLACE ATLEAST ONCE A WEEK TO BUY OR SELL PRODUCTS. EACH HAAT CATERS TO THE NEEDS OF A MIN OF 10 AND MAXIMUM OF 50 VILLAGES FROM WHERE AN AVERAGE OF 4000 PERSONS COME TO BUY A RANGE OF DAILY NECESSITIES ANMD SERVICES. ARICULTURAL AND FOREST PRODUCTS AND VARIOUS HANDICRAFT ITEMS ARE PREDOMINANT GOODS DEALT IN THE MARKETS. URBAN GOODS ARE ALSO SOLD LIKE PACKAGED FOODS, TOILETRIES,COSMETICS AND CERTAIN LOW VALUE DURABLES LIKE UTENSILS. HAATS OFFER AN OPPORTUNITY FOR SALES PROMOTION CAMPAIGNS, NEW PRODUCT LAUNCHES AND SAMPLING OF NEW PRODUCTS. THERE ARE IDENTIFIABLE VARIATIONS , BOTH DURING THE DAY AND THE WEEK , IN THE MARKET ACTIVITY OF PERIODIC MARKET. FOR EXAMPLE DURING THE DAY , AGRI PRODUCE IS SOLD DURING THE FIRST HALF OF THE DAY AND IN THE 2ND HALF URBAN CONSUMER GOODS ARE PURCHASED. GOVERNMENT AUCTIONS THE HAATS . THE CONTRACTOR WHO WIMS THE AUCTION ADMINISTERS THEM.HE COLLECTS TAXES FROM TRADERS AND ALLOTS STALLS AND AREAS FOR TRADING. MELAS:MELAS ARE PART OF THE INDIAN CULTURE. THEY ARE HELD TO COMMEMORATE IMPORTANT EVENTS , CELEBERATE FESTIVALS OR SPECIFIC OCCASSIONS. MAJORITY OF THE MELAS HELD DURING OCT-NOV , JAN-APRIL WHICH COINCIDES WITH THE KHARIF OR RABI CROPS. MELAS ARE USUALLY JOYOUS AFFAIRS AND CREATE HOLIDAY ATMOSPHERE. CONSUMERS ARE IN A SPENDING MOOD.

FARMERS BRING THEIR FAMILIES AROUND. WOMEN WHO ORDINARILY ARE RESTRICTED FROM MOVING OUT OF VILLAGES HAVE UNIVERSAL SANCTION TO ATTEND MELAS. VARIATIONS , NOVELTY, CHANGE AND TRIALS ARE PART OF THE MOOD WHICH MAKES IT AN IDEAL TIME FOR MARKETERS TO LAUNCH THEIR PRODUCTS. SHARE OF MANUFACTURED GOODS IN MELAS IS 42%. ELCTRONIC LOGO DISPLAYS AND VIDEO PROJECTIONS HAVE REPLACED NAUTANKI AND PUPPETRY SHOWS. MAJOR MELAS IN THE COUNTRY : PUSHKAR MELA, KHUMBH MELA, SONEPUR MELA. NEW PLAYERS IN THE DISTRIBUTION CHANNEL:1)UNOFFICIAL CHANNELS : HERO HONDA DEALERS HAVE REPORTED TO THE COMPANY OF AN EMERGENCE OF AN UNOFFICIAL CHANNEL OF DISTRIBUTION - VILLAGE MECHANICS , LOCAL REAL ESTATE AGENTS , SHOPKEEPERS. THESE PEOPLE TAKE BIKES FROM THE OFFICIAL DEALERS IN 2S AND 3S AND DISPLAY IN THEIR PREMISES. THEY CLOSE THE SALE. HOWEVER THE PAPER WORK IS LEFT TO THE DEALER TO COMPLETE. 2)PUBLIC DISTRIBUTION SYSTEM :FAIR PRICE SHOPS CAN BE UTILISED TO SELL CONSUMABLES AND LOW VALUE DURABLES. 3)PETROL BUNKS:THEY TOO HAVE BECOME MULTI PURPOSE DISTRIBUTION CENTRES. 4)CO-OPERATIVE SOCIETIES:THERE ARE MORE THAN 4 LAC CO-OPERATIVES IN THE COUNTRY. THEY ACCOUNT FOR 62% OF THE TOTAL CREDIT SUPPLIED IN RURAL AREAS AND 34% OF THE TOTAL FERTILIZERS DISTRIBUTED IN THE COUNTRY. 5)NGOs:NGOs HAVE PROGRAMMES FOCUSSING ON SUSTAINABLE DEVELOPMENT THRU PROVIDING AVENUE FOR INCOME GENERATION. THEY COMMAND SUBSTANTIAL INFLUENCE WHERE PROGRAMMES ARE IMPLEMENTED.COS MAY JOIN HANDS WITH THEM FOR MUTUAL BENEFIT. THEY HAVE A BETTER REACH THAN INSURANCE AGENTS AND BANKS.

