Unit 7 Rural Distribution Strategies

Prof.
Dhirendra Apte
Symbiosis Centre for Management Studies
TY BBA : Sem 5 - Fundamentals of Rural Marketing
Chapter / Unit - 7 : Rural Distribution Strategies

Prof. Dhirendra Apte


Evolution of Rural Distribution Systems
Historically, the rural distribution system has included wholesalers,
retailers, mobile traders, vans and weekly haats.
In the feeder markets, retailers act as wholesalers and vice versa to

sell to small retailers who come from surrounding villages.
Small town retailers send their salesmen to villages to book orders

and supply goods to these small retailers.

One of the crucial jobs in rural marketing is

Distribution or making goods available in over 6.40 lac
villeges across the country, many of them in very
remote regions.
Setting up a perfect distribution channel is a big
challenge due to limitations of good roads, storage
facilities and finance options.
Distribution strategy of any business acts as a limiting

factor in growth of the business in rural areas.
Important point to be kept in mind while formulating
specific strategies for distribution in rural areas is the
characteristic of the product – Consumable or Durable i.e.
the shelf life of the product.
Perishable items need a robust logistics plan for effective
distribution compared to non-perishable items.


The first step in building a distribution channels for
rural markets is to understand the buying
behaviour of the rural customers.
Three factors determine the buying behaviour :-
1. Socio economic factors
2. Type of goods sold and
3. Place of Purchase

Factors determine the buying behaviour :
1. Socio economic factors : as per Income Level – High,
Medium, Low
2. Type of goods sold : Daily use items, Utensils, Clothing,
Food items, Electronic / electric gadgets, Vehicles,
Agricultural inputs and services
3. Place of Purchase : Rural retail store, Village fairs,
Shops / Malls in nearby bigger towns / Taluka / district ,
banks, post office etc.

Different Types of Distribution Strategies
 Direct Distribution. Direct distribution refers to selling your products
directly to customers without any need for a middleman – mostly used
in E-commerce business model.
 Indirect Distribution – thru various partners like – Mother warehouse,
Wholesalers, Distributors, Stockists, Retailers – mostly used by all
consumable goods manufacturers.
 Intensive Distribution : With special focus on any specific region or for
any specific Product(s).
 Exclusive Distribution : Products are made available in a region only
through a specially appointed distributor.
 Selective Distribution : Products / range of products are made
available only at a few Select points e.g. : Raymond Woollen Mills had
such a policy for their Top of the line Premium quality fabric range – the
criterias for werewhich was


Process :
1. Segment villages before expanding:
With numerous villages in India, it is impossible for an

organization to hit the rural market all at once.
Ideally, coverage of villages with up to 2000 and above
population could be the break-even point for a distribution
set-up. By doing so the percentage of villages covered
comes to only 10%, however the percentage of all the rural
population covered will be substantial.

2. Use of co-operative societies:
There are over 3 lacs co-operative societies operating in
rural areas for different purposes like marketing
cooperatives, farmers service cooperatives and other multi-
purpose cooperatives.
These cooperatives have an arrangement for centralized

procurement and distribution through their respective state
level federation. Such state level federation can be
motivated to procure and distribute consumables items and
low value durable items to the members to the society for
serving to the rural consumers.

2. Use of co-operative societies:
Use of cooperative societies–
These co-operatives societies are formed for different purposes
like marketing, providing credit facilities for various products in
rural areas. For eg. Farmers’ Service Co-operative Societies
function like a mini super market for rural consumers where
they sell soaps, detergents, 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.

3. Utilization of Public Distributory System ( PDS ):
The PDS in the country is fairly well organised. The revamped

PDS places more emphasis on reaching remote rural areas like
the hills and tribals.
The purpose of PDS is to make available essential commodities

like food grains, sugar, kerosene, edible oils and others to the
consumers at a reasonable price. The shops that distribute
these commodities are called fair price shops. These shops are
run by the state civil Supplies Corporation, co-operatives as
well as private entrepreneurs. Here again there is an
arrangement for centralized procurement and distribution.

