Marketing of non-farm products

In general, non-farm products are synonymous with manufactured items. However, as economic terms, non-farm products, as opposed to farm products are those which after some sort of processing in small units in the rural areas, themselves become value-added and are traded at premium. Such non-farm activities in rural areas include tobacco curing, small-scale oilseed crushing, tanning on cottage-scale, etc. Beside these, collection of milk, woolshearing, dates-curing, primary processing of raw sugar (shakkar and gur-making are non-farm activities and eventually become non-farm products. !his sort of small-scale industry in the rural areas over a period of time has grown appreciably. "arketing in rural areas# $nlike marketing in urban areas, a comple% and multisectoral operation, marketing in rural areas is based on age-old traditional way of processing and distribution. !he bulk of marketing function is usually performed by persons traditionally known as, &middlemen' or &distributors' and also called, whole sellers, retailers, or brokers. !hey include trader-cum-peasants in various &open markets'. In some comparatively bigger rural areas where production of a particular commodity gets concentrated, a sort of a market develops on permanent basis. (or instance, )unnri, district "irpurkhas (Sindh is perhaps the largest chilis market in *akistan. +fficiency# In order to improve the working and the efficiency of such rural markets, efforts be made to revitalise them altogether. !heir efficiency is much more important if one was to keep in mind that these are the markets with which farmers come in contact with directly and from which they earn their incomes. !he reason of their failure could be traced to their uni-sectoral nature and singlepurpose approach. ,ll of such programmes were based on the theory that it was the ignorance about the modern agricultural practices which was the basic cause of low production and conse-uently the rural poverty. In other words, these programmes remained production-oriented with little stress on marketing. !hey .ust failed to appreciate as to how the benefits of increased production could be made available to small farmers. !he integrated rural development programme (I/0* was still yet another rural development effort. 1o doubt, it had some innovative features, like people's participation in decision-making, planning and implementation through the branches of various nation-building departments at dispersed rural focal points. But even these arrangements failed to prove effective as these centres largely remained pre-occupied in the supply of various input items.

Inade-uate facilities# It is due to insufficient facilities in the rural areas that farmers, particularly owners of small land holdings, have to sell their products at highly unfavourable prices. !he markets in the rural areas are still ungoverned by any legal framework. However, in the province of *un.ab a concept of 2(eeder "arkets3 has been translated into practice according to which certain rural markets have been linked with the ad.acent regulated wholesale markets in the urban areas. In fact it is an e%ercise towards the revitalisation of rural market under a legal cover. 1on-farm products# "arketing mechanism of the non-farm products in the rural areas is not a problem like that of farm products. Selling non-farm products such as edible oils, oil cakes, raw sugar and gur, domestically processed fruits and vegetables such as chutney achar, murabba etc., curd date, hides and skin, animal bones, wool and hair as well as various items of inputs (such as seeds, pesticides etc. , take place mostly through &arhthis' (commission agents . !he price fi%ation, in the case of farm produce, is mostly based on the open auction sale and the prices of non-farm products are mostly fi%ed by producers themselves. In some cases, price fi%ation is also done through bargain between buyers and sellers. Suggestions# In view of the above problems, some suggestions are made for improving the marketing of non-farm products# (4 Suitable varieties of fruits and vegetable may be evolved which are all e%clusively meant for processing. (5 (acilities such as transportation, may be made available at cheaper rates in rural areas. (6 In order to end the dependency of non-farm products, it is proposed that separate walled markets be established e%clusively for sale-purchase of non-farm products, in rural areas. (7 1on-farm product of greater value may be processed and produced in the rural areas. (8 , survey of non-farm products and an estimation of those which can be produced with advantage may be carried in prospective focal areas and pilot pro.ects be prepared by -ualified consultant, keeping in view the findings of the survey. (9 1on-farm products may not be taken for granted. /ather proper arrangement of the necessary items for the rural inhabitants like te%tile goods, electric and electronic appliances may also be made.

