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Rural Distribution: Session 9 Sales & Distribution Prof. Avinash Mulky
Rural Distribution: Session 9 Sales & Distribution Prof. Avinash Mulky
Rural Distribution: Session 9 Sales & Distribution Prof. Avinash Mulky
Rural Sector > National Average Himachal Bihar Sikkim Assam Orissa Tripura, Nagaland UP 9.8% 10.5% 11.1% 12.7% 15% 17-18% 20.8%
120 Mn Households ~ 12% of worlds population Almost as many upper middle income h/h ( 15.9 Mn rural; 16.6 Mn urban) { Rs. 45001-215000} More than twice the no. of middle income households ( 37.3 Mn rural ; 16.8 Mn urban) { Rs.22001 45000} Higher FMCG spend Rs.63,500 cr ( Rs. 49,500 cr urban) Source: NCAER, HLL
50%+ HLL, Colgate, Toyota 40 to 50% Hero Honda 30 to 40% Kinetic , Godrej, Cavin Kare 25 to 30% Marico, Cadbury, Glaxo, SKB
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75%+ Bicycles, Radios 50% + Batteries, Tea. Salt, Washing cake, Fans 40 % + Audio 20 to 30% Refrigerators, Colour TV, Pharma 10 to 20% Paints, Cement, washing machines
Source: ETIG
Access
Rural Indians
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Bottlenecks
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Poor Infrastructure limits mobility Connectivity on telephone is poor Connectivity on data is almost zero
Physical distribution
Factory (6)
(35)
Increased coverage SS can split cartons, offer smaller lots Rotation at sub-stockist increases
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SS does not wait for DD to arrive ( ~ 3 days) Reduction in lead times Lesser inventory locked up
Location : Kolhapur , Maharashtra Average sales: Rs. 14 lakhs per month Average stocks held : 15 days SKUs handled : 22 Staff : 4
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Ruchi
10 1.2% 21 Cheque 7days Nil
Dr. Morepen
1.25 3% 22 Cheque 15days Nil
Yearly revenue must be at least 30% of above to service > Rs. 800 / month
If costs come to Rs. 10,000 per line then millions of households can be connected, especially in rural areas
Incubated 5 product companies Developed a number of Access products Brought down cost per line to about Rs. 18000 Cor DECT WILL provides simultaneous
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35/70 kbps internet access Telephone connection supporting fax, PCO and speakerphone
Connectivity in villages
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SARI Project : Provide telephone and internet connectivity to every village in Madurai District ( TN)
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Local Service partner operates the network DHAN Foundation a NGO working with villagers on micro- credit provides support
A joint project of MIT Media Labs, IIT Madras, Harvard, McKinsey and I-Gyan
Case Study
n-LOGUE
n- LOGUE
Vision Connect ( Voice and internet) small towns and rural India
Mission ( Why)
N-LOGUE focus
Business Model..1
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Have a Local Service Provider ( LSP) akin to a cable operator who runs the show from a small town and provides services to villages in a 25 km radius Drive public access kiosks from villages. They buy services from the LSP
Business Model 2
n LOGUE Services Revenues
LSP 1 LSP 2
kiosk
kiosk
kiosk
kiosk
kiosk
Key technologies
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Cor DECT Wireless in local loop ISP in a Box ( MINNOW) Low cost PC Reliable power back-up
Rs. 40,000 per kiosk providing telephone, internet, low end Pentium PC with colour monitor, speakers, microphone, 16 hour back-up for phone, 4-hour back-up for PC, Indian language software
Current Deployment
Nellikuppam Pudupettai
Kullanchavadi
CWE3
Save time Save money Communication Easy access E-Governance Reduce middlemen Increase literacy Education Augment school education Source: TeNeT Group IIT Madras Entertainment Movies Music Photos Wealth CUSTOMER Reduce Cost Better Yield More Credit
Awareness
DD reach is important Sent out to the shop for purchase, can influence brands Exposed to communication Cost per contact is high Scalability of haat promotion
200,000 haats
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Rural Relations..1
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Run by Pradeep Lokhande, Pune Rs. 1.5 cr in billings over last 4 years Contact with over 5.93 lakh households in 28,000 villages in Maharashtra, Gujarat, MP, Rajasthan & UP Clients include HLL and P&G, Tata Tea, Asian Paints, Marico Market Research, Rural Communication Concept selling
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Oral Care, Hygeine Handwritten by college girls @15 paise per postcard
Rural communication
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Video on Wheels Bazaar / Haat operation Wall Painting House to house sampling Fairs Outdoor publicity Print Media Electronic Media
Affluence
India is poor because rural India is poor. Rural India is poor because rural people are drastically under employed. Unless rural families get employment, rural India cannot prosper M K Gandhi
If rural incomes go up by 1%
Key Players
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Government
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Central State
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Banks and Rural Credit Organisations NGOs Commercial organisations SHGs Rural entrepreneurs