Distribution Strategies for Rural Market – Indian Perspective
In our last post we talked about Product Strategies one can adopt while managing business in the rural markets. (Product Strategies for Rural Market – Indian Perspective). However, at most of the time its the distribution which acts as a limiting factor in growth of the business in rural areas. Let us see some successful distribution strategies for rural market.
One 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.
Below is how companies have succeeded in the reaching out to their audience in rural areas:
- 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.
- Use of co-operative societies: There are over 3 lacks 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.
- Utilization of public distributory system: 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. The manufacturing and marketing men should explore effective utilization of PDS.
- 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.
- 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.
- Shandies/Haaths/Jathras/Melas: These are places where the rural consumers congregate as a rule. While shandies/heaths are held a particular day every week, Jathras and 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 urbanite also like ‘Mankanavillaku’ in Malappara in Kerela, Kumbh Mela at Hardwar in U.P. ‘Periya Kirthigai’ at Tiruparunkunaram in Tamil Nadu.
- 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. 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.