4. Utilisation of multi-purpose distribution centres by petroleum/oil companies:
In order to cater to the rural areas the petroleum/oil companies have

evolved a concept of multi-purpose distribution centres in rural areas.
In addition to petrol/diesel, lubricants, these outlets also stock
consumables agricultural inputs like fertilizers, pesticides and seeds.
It is estimated that there are about 450 such outlets in operation in

the country. The rural consumer who has tractors, oil-engine pump
sets and mopeds frequent these outlets for their requirement. These
outlets can be profitably utilized for selling consumables and durable
items also.

5. Distribution upto feeder markets/mandi towns:
Keeping in view the hierarchy of markets for the rural consumers, the
feeder markets and mandi towns offer excellent scope for distribution.
The rural customers visit these towns at regular intervals not only for
selling the agricultural produce but also for purchasing cloth,
jewellery, hardware, radios, torch cells and other durables and
consumer products.
From the feeder markets and mandi towns the stockist or wholesaler
can arrange for distribution to the village shops in the interior places.
This distribution can be done by mopeds, cycles, bullock-carts, camel-
backs etc. depending upon the township.
�

6. Distribution upto feeder markets/mandi towns:

Keeping in view the hierarchy of markets for the rural Haats / Melas - These
are places where the rural consumers congregate as a rule.
While Haats are held on a particular day every week, Melas are held once or
twice a year for longer durations. They are normally timed with religious
festivals.
Such places attract large number of itinerant merchants. Only temporary
shops come up selling goods of all kinds. It can be beneficial for companies to
organize sales of their product at such places. Promotion can be taken, as
there will be ready captive audience. For convincing the manufacturing and
marketing man with regard to the importance of these places from rural
marketing point of view a visit to such places is necessary.

It is estimated that over 5,000 fairs are held in

the country and the estimated attendance is
about 100 million rural consumers.
Biggest fair ‘Pushkar Mela’ is estimated to

attract over 10 million people. There are 50
such big rural fairs held in various parts of
country, which attract many urbanite also.

7. Agricultural Input Dealers :

Fertilizers should be made available to the farmers
within the range of 4-5 km from their residence, as
per the essential commodities act.
This is why there are about 2 lakh fertilizer dealers
in the country, both in cooperative & private
sector.

7. Agricultural Input Dealers :

Example of Varana Nagar in Maharashtra proved an eye
opener in this regard where the sugar and milk co-operatives
have totally changed the life style of people.
The supermarket in Varana Nagar caters exclusively to rural

consumers. Similarly a co-operative supermarket called
‘Chintamani’ in Coimbatore (T.N) arranges free transit of
rural consumers to the supermarket of their purchases.
�


Ensuring Reach & Visibility –

The thing which is critical, is to get the required
quantity of Stock at the sales point as rural retailer
can‘t afford to buy in bulk.
Reaching upto Mandis, Towns, Semiurban centres –
Organizations have to cater to rural needs for
consumer durables, clothes, kitchen equipment and
agri-input by making their products available upto
feeder towns, semi-urban centers or mandis.

Targeting larger villages –There are only 85000 large villages out
of more than 6,40,000+ 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 funds for the same at this time. Organizations have
to ensure that their products are available at these times.

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.
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.

Converting unorganised sector manufacturers

into distributors –
Small scale manufacturers located in rural areas
have good knowledge of the territory and have
good sales network.
Organizations like Exide are attempting to convert
these small scale manufacturers to become their
dealers

Changing role of women in decision making


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.
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.

Agricultural input dealers –There are about 2,62,000 fertilizer

dealers in the country. During off season most of the dealers don’t
have any major activity to keep them busy. Companies need to
motivate them so that they can sell other products also during their
free time.
Haats / Melas – These are periodic markets which operate in a weekly

/ seasonal 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.

 Accessing Rural markets: Coverage Status in Rural Markets

Marketers have to ensure the reach of their product to retail outlets, and they
also need to motivate retailers to stock their product or brand.
Almost 50% of the rural population resides in the 1 lakh odd large villages.
These villages are connected by all-weather roads and they account for 60%
of rural wealth.
HUL, Eveready, ITC etc are the companies that have the most deeply
penetrated rural distribution system to cover the retail network up to the
2000+ population villages.

