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Distribution Strategy in Rural Marketing
Distribution Strategy in Rural Marketing
Distribution Strategy in Rural Marketing
STRATEGY
1
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
2
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
• 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
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
Channels of Distribution
Five layers of distribution channels for movement of
products from company depot to interior village markets:
RETAIL WHOLESALE
RURAL
MARKET
23
MARKETING
DISTRIBUTION MODEL 1
COMPANY
C&FA
DISTRIBUTOR DISTRIBUTOR
(RURAL) (URBAN)
24
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
25
DISTRIBUTION
DISTRIBUTIONMODEL
MODEL 2 2
COMPANY
C&FA / DEPOT
DISTRIBUTOR
WHOLESALER
RETAILER RETAILER
(LOCAL)
26
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
27
NIRMA DISTRIBUTION
NIRMA SYSTEM
DISTRIBUTION SYSTEM
NIRMA Ahmedabad
DIRECT DISTRIBUTOR
At district level
LG
DEPOT
CONSUMER
29
MARKETING
DURABLE GOODS COMPANIES DISTRIBUTION SYSTEM
-2
PHILIPS
DEPOT
DISTRIBUTOR STOCKIST
(URBAN) (RURAL)
RETAILER RETAILER
(URBAN) (RURAL)
CONSUMER
30
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
31
NIRMA DISTRIBUTION
DISTRIBUTION SYSTEM
OF FAKE PRODUCTS
MANUFACTURER
WHOLESALER IN BIG
CITY
WHOLESALER IN
SMALL TOWN/KASBA
CUSTOMER
32
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
34
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.
38
SYNDICATED DISTRIBUTION
Distribution is posing a major problem for a
new company to penetrate to Rural market.
40
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).
41
ITC’s DISTRIBUTION MODEL.
• Reached Rural Consumers through its e-
Choupal model for backward and forward
linkages for its agri related business
42
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.
43
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 .
44
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.
45
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.
46
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.
47
IDEAL DISTRIBUTION FOR RURAL.
• Per Capita Sales=Annual Sales/Market Population..
49
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’.
50
Challenges in Rural Communication
• Heterogeneity and
Spread
National Languages
16 Scheduled Languages
Local Vernaculars:
Over 114 recognized varieties,
216 mother tongues with more than 10000 speakers were recorded
in 1991
51
Key characteristics of heterogeneous rural
markets
• Widespread geographical dispersion (6,38,000 villages) many
of them are still beyond the reach of media.
52
Therefore, the requirement is threefold
53
Understanding the Rural Audience
54
A View of the Communication Process
MESSAGE
SENDER ENCODING ----------------------- DECODING RECEIVER
MEDIA
NOISE
FEEDBACK RESPONSE
55
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.
56
Developing Effective Communication
57
1. Profiling the target audience
58
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
59
2. Determining Communication Objectives
• Once the target market has been identified, the marketer and
the communicator must decide on the desired audience
response.
60
AICDA Model of Communication
.
Awareness Interest Conviction Desire
Action
61
Thus a marketer may seek one or more of the following
objectives:
• To bring about awareness among a certain percentage of the
target audience.
62
Message Design
63
Message content
65
• Language: should be simple, direct, designed
in the local language. It should consider
traditional and cultural aspects
66
Message Structure
67
Message Format
68
Context Association
69
Message Source
71
Communication Channels
72
• 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
73
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.
74
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
75
Factors in setting the Promotion Mix
76
Creating Advertisements for
Rural Audiences
77
• 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.
78
Scheme of Rural Advertising
Production
79
80
Conventional Media
• Radio
• Television
• Cinema
• Print
81
Non-Conventional Media
• Wall Painting
• Folk Media- Folk Theatre
Folk Songs
Folk Dances
• Magic Shows
• Puppet shows
• Video Van
82
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
83
Rural Marketers Rule
• Target top 100 commercial melas
84
Mandis
85
Personalized Media
• POP Dispalys
• Direct Mail
86
Rural Media
87
Communication Strategies
• Launch of new product
88
89