Rural Distribution

							        Impediments for any marketer to reach rural consumers are:

                 2) Lack of
                                 3) Large      4) Lack of      5) Lack of
1) Lack of      pucca roads
                                distances       proper        mass media
transport       connecting
                                between          retail          infra-
 facilities      towns to
                                 villages       outlets        structure
                  villages
There are three broad options:

        Intensive distribution

        Selective distribution

        Exclusive distribution
     The following figure depicts product movement routes thru the interiors.

     Level                 Channel measure                        Place
Level a           Company depot                            National / state


Level b           Redistribution stockist c&f agents,      Dist hqs
                  semi wholesalers, retailers

Level c           Semi wholesalers, retailers              Tehsil hqs,
                                                           mofussil towns


Level d           Itinerant traders, vans, petrol bunks,   Haats , large
                  semi wholesalers, retailers, co-op       villages
                  society
Level e           Retailers, vans, sales NGOs, govt.       Villages
                  agencies.
 47000 haats held throughout the country.

 Weekly markets

 Each haat caters to the needs of a min of 10 and
  maximum of 50 villages from where an average
  of 4000 persons come to buy a range of daily necessities and services.

 Urban goods are also sold like packaged foods, toiletries, cosmetics and certain low
  value durables like utensils.

 During the day, agri produce is sold during the first half of the day and in the 2nd
  half urban consumer goods are purchased.

 Government auctions the haats. The contractor who wins the auction administers
  them. He collects taxes from traders and allots stalls and areas for trading.
 They are held to commemorate important events,
  celebrate festivals or specific occasions.

 Majority of the melas held during oct-nov, jan-april
  which coincides with the kharif or Rabi crops.

 Share of manufactured goods in melas is 42%.

 Major Melas in the country: pushkar mela, khumbh
  mela, sonepur mela.
                                 Orders for Procurement

                               Commission on agricultural
 1.   Procurement                  costs and prices
 2.   Storage
 3.   Transportation
 4.   Bulk allocation
                          Recommends minimum support price




  Public Distribution System [PDS]

It is a system of distribution for essential
     commodities to a large number of
     people through a network of FPS
   Van /                Feeder towns
                        Wholesale and
Sub-Stockist               Retail



               Rural
               Market
 Stockists from nearby urban markets cover four to
  five rural markets per day.
 A distance of 60 to 70km. is covered per day.

 They operate mostly on a cash basis as per the
  desired frequency.

 They provide better control over distribution.
 Gets stock from super stockists appointed in the
  district.

 Super stockists typically cover 10-15 sub-stockists in
  the district.

 The sub-stockist covers all the outlets in his rural
  market like the regular stockist, by extending credit
  and services.
The rural distribution models of all major FMCG companies
can be divided into two universal models namely:



               Distribution model 1 (DM1).



               Distribution model 2 (DM2).
                            Company



                              C& FA



              Distributor                 Distributor
                (Rural)                    (Urban)



   Sub -
                            Wholesaler                  Wholesaler
Distributor


                             Retailer      Retailer
 Retailer      Retailer                                  Retailer
                             (Satellite    (Urban)
  (Rural)       (Local)                                  (Urban)
                               Mkt.)
           Company



            C & FA /
             Depot



           Distributor




Retailer                 Wholesaler




                          Retailer
                      Ahmedabad                       Nirma


     Hyderabad, Kolkata, Kanpur                       Depot


                                                      Direct            At the district level
                                                    Distributor

                       Sub-Distributor
At the Tehsil Level           /
                                                                  Covers 300-400
                       Big Wholesaler
                                                                  outlets directly



        Wholesaler                       Retailer          Wholesaler                       Retailer
   The structure followed by nirma consists of minimum channel partners. Direct
    distributors receive supplies from depot.

   Market cover is mainly through the wholesalers’ network and hence few
    distributors are required to handle bulk dispatches.

   In some areas big wholesaler plays a role of a sub distributor, supplying to the
    retailer and wholesalers in his area.

    Distributors are appointed and are the only channel partner recognized by the
    company.

   The distributor’s area is one or more districts, depending on market potential.

   The depot is company owned. The company supplies goods on a ready basis.
                        LG


                      Depot


                                              New Rural Office


                    C $ F Agents                 Warehouse




Exclusive Dealers                  Multiple Dealers



                    Consumers
               Philips


  Urban                   Rural
               Depot
Distributor              Stockist



 Retailer                Retailer


              Consumer
                Manufacturer




                Wholesaler in
                  Big City



                Wholesaler in
                Small Town /
                  Kasbah




Haat Retailer   Village Retailer   Mobile Trader




                  Customer
Objective of HLL’s Project Shakti:

 To create income-generating capabilities for
  underprivileged rural women, by providing a sustainable
  micro enterprise opportunity.

 To improve rural living standards through health and
  hygiene awareness.

 To create income-generating capability among underprivileged
  rural women by providing a sustainable micro-enterprise
  opportunity to them.
         Lux at Rs.5,

      Lifebuoy at Rs.2,

Surf Excel sachet at Rs.1.50,

      Pond's Talc at Rs.5,

Pepsodent toothpaste at Rs. 5,

Fair & Lovely Skin Cream at Rs.5,
                SM                SM

           SM         SW           SM
     SM
SM
      SW             Wholesaler
                       Town             SW
SM
     SM                            SM
           SM         SW
            SM                    SM     SW : Semi Wholesalers
                                         SM : Satellite Markets
Web:

http://en.wordpress.com/tag/business/
http://stockmarketing.in/news/moser-baer-unveils-innovative-distribution-
strategy-for-rural-expansion/9634/
http://streamlinesupplychain.wordpress.com/2009/03/15/huls-rejigged-rural-
distribution-network/

http://rajeshaithal.googlepages.com/structureofdistributioninruralareas%E2%8
0%93empiricalevidencefromvillagesinkarnatakaandgujarat

http://stockmarketing.in/news/moser-baer-unveils-innovative-distribution-
strategy-for-rural-expansion/9634/


Books:
The Rural Marketing Book – Pradeep Kashyap and Siddhartha Raut

Rural Marketing – Ramkishen Y

Rural Marketing - Krishnamurthy