TY BBA : Sem 5 -
Fundamentals of Rural Marketing Chapter / Unit - 5
End of Chapter 7 :
Rural Distribution Strategies


TY BBA : Sem 5 -
Fundamentals of Rural Marketing Chapter / Unit - 5

Symbiosis Center for Management Studies

Dhirendra Apte


Dhirendra Apte

TY BBA : Sem 5 Fundamentals of Rural Marketing
Dhirendra Apte

What is Rural Marketing ?
Dhirendra Apte

TY BBA : Sem 5 Fundamentals of Rural Marketing

Unit 7 Rural Distribution Strategies

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Prof.

Symbiosis Centre for Management Studies

TY BBA : Sem 5 - Fundamentals of Rural Marketing

Chapter / Unit - 7 : Rural Distribution Strategies

Symbiosis Centre for Management Studies

TY BBA : Sem 5 - Fundamentals of Rural Marketing

Chapter / Unit - 7 : Rural Distribution Strategies

Symbiosis Centre for Management Studies

TY BBA : Sem 5 - Fundamentals of Rural Marketing

Chapter / Unit - 7 : Rural Distribution Strategies

In the feeder markets, retailers act as wholesalers and vice versa to

Small town retailers send their salesmen to villages to book orders

Symbiosis Centre for Management Studies

Symbiosis Centre for Management Studies

TY BBA : Sem 5 - Fundamentals of Rural Marketing

Chapter / Unit - 7 : Rural Distribution Strategies

One of the crucial jobs in rural marketing is

Symbiosis Centre for Management Studies

TY BBA : Sem 5 - Fundamentals of Rural Marketing

Chapter / Unit - 7 : Rural Distribution Strategies

Distribution strategy of any business acts as a limiting

Symbiosis Centre for Management Studies

TY BBA : Sem 5 - Fundamentals of Rural Marketing

Chapter / Unit - 7 : Rural Distribution Strategies

Symbiosis Centre for Management Studies

TY BBA : Sem 5 - Fundamentals of Rural Marketing

Symbiosis Centre for Management Studies

TY BBA : Sem 5 - Fundamentals of Rural Marketing

Symbiosis Centre for Management Studies

TY BBA : Sem 5 - Fundamentals of Rural Marketing

Symbiosis Centre for Management Studies

TY BBA : Sem 5 - Fundamentals of Rural Marketing

Symbiosis Centre for Management Studies

TY BBA : Sem 5 - Fundamentals of Rural Marketing

With numerous villages in India, it is impossible for an

Symbiosis Centre for Management Studies

TY BBA : Sem 5 - Fundamentals of Rural Marketing

These cooperatives have an arrangement for centralized

Symbiosis Centre for Management Studies

TY BBA : Sem 5 - Fundamentals of Rural Marketing

Since these societies have necessary infrastructure for storage

Symbiosis Centre for Management Studies

TY BBA : Sem 5 - Fundamentals of Rural Marketing

3. Utilization of Public Distributory System ( PDS ):

The PDS in the country is fairly well organised. The revamped

The purpose of PDS is to make available essential commodities

Symbiosis Centre for Management Studies

TY BBA : Sem 5 - Fundamentals of Rural Marketing

4. Utilisation of multi-purpose distribution centres by petroleum/oil companies:

In order to cater to the rural areas the petroleum/oil companies have

It is estimated that there are about 450 such outlets in operation in

Symbiosis Centre for Management Studies

TY BBA : Sem 5 - Fundamentals of Rural Marketing

5. Distribution upto feeder markets/mandi towns:

Symbiosis Centre for Management Studies

TY BBA : Sem 5 - Fundamentals of Rural Marketing

6. Distribution upto feeder markets/mandi towns:

Symbiosis Centre for Management Studies

TY BBA : Sem 5 - Fundamentals of Rural Marketing

It is estimated that over 5,000 fairs are held in

Biggest fair ‘Pushkar Mela’ is estimated to

Symbiosis Centre for Management Studies

TY BBA : Sem 5 - Fundamentals of Rural Marketing

7. Agricultural Input Dealers :