DISTRIBUTION CHANNEL IN RURAL MARKETING

ENTERINING THE RURAL MARKET

New Entrant :ompany starts /ural "arket first ; then ventures in $rban "arket (eg :avin )are :hik ; "eera Shampoo Mid- Entrant :ompany starts /ural "arket after success in $rban "arket (eg H<<, <= Late - Entrant :ompany starts /ural "arket after success in $rban "arket for long (eg :adbury

urpose

R G A

Retain Grow Add

t!e market

RURAL MARKETING "TRATEG#

L *rofile the /ural "arket A *rofile the :onsumer N * N "arket Behaviour ; "/ I Segmentation !argeting *ositioning N G E --------------------------------------------------------------------------------$ /ural *roduct E /ural *ricing % + /ural 0istribution U T /ural Sales (orce "anagement I /ural :ommunication & --------------------------------------------------------------------------------N ' "onitor the /ural Strategy E E , ( ) (eedback ; :ontrol A % K

(E-EL& MENTAL MARKETING

0evelopmental marketing is a process through which awareness is created >could be demonstration >could be presentation >(ree samples >could be through up eg tie up with Bank tie up with *etrol?0iesel pumps ,wareness (Hyndai did with I@: and *1B and SBI subsidiaries >6AB sale of Hyndai!rial from /ural?Semi $rban areas
*urchase *ost-*urchase Satisfaction

%o.gate / program &peration 0agruti Switch from :harcoal to :olgate tooth powder HLL (ree samples of <ifebuoy :avin )are C (ree sample of :hik :hampoo Marico Industries C arac!ute coconut oil Sudhata ki pehchan smell to differentiate between real and spurious

Rural Marketing- Distribution strategy CHALLENGES IN RURAL DISTRIBUTION 1. Large number of small markets 2. Dispersed population and trade 3. Poor road connectivity . Multiple tiers !. Poor availability of suitable dealers ". Lo# density of s$ops per village %. &nade'uate banks and credit facilities (. Poor storage system ). Lo# investment capacity of retailers 1*. Poor visibility and display of products on rural s$op s$elves. 11. Poor communication of offers Distribution +trategy Ensuring Reach & Visibi i!" # ,$e t$ing #$ic$ is critical- is to get t$e +tock .eeping /nit rig$t- as rural retailer can0t afford to keep many different +./s. &n suc$ an environment- being first on t$e s$elf in t$e product category and

developed a privileged relations$ip #it$ t$e retailer is a source of competitive advantage to consumer good companies. Reaching u$!% Man&is' T%(ns' Se)iurban cen!res # 1rgani2ations can cater to rural needs for consumer durables- clot$es- kitc$en e'uipment and agri-input by making t$eir products available upto feeder to#ns- semi-urban centers or mandis. Targe!!ing arger *i ages # ,$ere are only (!*** large villages out of more t$an "-3(-*** villages. 3ut t$ey $ave *4 of t$e rural population and "*4 of total consumption. Un&ers!an&ing %+ ,ea- seas%ns 5 Peak season times in rural parts are 6estivals$arvest and marriage seasons. 3ulk of t$e demand for t$e consumer durables concentrated during t$ese times. ,$e rural consumers are in s$opping mood and $ave t$e cas$ for t$e same at t$is time. 1rgani2ations $ave to ensure t$at t$eir products are available at t$ese times. De i*er" *ans # 7ompany delivery vans #$ic$ can serve t#o purposes8 t$ey can take t$e products to t$e customers in select rural areas and also enable t$e firm to establis$ direct contact #it$ t$em and t$ereby provide an opportunity for promotion. C% ab%ra!i%n +%r Dis!ribu!i%n # 9arious organi2ations #it$ comparatively lesser distribution reac$ can collaborate #it$ organi2ations t$at already $ave ac$ieved $ig$ penetration levels in rural areas. 6or eg. P:; $ad tie-ups #it$ ;odre<- Marico &ndustries and no# its planning one #it$ =irma for distribution of 7amay soaps. C%n*er!ing un%rganise& sec!%r )anu+ac!urers in!% &is!ribu!%rs # +mall scale manufacturers $ave good kno#ledge of t$e territory and $ave good sales net#ork. 1rgani2ations like >?ide are attempting to convert t$ese small scale manufacturers to become t$eir dealers. C%)$an".s %(n Dis!ribu!i%n Ne!(%r- # ,ro<ect +$akti of @/L is one suc$ e?ample. Distribution 7$annels in Rural &ndia Use %+ c%%$era!i*e s%cie!ies5 ,$ere are over lak$ co-operatives operating for different purposes like marketing- credit and dairy cooperative in rural areas. 6or eg. 6armers +ervice 7o-operative +ocieties function like a mini super market for rural consumers #$ere t$ey sell soaps- detergents- clot$- seeds- fertili2erspesticides etc. at economical and reasonable prices. +ince t$ese societies $ave necessary infrastructure for storage and distribution- companies may contact t$ese societies to sell t$eir products. Use %+ ,ub ic Dis!ribu!i%n S"s!e) # &n &ndia- t$e Public Distribution +ystem is #ell organi2ed. ,$ere are about .3% lak$ fair price s$ops operating in t$e country. +ince t$e PD+ outlets cover t$e entire country t$ey can be utili2ed for marketing consumable items and lo# value durables in rural areas. U!i i/a!i%n %+ ,e!r% ,u)$s # ,$ese petrol pumps- in addition to petrolAdieseloil and lubricants are also selling consumables suc$ as soaps- detergents- biscuits etc- particularly on t$e $ig$#ays. ,$ese bunks may also t$ink of stocking certain consumable agricultural inputs like fertili2ers- seeds and pesticides. Agricu !ura in$u! &ea ers # ,$ere are about 2-"2-*** fertili2er dealers in t$e country. During off season most of t$e dealers don0t $ave business- $ence t$e

