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V Ramanathan*
In the last two decades, the developed and developing nations have seen their economies change from being a manufacturing-led to a service-led, in terms of wealth creation, employment and investment. From the day, when our country opened the doors of our economy to the process of liberalization, privatization, and globalization, the manufacturers as well as the distributors of both domestic and global markets have started to herald their products in our rural destination. The increase in the number of south Indians working in rural environment, the exposure of products through the media, frequent trips abroad made by the rural educated youth, and the level of increasing literacy in south Indian rural public, have all created a brand consciousness among south Indian rural customers. They equate brand with quality, prestige, and status. At present, the penetration of Fast Moving Consumer Goods (FMCGs) in rural markets has delineated the new marketing strategies to promote their branded items available in all rural outlets. So, they have started to adopt channel enhancement strategies in south Indian rural markets, where availability determines the volumes and market share. The word retailing has its origins in the French verb retailer, which means to cut up, and refers to one of the fundamental retailing activities, which is to buy in larger quantities and sell them in smaller quantities.
Introduction
Retailing is the activity of selling goods and services to a final consumer for his/her own use. It is concerned with getting goods in their finished state into the hands of customers who are prepared to pay for the pleasure of eating, wearing, or experiencing particular product-items. Retailing is all about distribution of goods and services. The word retailing has its origins in the French verb retailer which means to cut up, and refers to one of the fundamental retailing activities, which is to buy in larger quantities and sell them in smaller quantities. Retailers form the link between the manufacturers, wholesalers, agents, and the customers. They are the persons who keep in touch with the customers and get an opportunity to understand their needs and preferences.
* Lecturer, Department of Management Studies, Sri Chandrasekharendra Saraswathi Maha Vidyalaya, Enathur, Kanchipuram, India. E-mail: ram2005_mba@yahoo.co.in
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Source: Principles of Retail Management by Rosemary Varley, Palgrave Macmillan publications. Ibid.
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deprives customers of the benefits of the organized retail industry, such as stabilized pricing, wide range of selection, and comfortable shopping. Many new players, domestic as well as international, are entering the Indian retail industry. It was only in the late 1990s that FMCG companies organized heavy retailing in India. Till 1990, a few of the organized retailing industry were controlled by the manufactured-owned retail stores. With the liberalization of Indian economy in 1990, FMCGs entered the Indian retailing industry. Encouraged by the response among consumers to branded retail stores, Indian entrepreneurs have set up large stores, shopping malls, and multiplexes.
of their
FMCGs
to
retain the
rural
customers
confidence and
win
their loyalty.
Data gathered from NSS survey.
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advertisementsin rural markets has made the FMCGs prefer mass media advertisements. According to a recent survey conducted by the
the
non-food
categories such as toilet soaps, washing powders and liquids, tooth pastes, and detergents are heavily promoted by the producers of FMCGs in the rural market; The FMCG promoters now realize that copartnership retailing strategies can help penetrate the south Indian rural markets. Through these strategies, the FMCG promoters identify the prospective retailers from
Retailing Channel Enhancement Strategies Adopted by FMCG Companies in South Indian Rural Markets
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respective rural markets and educate them to promote the FMCGs in the rural markets through proper training tools; Most of the promoters of FMCGs are insisting the rural retailers to design their outlets, which attract the rural consumers to buy from their assortments; The retailers in south Indian rural markets prefer to promote particular brands available in their assortments which provide them a decent and consistent profit margin. Therefore, all the FMCG promoters try to attract the rural retailers by offering them a sizeable and lucrative margin; The promoters of FMCGs have started to patronize the long daydreams of rural retailers, i.e., conducting sales contests for them, as is being done for urban retailers, where the top selling retailers from rural markets are identified and given awards (cash awards and incentives), rewards (best retailer award), and special family package trips to various placesboth to domestic and foreign places of attraction; Producers of FMCGs have started redesigning the traditional distribution channel systems adopted in south Indian rural markets. Normally, FMCGs decline to offer exclusive dealership for rural retailers. Now they are encouraging the rural retailers to go for exclusive dealerships for FMCG products by way of offering good profit margin for their investment and provide a reasonable credit support; Promoters of FMCGs are insisting that their direct marketing teams assist the rural retailers to promote their respective brands. The direct marketing teams of FMCG promoters jointly promote their products with rural retailers and assist them to handle rural consumers effectively; The rural retail outlets have been stimulated to store fast moving brands of different FMCG product categories; The rural retailers are educated to manage the cost of retailing their products, and manage their inventories and the cost associated with it; Most of the promoters of FMCG believe in the importance of relationship marketing, and the same is inculcated among the rural retailers by educating them in the ways of managing the relationship with rural consumers; Even though support has been extended by the FMCG manufacturers and marketers to rural retailers to promote their products in rural markets, many retailers detest going for mass retailing of FMCG items
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because of the financial burdens. For this reason FMCG promoters help the rural retailers to get loan from rural infrastructure promotion banks. FMCG promoters are extending their support in the form of giving guarantees to rural retailers and recommending micro loans from various rural banks to the retailers; Nowadays, the banks in rural areas are compelled to help rural retailers in sanctioning both long-term and short-term loans for meeting the retailers capital requirements and operating expenses; Of late, the FMCG promoters are keen to apply the new concept of retailing entrepreneurship in rural south Indian markets, through which they identify the educated unemployed youth in various rural areas with the help of Entrepreneurship Development Program (EDP) in coordination with rural NGOs and motivate the rural youth to actively participate in the venture of retailing FMCGs in their geographical locations; and
Most of the FMCG promoters have entered into a tie-up with rural Non-Governmental Organizations (NGOs) through a program called Rural Entrepreneurship Development Program for identifying, motivating, and training educated unemployed young retailers to involve themselves in retailing of FMCG items.
Conclusion
Generating awareness pays dividends only when steps are taken to ensure continuous availability of products. In the south Indian rural markets, availability determines volumes and market share, because the consumer usually purchases what is available at the outlet, influenced largely by retailers. Therefore, over the decades, the producers of FMCGs have progressively strengthened their distribution reach in the south Indian rural market. Direct rural distribution begins with the coverage of villages adjacent to small towns. The companys stockists in these places are made to use their infrastructure to distribute products to outlets in these villages. To fully realize the potential and prospects in south Indian rural markets, FM CGs require a ma trix of init iati ves, suc h as und erst andi ng of customer behavior and tastes, providing moral support to rural retail outlets (business partners), and ensuring the availability of goods at the doorstep of consumers through retail outlets. Above all, it calls for innovation, perseverance, and patience.
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Bibliography
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6. Krishnamacharyulu C S G and Lalitha Ramakrishnan (2002), Rural Marketing An Integrated Approach, Pearson Education (Singapore) Press Ltd. 7. Michael Hugos (2002), Essential of Supply Chain Management , John Wiley & Sons, Inc. 8. Philip Kotler, Siew Meng Leong, Chin Tiong Tan and Swee Hoon Ang (2006), Marketing ManagementAn Asian Perspective, Prentice Hall. 9. Richard J Varey (2002), Marketing Communication, Principles and Practices, Routledge, 11 New Fetter Lake, London, Taylor and Francis Group. 10. Rosemary Varely and Mohammed Rafiq (2003), Principles of Retail Management, Palgrave Macmillan. 11. Sanal Kumar Velagudhan (2002), Rural MarketingTargeting the Non-urban Consumers, Response Books, a division of Sage Publications. 12. Varma and Aggarwal (2006), Rural and Agricultural Marketing, Forward Publishing Company. Reference # 02J-2007-11-05-01
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