Distribution networks, ideal Distribution model for Rural market

27/03/2021 0 By indiafreenotes

One of the ways would be using company delivery mass, which can serve two purposes it can take the products to the customers in every hook and corner of the market and it also enables the firm to establish direct contact with them and thereby facilitate sales promotion.

Project Shakti:

HLL has come out with a new distribution model with main objective to develop income-creating capabilities of underprivileged rural women by providing a sustainable enterprise opportunity and to improve rural living standards through health and hygiene awareness.

Typically, a woman from the Self Help Group is selected as a Shakti entrepreneur and receives stocks Lifebuoy, Wheel, Pepsodent, Annapurna salt, Clinic Plus, Ponds, LUX, Nihar, 3 Roses tea, etc. at her doorstep from the HLL rural distributor. She sells directly to consumers as well as to small merchants in the village.

Each Shakti entrepreneur services 6-10 villages in the population range of 1000-2000 people. With training and hand-holding by the company for the first three months, she begins her journey selling the products door-to-door. Normally the entrepreneur has a turnover of Rs.10,000 to Rs.25,000 per month and earns a profit of Rs.800 to Rs.2,000 a month.

Back-haul method for the distribution vehicles:

Organising a suitable back-hual method for distribution vehicles may prove to be an economic to transport the “urban goods” like soap, detergent, oil, cream, shampoo, tooth paste, and other daily necessary items for the rural consumers and in the return journey, the energy verticals will transport the fruit and vegetables etc. from rural areas to the nearest towns and cities for distribution among the urban consumers.

But this needs a well co-ordinated “VMS” distribution strategy in which the manufacturer, distributor/relation and the customers jointly make a strong distribution chain. Annual “melas” and “fairs” organized are quite popular and provide a very good platform for distribution because profit visits them to make several purchases. According to the Indian Market Research (IMRB) Burean, around 8000 such nulas and fairs are held in the rural India every year.

Rural markets have the practice of faxing specific days in a week as weekly market days, i.e., “Haats” when exchange of goods and services are carried out. This is another potential low cost distribution channel available for the marketers.

Also, every region consisting of several villages is generally served by one satellite town, formed as “Mandia” or Agri-markets where people prefer to go and buy from their commodities. The marketers using their feeder fown will be able to cover a large section of rural population.

The other distribution strategies for the rural population are as under:

  • The general insurance companies may promote their policies of health insurance, crop insurance and vehicle insurance through the existing co-operatives.
  • Marketers may arrange more number of wave-houses for storage and re-packaging into smaller pouches for which employing local villages will work profitable and popular.
  • All communication in the rural areas must be in the regional language and dialects.
  • Markets need to develop innovative packaging technology which would be economic, protective and improve shelf-life of goods.
  • In addition to focusing on targeted promotions and advertising, there is an urgent need to work on economical packaging, dual pricing and special size of PMCQ and household products.
  • Marketers need to place emphasis on retailers directly rather than depending on the wholesalers for distribution in the rural market as this has not proved to be very effective marketing channel.
  • Marketers targeting the rural market should be well aware about the seasonality of the business. Because the trade is seasonal, employment and disposable income can fluctuate arrange the villages during the year. This means that business should view market research data that relies on yearly aggregate statistics with caution.
  • Marketers must trade off the distribution cost with incremental market penetration.

Syndicate Distribution:

Companies selling non-competitive goods can join together and distribute the products through a common distribution channel. Example- P&G has made use of the distribution channel of Marico for selling their product.

Satellite Distribution:

In this system, the company appoints stockists in important towns. These stockists are responsible for placing orders with the company, receiving the stocks, sorting of stocks and supply the goods in small lots to the retailers and merchants situated in rural areas and in and around the towns.

The stockist is given 15-30 days’ credit by the company. Over a period of time, along with increase in business, some of the good retailers will be elevated as stockists. Therefore, many retailers hover around a particular stockist. The advantage of this system is it enables the organisation to penetrate interior markets. Example- Companies like Nestle, Marico, Eveready batteries have appointed stockists to service the village merchants and the merchants are met at fortnightly/monthly intervals through van operations.

Essential things for effective distribution

  • Focus on the local market is essential for a better grip on the situation. Since localized distribution hubs are supposed to cater a limited geography, they can work in a better way.
  • All the stakeholders should be provided with adequate training. Yes, it is very much required because everyone has to be on the same page when you address the needs of rural consumers. Align your customers, vendors, and employees before you derive and implement effective marketing strategies.
  • Tweak the product promotion and marketing tactics to the local needs. Since there is incredible diversity in cultures, traditions, and languages in rural India, the model has to be flexible and adaptive.
  • Your company should make effective use of technology to reach the masses. Yes, there are ways to unleash the immense potential by thinking out-of-the-box ways of reaching people. Companies like Vritti iMedia have proved it. They made outstanding use of bus stands to promote products and services. Audiowala Bus Stand is a brilliant example of creative thinking and innovation.
  • Service delivery is equally important. Marketing strategy shouldn’t be limited to promotion and distribution only. Rather, it should be equally efficient when it comes to delivering services.
  • Always remember that an emotional touch works excellently in the rural areas. Once the trust is developed in the product, it is important that you live up to it.