companies may try to motivate t$em so t$at t$ey can sell ot$er products also during t$eir free time. Shan&ies0 Haa!s0 1a!hras0 Me as # +$andies are periodic markets #$ic$ operate in a #eekly cycle. ,$ey offer a ready distribution net#ork and are steady- c$eap and appropriate. @aats can be used effectively for distribution- demonstration and sampling of daily need products. Melas #ork best for introducing ne# brands and building brands t$roug$ t$e organi2ation of events at t$e venue. Bccessing Rural markets C 7overage +tatus in Rural Markets Marketers $ave to ensure t$e reac$ of t$eir product to retail outlets- and t$ey also need to motivate retailers to stock t$eir product or brand. !*4 of t$e rural population resides in t$e 1 lak$ odd large villages. ,$ese villages are connected by all-#eat$er roads and t$ey account for "*4 of rural #ealt$. Bt t$e ot$er end are 2.3 lak$ tiny villages- #$ic$ $ave $ardly any s$ops. @/L- >veready- &,7 etc are t$e companies t$at $ave t$e most deeply penetrated rural distribution system <ust about cover t$e retail net#ork up to t$e 2***D population villages. Rural distribution 7$annels 6ive layers of distribution c$annels for t$e movement of products from t$e company depot to t$e interior village markets. La"er Channe $ar!ner L%ca!i%n

Layer 1 Layer 2

7ompany depot A 7:6 B DistributorAvan operatorA super stockistA rural distributor

=ationalAstate level District level

Layer 3

+ub-distributorA retail stockistA sub-stockistA star seller A +$akti dealer

,e$sil @E- to#ns and large villages

Layer

F$olesaler

6eeder to#ns- large villages$aats 9illages- $aats

Layer !

Retailer

E*% u!i%n %+ Rura Dis!ribu!i%n S"s!e)s @istorically- t$e rural distribution system $as included #$olesalers- retailersmobile traders- vans and #eekly $aats. &n t$e feeder markets- retailers act as #$olesalers and vice versa to sell to small retailers #$o come from surrounding villages. +ome to#n retailers send t$eir salesmen to villages to book orders and supply goods to t$ese small retailers. 2h% esa ing !*4 of rural consumption is still routed t$roug$ #$olesalers because t$ey are located in nearby feeder markets- #$ic$ are fre'uented by village retailers to replenis$ stocks. &ndian #$olesaler is a trader rat$er t$an a distributor and t$erefore tends to support a brand during periods of boom and #it$dra#s support during periods of slump. Rural markets #ere neglected by most companies due to t$e lo# density of retail outlets and t$e small off-take per retailer. F$olesalers based in feeder to#ns took advantage of t$is situation as village retailers found it convenient to buy from t$ese places. ,$is resulted in t$e $old of t$e market by t$ese #$olesalers- #$o often indulged in trade malpractices in t$e c$annel. Rura Re!ai S"s!e) Rural &ndia accounts for "!4 of retail outlets in t$e country. ,$e logistics of feeding t$e 3! lak$ retail outlets spread over " lak$ villages is a toug$ task. ,$e $ig$ distribution costs due to geograp$ical spread and lo# volumes per outlet act as a barrier to t$e entry of products in rural markets. ,$e average mont$ly sale per village s$op is less t$an Rs. !***- #$ic$ restricts t$e variety and range of t$e products stocked.

