Rural Distribution Channel Management

Introduction:

• There are 60 lakh outlets, both in urban and rural markets.

• 36 lakh retail outlets are spread over six lakh villages.

• The companies need substantial amount of working capital and large dedicated sales force.

Obstacles to reach the rural consumers

• The distribution chain requires a large number of intermediaries and this increases the cost of distribution.

• Non-availability of dealers.• Poor viability of retail outlets due to low business volume.• In adequate banking facilities.• Only about 80% of the markets are connected by roads.• Interior village roads.• Interior village roads get flooded during monsoon.• Transport and communication facilities are generally poor in

villages.• Credit requirement of channel members.

Why to increase distribution channel in rural area ?

• As per RMAI retail study , the tendency to shop from the nearby town city is high among consumers residing within a 25-km periphery, or in villages close to the highways.

• Whereas 80% of the finished goods are purchased from the near by towns and cities.

• Therefore, marketers need to ensure product availability at the right places to generate rural sales.

• Haats

Traditional Methods

• MelasBranded products in Haats

Company stalls in Melas

• Mobile Trading

Own brand mobiles

Development of Retailers in Rural Market

• Co-operative Societies• Public Distribution System• Agricultural Input Dealers• Potential Villages• Feeder Markets/Mandis• Post Offices and Bank

Branches

The Emergence of Modern Retail In Rural Areas

• ITC’s Choupal-Saagar, • DSCL Hariyali Kisaan Bazaar

• Godrej Aadhaar

• Tata Kisan Sansar

• 3A Bazaar

CONCLUSION:

• The rural markets and the consumers are scattered over a wide geographical area. Considering low income of consumers, low density of population, poor condition of roads, it becomes difficult and uneconomical to individually service all the villages. The marketers have to follow a selective approach, based on market potential in developing a network of distributors and retailers in rural markets.

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