TATA AIG THE INSURANCE COMPANY HAS STARTED TAPPING THE RURAL MARKETS .THEY HAVE BYPASSES CONVENTIONAL DISTRIBUTION CHANNELS LIKE AGENCY NETWORKS/BANKS. 6)BAREFOOT SALESMEN :COMPANIES TRAIN SONS OF THE SOIL TO OPERATE AS BAREFOOT SALESMEN.FLUENCY IN LOCAL DIALECT AND FAMILIARITY WITH PERSONS AND TERRAIN IN THE AREA OF OPERATION WOULD BE AMONG THE FACTORS ENHANCING THE EFFICACY OF THE APPROACH. HE WORKS ON A COMMISSION BASIS . HE BOOKS ORDERS FROM THE RETAILERS IN THE VILLAGES WITHIN A LIMITED RAIDIUS. ON AGGREGATING ORDERS WHICH PERMIT DISTRIBUTION ECONOMIES , HE CO-ORDINATES WITH AREA STOCKIST TO ARRANGE DELIVERIES AND MAKES COLLECTION. 7)SYNDICATED DISTRIBUTION:MARKETERS OF HOUSEHOLD PRODUCTS COME TOGETHER , FORM A SYNDICATED TRADING ORGANISATION AND JOINTLY DISTRIBUTE COLLECTIVE GROUP OF HOUSEHOLD PRODUCTS IN RURAL MARKETS AND ENJOY SHARED ECONOMIES. NEW APPROACHES:RELATIONSHIP MARKETING : MARKETERS GO BEYOND TRANSACTIONAL SELLING TO ESTABLISH THAT THEY ARE NOT MERELY INTERESTED IN AN IMMEDIATE SALE BUT IN BUILDING A LONG TERM SUPPLIER CUSTOMER RELATIONSHIP. CASE STUDY :-HLL LAUNCHED RELATIONSHIP MARKETING IN 1999. IT WAS DIFFERENT FROM CONVENTIONAL CAMPAIGN THRU MEDIA, HOARDINDS, SPONSORED EVENTS ETC. IT INVOLVED BUILDING RELATIONSHIPS WITH THE CONSUMERS IN RURAL RURAL AREAS THRU EDUCATION PROGRAMMES, HOME TO-HOME CONTACTS AND CINEMA SHOWS. AIM:- TO INCREASE SALES OF PERSONAL CARE BRANDS INCLUDING PEPSODENT ITS MASS MARKET TOOTHPASTE . COLGATE 50% MARKET SHARE DOWN FROM 60%. PEPSODENT 42% MARKET SHARE. FOCUS:-TO TAP 1ST TIME USERS. CHINA 90% OF POPLN USES TOOTHPASTE