 +ince a significant portion of t$e sale is on credit- it puts most village s$ops in a self-limiting sales cycle. Despite t$e same product being available in t$e village s$op- !(4 of villagers prefer to buy t$ese from a $aat because of better price- 'uality and variety. S!%c- Turn%*er Bverage value of stock per product category in interior villages is about a t$ird of t$at in feeder villages. 1ff-take of packaged food stuff and tobacco is $ig$er in interior villages- #$ereas toiletries $ave a $ig$er take-off in feeder villages in comparison to ot$er products. ,$e cas$ outlay of rural retail outlets is e?tremely lo# and most of it is invested in fast moving brands and $ig$ margin commodities. ,$e lo# off-take- lo# stocks and lo#er stock turnover ratio toget$er pose a c$allenge to t$e marketer of a ne# product t$at $o# to occupy retail s$elf space in rural markets. Rural retail s$elf space can be occupied by offering consumers a combination of attractive margins- credit facility and servicing t$at is superior to t$at offered by t$e competition. Rura re!ai She *es /nlike urban retail s$elves- rural retail s$elves are flooded #it$ local and regional brands as t$ese promise t$e retailer $ig$er margins and longer credit periods. ,$e number of product categories stocked by rural and urban stores does not vary significantly. 3ut #$at does vary is t$e number of companiesAbrands. ,$is difference in stocking pattern is because of poor reac$ and difficulty in servicing stores. ,$e first task is making brands available- but simultaneously marketers also need to make efforts to ensure t$eir visibility on rural retail s$elves. Products are stocked in a cluttered and disorgani2ed #ay. +lo#-moving products covered #it$ dust accumulated over a period of time are a common sig$t. ,$e visibility of brands is very poor due to t$e absence of proper racks and display bo?es and stands. 3rands t$at are advantageous to t$e retailer0s business are displayed prominently. ,$erefore marketers need to devise strategies to occupy rural retail s$elf space by providing display and storage systems. G#all mounted display strips for fairness creams and ice bo?es for soft drinks.H Vans Mobile vans $ave an important place in t$e distribution and promotion of products in villages. &n t$is system- t$e salesman loads t$e van #it$ stocks from t$e nearest stockist or company stock point and #orks t$e surrounding markets. 1nce $e $as covered all suc$ markets- $e moves to t$e ne?t stock point and starts covering t$e villages surrounding t$at stock point. >veready batteries and torc$es are market leaders. &t establis$ed an e?tensive distribution net#ork t$at includes 1*** vans- ***D distributors and #are$ouses. ,$ese vans reac$ " lak$ retail outlets directly- eac$ van making !* to

