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DISTRIBUTION IN RURAL MARKET

Introduction:The rural consumers normally purchase their household requirements from village shops, haats and mandi towns. There are 60lakh outlets, both in urban and rural markets in India. Out of this, 36lakh retail outlets are spread over 6lakh villages and making the products available in the store shelves is a challenge for the marketer.

Obstacles to reach the rural consumers:1. The distribution chain requires a large number of intermediaries and this increase the cost of distribution. 2. Non-availability of dealers. 3. Poor viability of retail outlets due to low business volume. 4. Inadequate banking facilities. 5. Only about 80% of the markets are connected by roads. 6. Interior village roads get flooded during monsoon. 7. Transport and communication facilities are generally poor in villages. 8. Credit requirement of channel members.

Channels of distribution:Marketing channel is the route taken by the title to the product as it moves from the producer to the ultimate consumer. Every marketing channel starts with the producer and ends with the consumer. It s a two-way communication. Consumers purchase goods through such channels and producers reach the consumers through marketing channels. The channel members consist of wholesalers and retailers who are middlemen in distribution and they perform all marketing functions.

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0 level Manufacturer

1 level Manufacturer

2 level Manufacturer

3 level Manufacturer

4 level Manufacturer
C&F agent

Retailer

Distributor

C&F agent

RuralDistributor consumer Consumer Retailer Distributor wholesaler

Consumer

Retailer

Retailer

Consumer

Consumer

1. Manufacturer- Consumer(Direct sale):-

In this case, the stocks are directly

supplied to the ultimate consumer avoiding middlemen and their commission. This benefits the consumer as well as the seller.

Examples:-

in many states, the government has encouraged farmers to sell

vegetables directly to urban consumers by setting up farmers market . These markets are known as Rythu Bazzars (Andhra Pradesh) and vivasayigal santhai (Tamilnadu). These markets are run by government and only farmers are allowed to sell the agricultural produce to the consumers in the market. The market works both in the morning and evening hours. The market committee in consultation with farmers fixes the rates for different commodities. The farmers come from about 25 villages surrounding the city and are allotted stalls by the market committee. The market committee also provides cold storage facilities for perishable commodities.

2. Manufacturer- Retailer-Consumer:Here, the stocks are sold to the consumers through a network of retailers.

Examples:- Mahindra and Mahindra tractors have appointed dealers in important rural
markets. A dealer either covers one district or two three tehsils. The company arrange for supply of tractors to these retailers from their manufacturing unit. The dealer looks after sale and service of tractors.

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3.Manufacture-distributor-retailer-consumer:The manufacturer appoints distributors in key rural markets and these distributors cater the needs of retailers in villages. This is a popular channel option used by manufactures.

Examples:- Manufacturers of tea, coffee and branded oil, appoint distributors in district/
taluka headquarters and distributors service the retailers in villages.

4.Manufacturer-company-depot/C&F agent-Distributor-Retailer-Consumer:In this case, the manufacturer moves the stocks to company depot/depot operated by a C&F agent and from these depots, stocks are supplied directly to distributors, who in turn service the retailers.

Example:- Agro-chemical companies like Syngenta, are using two/three intermediaries to

reach the farmers in remote villages.

5.Manufacturer-company-depot/C&F agent-Rural Distributor-WholesalerRetailer-Consumer:The manufacturer opens his own depots or appoints

C&F agents in state capital or in key cities in each state. The C&F agent, supply stocks to rural distributors. From the rural distributors, the stock move through wholesalers and retailers to reach the ultimate consumers.

Examples:- Distribution of consumer products by companies like HUL, Dabur, Nirma, Parle,
Marico in rural market.

Physical distribution:Physical distribution activities include order processing, handling of goods, packaging, ware housing, transportation, inventory control, banking and customer service. Considering the constraints in physical distribution of stocks in rural areas, many companies have come out with innovative solutions.

1) Company owned delivery vans:-

The van may be owned by the company or distributor. The delivery van takes the product to the retail shops in village. The

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distributors salesperson travels in the van and he delivers the stocks to the retailer and collects the money too.

Examples:-

Bharat petroleum has introduced rural marketing vehicle(RMV) way

back in 1999 in Punjab. The vehicle moves from village to village and fills LPG cylinders on the spot to rural customers.

2. Hired vans:- In this case, the wholesaler uses a hired vehicle to cover the retailers in
villages. Normally, the cost of operation of the hired vehicle is shared between the wholesaler and the company.

Examples:- (a) HUL distributors use hired vehicle to reach the rural retailers.
(b) Syngenta distributors use hired vehicles for delivery of pesticides as well as for collections.

3.bullock carts or camels:- these are used for covering remote villages with no motor
able road. In certain parts of Kerala, A.P and Westbengal, boats also used to cover villages that are not connected by roads.

4. Syndicate van distribution:-

In this case, the firms/distributors selling non-competitive

consumer goods come together to service the rural retailers. The delivery van carries the product of both the companies.

Example:- A firm manufacturing edible oils and another local firm dealing in biscuits,
namkeen and Atta could jointly service rural retailers, through van operation.

Conclusion:-

The rural markets and the consumers are scattered over a wide

geographical area. Considering low income of consumers, low density of population, poor condition of roads, it becomes a difficult and uneconomical to individually service all the villages. The marketers have to follow a selective approach, based on market potential in developing a network of distributors and retailers in rural markets.

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