RURAL MARKETING-

DISTRIBUTION
STRATEGY
Retailing
 Retail is the sale of goods to end users, not for
resale, but for use and consumption by the
purchaser.

 Retail involves the sale of merchandise from a

single point of purchase directly to a customer who
intends to use that product.
 Types of Retail Stores

 Department Stores: Sell a wide range of merchandise

that is arranged by category into different sections of the
physical retail space.
 Grocery Stores and Supermarkets: Sell all types of
food and beverage products, and sometimes also home
products, clothing, and consumer electronics as well.
 Warehouse Retailers: Large no-frills warehouse-type
facilities stocked with a large variety of products
packaged in large quantities and sold at lower-than-retail
prices.
 Types of Retail Stores
 Specialty Retailers: Specialize in a specific category of
products. Nike is examples of specialty retailers.
 Convenience Retailer: Usually part of a retail location which
sells gasoline primarily, but also sells a limited range of
grocery merchandise and auto care products at a premium
"convenience" price from a brick-and-mortar store.
 Discount Retailer: Sell a wide variety of products, often
private labeled or generic brands at below-retail prices.
Discount retailers like best price, 99 dollars, metro sometimes
sell discontinued merchandise at lower-than-wholesale prices
and pass the savings onto their customers.
 Rural Retail System

 Rural India accounts for 65% of retail outlets in the

country. The logistics of feeding the 35 lakh retail
outlets spread over 6 lakh villages is a tough task.

 The high distribution costs due to geographical spread

and low volumes per outlet act as a barrier to the
entry of products in rural markets.
Rural Retail System
 The average monthly sale per village shop is less
than Rs. 5000, which restricts the variety and range
of the products stocked.

 Despite the same product being available in the

village shop, 58% of villagers prefer to buy these
from a haat because of better price, quality and
variety.
 Rural Retail Shelves
 The first task is making brands available, but
simultaneously marketers also need to make efforts to
ensure their visibility on rural retail shelves.
 Products are stocked in a cluttered and disorganized
way.
 Slow-moving products covered with dust
accumulated over a period of time are a common
sight.
 The visibility of brands is very poor due to the
absence of proper racks and display boxes and stands.
 Rural Retail Shelves
 Brands that are advantageous to the retailer’s business
are displayed prominently.

 Therefore marketers need to devise strategies to

occupy rural retail shelf space by providing display
and storage systems. (wall mounted display strips for
fairness creams and ice boxes for soft drinks.)
The Emergence of Modern Retail in Rural India

 ITC became the first organized player in the rural

retail by launching the country’s first rural mall
“Choupal Sagar”
Choupal Sagar
 Opened in 2004
 Diverse product range from FMCGs to Electronic
Appliances
 Farmers can sell their products and get cash. That
cash could be used to purchase products.
DSCL Hariyali Kisan Bazar
 DCM Shriram Consolidated Limited Opened
Hariyali Kisan Bazar in 2002
 Quality Farm produce under one roof
 The largest rural retail chain of India in terms of
product categories and volume of business
Tata Kisan Sansar
 In 1998 company started Tata Kisan Kendra later
renamed as Tata Kisan Sansar in 2002
 One stop farmer solution shop
Godrej Aadhaar
 http://www.aadhaarretail.com/
 Joint venture between Future Group and Godrej
 Currently 40 stores in Gujrat and Punjab
 Consumer durables, food groceries, apparels,
footwear's etc.
Wholesaling

 Wholesaling or distributing is the sale of goods or

merchandise to retailers; to industrial, commercial,
institutional, or other professional business users; or
to other wholesalers and related subordinated
services.

 50% of rural consumption is still routed through

wholesalers because they are located in nearby feeder
markets, which are frequented by village retailers to
replenish stocks.
The Challenge of Availability
 Generating awareness yields results only if steps
are taken to ensure constant availability

 In rural India, availability determines the volume

and market share because the consumers are
influenced by the retailers and purchases what is
available at the outlet.
Challenges in Rural Distribution

 Large number of small markets

 Dispersed population and trade
 Poor road connectivity
 Poor availability of suitable dealers
 Low density of shops per village
Challenges in Rural Distribution
 Inadequate banks and credit facilities
 Poor storage system
 Low investment capacity of retailers
 Poor visibility and display of products on rural
shop shelves.
 Poor communication of offers
Distribution Strategy

 Ensuring Reach & Visibility –being first on the

shelf in the product category and developing a
privileged relationship with the retailer is a source of
competitive advantage to consumer good companies.

 Reaching Mandis, Towns, Semiurban centres –

Organizations can cater to rural needs for consumer
durables, clothes, kitchen equipment and agri-input
by making their products available up to feeder
towns, semi-urban centers or mandis.
 Distribution Strategy
 Targetting larger villages – There are only 85000
large villages out of more than 6,38,000 villages. But
they have 40% of the rural population and 60% of total
consumption.