"* calls per day. ,$e company ensures t$at t$e van revisits a retailer every 1! days. ,$e stock for t$ese vans is supplied by t$e small to#n distributors. Rural Mobile ,raders 5 ,$e Last-Mile distribution Mobile trading is an age-old- direct to $ome- unorgani2ed distribution system in rural &ndia. +ell a variety of daily-need products- mostly local brands ranging from detergentcosmetics- and personal care products to garments and foot#ear. ,$ey carry t$eir product on bicycles- mopeds- $andcarts or on foot. Mobile traders $ave a deep reac$ since t$ey target small villages to avoid competitions from s$ops in bigger villages. ,$eir direct selling approac$ ensures $ig$ involvement on t$e part of consumers and since t$ey $ave a fi?ed and committed consumer base- mobile traders en<oy a good rapport #it$ t$eir clients. Mostly sell fakes and local brands. Haa!s 0 Shan&ies @aats are t$e periodic markets and t$e oldest marketing c$annel in &ndia. ,$ese markets provide people an opportunity not only to purc$ase consumer goods- but also to sell surplus agricultural and allied products. ,$ey provide a first-contact point for villagers #it$ t$e market- a means for distributing local products and e?c$anging rural surplus- an opportunity for buying daily necessities as #ell as farm supplies and e'uipment and a place for social- political and cultural contact. >ac$ $aat caters to t$e need of a minimum of 1* to a ma?imum of !* villagesdra#ing around *** persons #$o come to buy and sell a range of daily necessities and services. ,ub ic Dis!ribu!i%n S"s!e) 3,DS4 PD+ is a system of distribution for essential commodities to a large number of people t$roug$ a net#ork of 6P+ G6air Price s$ops- often referred to as Iration s$ops0H. ,$e commodities are #$eat- rice- sugar- edible oil and kerosene. PD+ $as been evolved to reac$ t$e urban as #ell as t$e rural population in order to protect consumers from t$e fluctuating and escalating price syndrome. &t $as emerged as a ma<or instrument of t$e ;overnment0s economic policy aimed at ensuring availability of food grains to t$e public at affordable prices as #ell as for en$ancing food security for t$e poor. PD+ #it$ a net#ork of about .%" lak$ 6P+ is t$e largest distribution net#ork of its type in t$e #orld.

PD+ =et#ork 1rders 1. Procurement 2. +torage 3. ,ransportation . 3ulk Bllocation 3e$avior of t$e 7$annel

 Cre&i! +aci i!ies !% cus!%)ers # &n some districts- credit sales account for as $ig$ as "* to %*4 of t$e total rural business- #$ile in ot$ers it is only 1! to 2*4. 7onsumers usually $ave a running account- a part of t$e outstanding dues is cleared every mont$ but t$e final settlement takes place at t$e $arvest time. ,ricing b" !he channe # +ometimes retailers in interior villages sell at a price $ig$er t$an t$e ma?imum retail price. ,$ey <ustify doing t$is on t$e ground t$at t$ey spend time and money to fetc$ t$e products from to#n #$olesalers. B to#n #$olesaler may deliberately cut t$e price of a fast-moving brand to increase $is business. Reas%n +%r s!%c-ing a $r%&uc!0bran& 5 Rural retailers stock a particular item usually because consumers demand it and to a lesser e?tent because of t$e #$olesaler0s pus$ or because a competitor stocks t$e item too. Seas%na $a!!ern %+ s!%c-ing # +easonal pattern is probably because t$e main buying season for rural consumers is during t$e $arvest and retail stocking of toiletriescosmetics- ribbons- bangles- clot$es- fertilisers- seeds also follo#s t$is pattern. In+%r)a!i%n s%urce an& in+ uence 5 F$olesaler is t$e most important source of information and also most important influence on t$e retailer. ,urchase s%urce 5 Retailers in interior areas are not visited by agents of distributors8 retailers go to t$e nearby to#n A large feeder village once or t#ice a mont$ to buy t$eir stock. Chane cre&i! 5 +mall retailers and retailers in t$e interior villages must buy in cas$- #$ile large retailers in feeder markets are offered credit. ,urchasing c"c es 5 &n $ig$ turnover feeder villages- rural s$opkeepers often visit t$e neig$bouring urban #$olesale market for t$eir purc$ases- sometimes as fre'uently as t$ree to four times a #eek. &n ot$er areas- #$ere rural s$opkeepers depend only on counter sales and not on #$olesale purc$ases- t$ey may buy once a #eek or once a fortnig$t. ,re*a en! Rura Dis!ribu!i%n M%&e s Retail F$olesale Rural distribution can broadly be categori2ed into t#o modelsC +maller companies adopt t$e #$olesale activation route o#ing to a lack of viability- #$ereas companies #it$ si2eable product baskets adopt t$e retail route to reac$ rural markets. Van O$era!i%n 5 +tockists from nearby urban markets cover four to five rural markets per day. B distance of "*-%* km is covered per day. ,$ey operate mostly on cas$ basis as per t$e desired fre'uency. ,$ey provide better control over distribution. Sub6s!%c-is! O$era!i%n ;ets stock from super stockists appointed in t$e district. +uper stockists typically cover 1*-1! sub stockists in t$e district. ,$e sub-stockist covers all t$e outlets in $is rural market like t$e regular stockistby e?tending credit and services. Distribution Model for 6M7; 7ompanies Distribution Model 1