IN INDIA ONLY 47% USE TOOTHPASTE AND 27% USE TOOTHPOWDER. AN OVERWHELMING MAJORITY USES TOOTHPASTE ONLY ONCE A DAY. STRATEGY:PRODUCT :- HLL INRODUCED 15 GMS PEPSODENT TOOTHPASTE PACK TO TARGET 1ST TIME USERS. CAMPAIGN :- OPERATION BHARAT PROGRAMME WAS LAUNCHED. HLLS DOOR-TO-DOOR CAMPAIGN IN RURAL AREAS CONCENTRATED ON EDUCATING CONSUMERS BY HOLDING FREE DENTAL CAMPS.IT ALSO HAS A DENTAL EDUCATION PROGRAMME IN ASSOCIATION WITH NEW YORK UNIVERSITY. IN INDIA THERE ARE SCHOLARSHIPS FOR STUDENTS IN DENTAL COLLEGES FOR COLLABORATING IN RESEARCH AT SUCH CENTRES. A DENTAL CHECK UP CAMP WAS CONDUCTED IN SCHOOLS.MORE THAN 12 LAC STUDENTS HAVE BEEN COVERED. THERE IS A RURAL HYGIENE PROGRAMME. IT HAS A TARGET OF REACHING 20 CRORE PEOPLE IN 3.5 LAC VILLAGES. DOOR-TO DOOR SALES:- ABOUT 10 MILLION HOME SIN RURAL INDIA HAVE BEEN TOUCHED SO FAR. THE PROJECT INVOLVES SELLING DISCOUNTED PERSONAL CARE KIT, CONTAINING MINI PACKS OF SHAMPOO, TALC POWDER, TOOTHPASTE AND FACE CREAM.THE KIT IS SOLD AT RS 15. SOLD SEPERATELY THE PRODUCT WOULD TOGETHER COST THE CONSUMER RS 27/-. CINEMA :- HLL CONCENTRATED ON CINEMA TIME IN THE EVENINGS. THERE ARE STILL VILLAGES IN INDIA WHERE THERE ARE NO TVS BUT CINEMA SHOWS ARE QUITE POPULAR. EFFECTS:THE STRTEGY HAD ENCOURAGING RESULTS.SHARE & LOVELY SHOT UP BY 20% IN 1 YEAR IN MAHARASHTRA. SHAMPOO USE IN THE SAME MARKET SHOT UP FROM 6% TO 18% EVEN IF IT IS USED ONCE A WEEK.

INTERNET MARKETING:THE FOLLOWING IS AN EXAMPLE FOR INTENET MARKETING.

ITC's E-Choupal What was started by ITC as a cost-effective alternative supply chain system to deal directly with the farmer to buy products for exports is getting transformed into a meta market for rural India. The tobacco giant has already set up over 700 choupals covering 3,800 villages in four States which include Madhya Pradesh, Uttar Pradesh, Karnataka and Andhra Pradesh dealing with products ranging from soya bean, coffee, aquaculture and wheat. Consider why a farmer would opt for the e-choupal over the regular mandi. Farmers who strike orders on the Internet kiosk with ITC have a choice. They can either bring their produce to the ITC warehouse or factory and get reimbursed for the transportation cost or they could give their supplies to one of the collection centres that have been set up by the company for a cluster of villages or even deliver it to the sanchalak who runs the Choupal. Both ITC and the farmers make a neat saving by bypassing the middleman in the mandi. For instance, the farmer saves as much as Rs 250 per tonne on soya bean because he does not incur costs such as bagging, transportation, loading and unloading, to haul his goods to the mandi. The company, on the other hand, saves over Rs 200 a tonne by avoiding transporting the produce from the mandi to the company outlet even after reimbursing the farmer for transport. And the sanchalak, the local-level entrepreneur, also makes money by getting a 0.5 per cent commission on the total transaction made through his kiosk. But the kiosk can be used for reverse trading also for companies to sell products and services needed by farmers directly. And ITC is already putting together a strategy to leverage the infrastructure to market and distribute goods and services that farmers require. The facility will be available for selling both ITC's products as well as those of other companies of course, at a price. The company has taken some initial steps to get agricultural input companies to sell their products directly to farmers. It has already roped in US seeds giant Monsanto, fertiliser companies such as BASF and Nagarjuna Fertilisers and the State-owned MP State Seeds Corporation to take orders and market their products through the site. These companies can display their products on the Net, train farmers on how to use them, offer special prices, book orders from farmers and through the sanchalak deliver it at the village. Of course, ITC does not provide the service free. Companies have to pay a 10 per cent fee on the face value of the transaction and the tobacco company pays the sanchalak five per cent of the sales as commission for any product sold on his kiosk. ITC is also experimenting with using the kiosk to sell fast moving consumer goods (FMCGs). As the first step, it is selling gas lanterns and packaged vegetable oil. At the moment, these are being manufactured by third parties on behalf of ITC. Orders by farmers are being booked by the sanchalak who also arranges to have them

delivered to the farmer's doorstep. If the idea clicks, the platform would be available for other companies too, which could help ITC generate healthy revenues. The third initiative is to leverage the e-choupal to sell services. Talks are already on with various insurance companies for using the e-choupal as a medium for both educating and selling insurance products to the farmer in which the sanchalak becomes the insurance agent. The ITC virtual mandi is emerging as a one-stop shop for selling and buying of all kinds of products and services in the rural market. As ITC owns the infrastructure and interacts with the rural consumers, it will be able to cross-subside its products and services through the revenue obtained by selling the products and services of other companies.