 Understanding of Peak seasons – Peak season times

in rural parts are Festivals, harvest and marriage
seasons. Bulk of the demand for the consumer durables
is concentrated during these times. The rural consumers
are in shopping mood and have the cash for the same at
this time. Organizations have to ensure that their
products are available at these times.
Distribution Strategy

 Delivery vans – Company delivery vans which can

serve two purposes; they can take the products to the
customers in select rural areas and also enable the
firm to establish direct contact with them and thereby
provide an opportunity for promotion.

 Company’s own Distribution Network – Project

Shakti of HUL is one such example.
Distribution Strategy
 Collaboration for Distribution – Various
organizations with comparatively lesser distribution
reach can collaborate with organizations that
already have achieved high penetration levels in
rural areas. For eg. P&G had tie-ups with Godrej,
Marico Industries and now its planning one with
Nirma for distribution of Camay soaps.
Distribution Channels : Vans

 Mobile vans have an important place in the

distribution and promotion of products in villages.
 In this system, the salesman loads the van with stocks
from the nearest stockist or company stock point and
works the surrounding markets.
 Eveready batteries and torches are market leaders. It
established an extensive distribution network that
includes 1000 vans, 4000+ distributors and 44
warehouses. These vans reach 6 lakh retail outlets
directly.
Distribution Channels : Rural Mobile Traders – The Last-Mile Distribution

 Mobile trading is an age-old, direct to home,

unorganized distribution system in rural India.

 They carry their product on bicycles, mopeds,

handcarts or on foot.
Distribution Channels :Rural Mobile Traders –
The Last-Mile Distribution

 Mobile traders have a deep reach since they target

small villages to avoid competitions from shops in
bigger villages.

 Their direct selling approach ensures high

involvement on the part of consumers and since they
have a fixed and committed consumer base, mobile
traders enjoy a good rapport with their clients.

 Mostly sell fakes and local brands.

Distribution Channels in Rural India

 Use of cooperative societies– There are over 4 lakh

co-operatives operating for different purposes like
marketing, credit and dairy cooperative in rural areas.
For eg. Farmers Service Co-operative Societies
function like a mini super market for rural consumers
where they sell soaps, cloth, seeds, fertilizers,
pesticides etc. at economical and reasonable prices.
Since these societies have necessary infrastructure for
storage and distribution, companies may contact these
societies to sell their products.
 Distribution Channels in Rural India

 Use of Public Distribution System – In India, the

Public Distribution System is well organized. There
are about 4.37 lakh fair price shops operating in the
country. Since the PDS outlets cover the entire
country they can be utilized for marketing
consumable items and low value durables in rural
areas.
 Distribution Channels in Rural
India

 Utilization of Petrol Pumps – These petrol pumps,

in addition to petrol/diesel, oil and lubricants are also
selling consumables such as soaps, detergents,
biscuits etc, particularly on the highways. These
bunks may also think of stocking certain consumable
agricultural inputs like fertilizers, seeds and
pesticides.
Distribution Channels in Rural India
 Agricultural input dealers – There are about
2,62,000 fertilizer dealers in the country. During off
season most of the dealers don’t have business, hence
the companies may try to motivate them so that they
can sell other products during their free time.
 Distribution Channels in Rural
India
 Shandies/ Haats/ Jathras/ Melas – Shandies are
periodic markets which operate in a weekly cycle.
They offer a ready distribution network and are
steady, cheap and appropriate.
 Haats can be used effectively for distribution,
demonstration and sampling of daily need products.
 Melas work best for introducing new brands
and building brands through the organization of
events at the venue.
Rural Distribution Channels Layers

 There are five layers of distribution channels for

the movement of products from the company depot
to the interior village markets.
Rural Distribution Channels Layers

Layer Channel partner Location

Layer 1 Company depot / C&F A National/state level

Layer 2 Distributor/van operator/ super District level

stockist/ rural distributor

Layer 3 Sub-distributor/ retail stockist/ sub- Tehsil HQ, towns and large
stockist/ star seller / Shakti dealer villages

Layer 4 Wholesaler Feeder towns, large

villages,haats

Layer 5 Retailer Villages, haats

 E Rural Marketing
 E-Marketing can be defined in broader terms as not
only trade in goods and services across internet but
also new ways of conducting business and
communicating with customers, suppliers and
colleagues
Challenges in E-rural Marketing
 Poor literacy rate
 Remote village locations
 Cash crunch of farmers, immediate cash transaction
system and reluctance of banks to provide soft
loans to farmers.
 Economic, low-cost solutions – any technology
solution aimed at benefiting the masses in rural
India must be affordable and low-cost