 7$annel +tructure &n Model 1- rural distribution $as been separated from urban distribution to create a specific focus on t$e rural market. 7overage area of rural distributors is clearly defined. 7ompany appoints a subdistributor under t$e distributor to penetrate deeper into rural areas upto t$e !*** population villages. ,$e RD covers a large area #it$ poor road net#ork and a lo# volume per outlet#$ic$ #ould make it unprofitable for $im to cover small locations. ,$e RD services t$e #$olesale market in $is area. &t $as a large number of points appointed in t$e rural areas- because t$e locations are many and scattered. Model focuses more on distributors and sub-distributors rat$er t$an t$e #$olesale c$annel. Distribution Models of 6M7; 7ompanies Dis!ribu!i%n M%&e 7 7$annel +tructure ,$is is a simpler model compared to DM1. ,$ere is no separate c$annel for rural distribution. ,$is model minimi2es distribution costs- allo#ing t$e company to offer better margins to t$e distributors and ot$er c$annel partners #$o t$en pus$ t$e sales of suc$ products. F$olesaler locations #ork as feeder markets- from #$ere t$e company caters to t$e re'uirements of nearby villages- places not covered by t$e distributor. &t is mostly companies #it$ a limited number of +./s and $ig$ sales volume t$at adopt t$is model. 7$annel partners are fe# and t$e distributor is given a large territory. =irma Distribution +ystem =irma Distribution +ystem ,$e structure follo#ed by =irma consists of minimum c$annel partners. Direct distributors receive supplies from t$e depot. Market coverage is mainly t$roug$ t$e #$olesaler0s net#ork and $ence fe# distributors are re'uired to $andle bulk despatc$es. &n some cases- a big #$olesaler plays t$e role of a sub-distributor- supplying to t$e retailers and #$olesalers. Distribution Model of Durable ;oods 7ompanies +ince durables are purc$ased largely from small and large to#ns- t$e number of locations for distribution is a fe# t$ousand only and t$ese can be managed by a fe# c$annel partners. L;s manufacturing plant is located in ;reater =oida- near Del$i. ,$e finis$ed goods are transported from t$e manufacturing plant to t$e company-o#ned depot#$ic$ in turn passes do#n t$e line to 7:6 agents. ,$ere is a specific area assigned to eac$ 7:6 agent and multiple dealers and e?clusive dealers are tied to t$e 7:6 agent by t$e company0s field force. ,$e orders are generated by t$e company0s sales field force- #$ic$ in turn is supplied by t$e 7:6 agent. Distribution of 6ake Products

 7$annels of Distribution for fake products Manufacturers to wholesalers/retailer in big city or small town, or directly to customer Manufacturers take orders for fake products t$roug$ personal visits or over t$e telep$one from big #$olesalersAretailers #$o deal in fakes. ,$ey also leave sample of ne# fake products for test marketing. Delivery is made to #$olesalersAretailers t$roug$ vans and tempos aut$ori2ed by t$e manufacturer. Wholesaler in big city to wholesaler in small town/kasba F$olesalers in kasbas source t$eir supply of fakes t$roug$ daily rail commuters. ,$ese passengers book orders from #$olesalers and collect supplies from t$e manufacturer of fake goods. ,$ese are $and delivered t$e ne?t day. Wholesaler in small town/kasba to village retailer/mobile trader/haat +alesmen of fake products visit retailers in villages of 3***D population category located 1!-2* km. from t$e nearest to#n to deliver products. Mobile traders get t$eir stock of fake goods for purc$ases above Rs. !** from mandis in nearby to#ns- or from t$e nearest kasba for smaller purc$ases. E)erging Dis!ribu!i%n M%&e s C%r$%ra!e6SHG Lin-age # +@; is a group of 1*-1! #omen organi2ed by government bodies or =;1s- #$o come toget$er to form a mutual t$rift group- to inculcate savings discipline and boost feelings of self-#ort$ among #omen. Members of +@;s get matc$ing loans from rural banks to set up incomegenerating enterprises. 1riginally- +@;s #ere formed to support povertyalleviation programmes in rural areas after t$e success of t$e model in 3anglades$- #$ere t$is concept originated. HUL.s Pro<ect +$akti #as targeted at strengt$ening t$e company0s 6M7; rural distribution drive. &nterested #omen from +@;0s #ere appointed as +$akti entrepreneurs- t$ey borro# money from t$eir group corpus and provide services to "-1* villages- covering a population of "***-1****.,$ey receive stocks from @/L rural distributors and make sales to bot$ retailers and direct consumers in villages. Sa!e i!e Dis!ribu!i%n 3!he Hub6an& S$%-e S"s!e)4 +tockists are appointed in ma<or to#ns and feeder to#ns. 3y and large- t$ey disc$arge t$e follo#ing functions C aH financing- bH #are$ousing and cH subdistribution. Retailers in and around t$e feeder to#ns get attac$ed to t$ese stockists. ,$e manufacturer supplies goods to t$e stockists eit$er on a consignment basis or on a cas$ or credit purc$ase basis. ,$e stockists take care of sub-distribution on t$e terms and conditions determined by t$e manufacturer or as agreed upon by t$e parties. 1ften- t$e stockists operate t$eir o#n delivery vans to take care of secondary transport and local delivery <obs. C%ca C% a Hub & S$%-e M%&e Recently modified its distribution c$annel by s$ifting from a centrali2ed model to a t$ree-tier $ub-and-spoke model. &nvested in glass bottles and ne# ve$icles in consonance #it$ t$e t$ree tier distribution structure. Large trucks #ere used to move stocks from t$e bottling plant to t$e $ubs- medium commercial ve$icles

#ere used to move stock from t$e $ub to t$e spokes and after t$at auto ricks$a#s and cycles #ere used to cater to t$e re'uirements of rural markets. +yndicated distribution +yndicated distribution is a viable and novel approac$ to gain entry into rural markets. /nder t$is approac$- t#o or more companies come toget$er to form a syndicated trading organi2ation- to <ointly distribute a collective group of $ouse$old products in rural markets by s$aring distribution costs. ,$e solution for small companies is to tie up #it$ a leading company- t$at already $as a presence in t$e rural market- in order to distribute products t$roug$ its distribution net#ork. ,$e golden rule is t$at t$e small company s$ould not deal in t$e same products- t$at t$e leading company sells. >g. P:; uses t$e rural distribution net#ork of Marico to sell Briel- ,ide etc. 7avin.are used t$e distribution net#ork of Bmrutan<an pain balm for its 7$ik s$ampoo. ITC.s Dis!ribu!i%n M%&e &,7 $as taken t$e initiative to reac$ rural consumers t$roug$ its e-c$oupal model for back#ard and for#ard linkages for its agri-related business- for direct procurement of agri produce from farmers and for selling a range of products t$roug$ 7$oupal +agar. 3arefoot Bgents 6e# insurance companies $ave taken t$e initiative of appointing barefoot insurance agents in order to penetrate rural markets. Bgents are recruited on t$e basis of t$ree parameters C 1H direct personal contact- 2H spreading information t$roug$ group discussions 3H and motivating people to become life insurance agents t$roug$ counselling. 1t$er 7$annels @ero @onda Motors $as ** dealers all over t$e country. ,$e company $as reported t$e emergence of an unofficial c$annel of distribution 5 village mec$anics- local real estate agents and s$opkeepers. ,$ese people take t$e motorcycles- usually in t#os and t$rees- from company dealers after providing ade'uate security deposits and display t$em outside t$eir premises for closing t$e sale. ,$e paper #ork- $o#ever- is left to t$e dealer to complete. I&ea Dis!ribu!i%n M%&e +%r Rura 1n t$e basis of t$e e'uation Per 7apita +ales GP7+H J Bnnual +ales A Market Population- t$e ideal distribution model for rural can be depicted as follo#s C ,$e Pro<ect +$akti type of model best serves t$e needs of t$e Lo# P7+-Lo# population density segment consumers. ,$e =+9 model is more appropriate for t$e Lo# P7+-@ig$ population density segment. PD+- cooperatives and fertiliser dealers could also be integrated into t$is model.