NATIONAL SEMINAR

"DYNAMICS OF DISTRIBUTION AND SUPPLY CHAIN MANAGEMENT"

8, 9 & 10 FEBRUARY 2011

Objectives of Seminar
 

 To create an awareness about dynamics of Distribution and Supply Chain

management function in the Industry.
 To discuss the latest trends in Distribution and Supply chain management.
 To understand the changing role of Distribution and Supply Chain function in
Industry.
 To Understand  Strategic Business Processes with respect to  Distribution and
Supply Chain

Sub -Topics for the Seminar

 

 Recent trends in Marketing, Distribution & Supply Chain Management

 Strategic Sourcing
 Warehousing and Inventory Management
 JIT and KANBAN manufacturing
 Logistics Outsourcing 3PL / 4 PL
 Push Strategy & Distribution
 Pharmaceutical Distribution
 Supply Chain Integration
 Trends in Retail Merchandising
 IT in Supply Chain Management
 Role of packaging in Supply Chain Management
 Distribution Strategy in Rural Market
 Distribution as a Strategic Tool
 Important Dates

National Seminar Dates  8th,  9th  and 10th February, 2011 

Last Date for submission of Abstract 15th  January,  2011

Last Date for submission of full paper along with 31 st January, 2011
registration fees
Last Date for  registration 6th February,  2011
Guidelines for Paper Submission
                Please submit softcopy of your abstracts and Papers at ns_siom@sinhgad.edu  OR   
ns.siom@gmail.com

All papers will be evaluated through a double blind review process consulted by drawing experts
from Institutions/ Universities/ Organizations of repute. Authors should please note the following -

1. The papers should

 Be based on original work not yet published, not exceeding 1000 words or 10 pages.

 An abstract of 100 words should be included as a part of the paper along with 5 keywords.

 Format for abstract is

 Title of paper

 Name/s of Author

 Statement of problems

 Core concept

 Findings / Practicle implications

 Conclusion 

 Authours of the paper are hereby authorising the rights to edit, alter, modify, copy and make
changes in the article submitted by them so as to make it suitable for publication.

 Full paper to be submitted on or before 31th Jan 2011.

 One hard copy and one soft copy should be submitted in A4 size, MS-Word format, Times
New Roman Font with heading in font size 14 and the remaining text of size 12 with spacing
1.5 as a single file.

 Heading (s) must be short, with a clear indication of the distinction between the hierarchy of
headings.

2. All figures (charts, diagrams, etc.) and photographic images, if any should be submitted in
both electronic form and as hard copy in originals. They should be numbered properly.

3. End Notes: all notes should be indicated by serial numbers in the text.
4. References:

 Literature cited should be detailed under the reference in alphabetical order of the surnames
followed by year of publications immediately after the authors name.

 Journal references should be listed as follows: Sharma, G S, (2001). Capital Restructuring,

Vikalpa, 26 (4), 3-18

 Books should be referred to as follows: Mahendru, M K, (2002). Production and Operations

Management, New Delhi: Kalyani Publishers.
  References from Internet should be referred to as follows: Kapil, C., Marketing Millinieum:
Bringing two paradigms together, Nov. 2008; Price Water Coopers, www.pwc.com.

 Manuscripts that do not conform to the requirements are subject to rejection.

5. A brief autobiographical note should be attached including full name, affiliation, full contact
details, email address and a brief professional biography.

6. Participation should be confirmed on or before 31st January, 2011 by sending the completed
Delegate Registration Form, along with Registration Fees.

Contest: 

Best Papers will be invited for presentation during the seminar and best three will be given awards
and citations.

The authors of the papers which are selected for presentation during the seminar will be
intimated within a week from  date of submission.

Publication:

Selected papers will be published in seminar Proceedings with ISBN No. and best papers will
be published in peer review journal "SBR" having ISSN No. 0974-0579
 DISTRIBUTION STRATEGIES IN RURAL MARKETS

DISTRIBUTION STRATEGY

A one of the ways could be using company delivery vans which can serve two
purposes – it can take the products to the customers in every corner of the
market and it also enables the firm to establish direct contact with them and
thereby facilitates sales promotion. The mediocre companies with sizable
resources may chip in for syndicated distribution. Haats and Melas could also be a
great platform to display merchandise. Also, every region consisting of several
villages is generally served by one satellite town termed as Mandi where people
prefer to go to buy their durable commodities. If marketing companies use these
feeder towns they can have a vast coverage of rural arena.

DELIVERY VANS

Companies can use their own delivery vans to reach the rural consumers. There are certain
advantages of using delivery vans. They take the products to customers and retail outlets in
every corner of selected rural markets and enable the company to establish direct contact with
the consumers which helps in sales promotion.

We can take the example of HLLs distribution strategy in rural market.

In 1998, HLL landed "Operation Harvest" with an objective to increase penetration, increase
brand awareness, encouraging trials and identification of key distribution points and retail
points. Around 30,000 villages having high growth potential, having a population of at least
2000, and well connected by roads, were selected. The vans were retrofitted with a public
address system and their audio-visual equipment. These vans covered six villages a day for
six days in a week. The cycle was repeated couple of times in the same villages. On reaching
the villages, they would play audio-cassette and video-films. These cassettes and films had
songs and sequences from popular films with advertisement of HLL coming at some intervals.
Company representatives distributed free samples. Small shops of villages were provided
with HLL products like Lifebuoy and Wheel. This helped company to understand the potential
of the market.

JOINT DISTRIBUTION BY NON-COMPETING COMPANIES

Companies having lesser distribution reach in rural areas can collaborate with companies

already having wide network in rural market. This type of tie-up can prove to be beneficial as
one can reach to large number of retail outlets by utilising the network and the other one can

earn better revenue. Also, this type of joint collaboration can help both companies to reduce

distribution costs and can convert operation which seems to be unviable into financially viable

operation.

Some examples of effective distribution tie-ups in rural market: -

 Samsung has tied-up with the Indian Farmers Fertilizer Cooperative (IFFCO). Thus,
 Samsung will use IFFCO's cooperative network for marketing the hand-sets to rural
consumers over a wide area.
 Nokia has entered into a partnership with HCL for distribution of its hand-sets.
 Motorola and Nokia have partnered with ITC e-Choupal which gave them wider reach in
rural market.
 Procter & Gamble had tie-up with Godrej and Marico Industries, and now it is planning
one with Nirma as well for distribution of Camay Soaps.
 Godrej has tie-up with Jyothi Labs to use its extensive distribution network for marketing
Godrej Tea across the country.

DISTRIBUTION UP TO FEEDER TOWNS / MANDIS

Companies can cater to the needs of rural consumers by making their products available upto
feeder towns orma nd is. Feeder markets orman d is provide excellent scope for distribution of
products like consumer durables, clothes, kitchen equipment, agri-inputs and tools. The rural
consumers visit these towns at regular intervals not only for selling their agricultural produce but
also to purchase clothes, jewelry, hardware, radio, and other consumer durable products.

HAATS

Along with permanent retail outlets,h aa t s can also be utilised to make the products available

to rural consumers.Haa t s are held on a particular day of every week. Typically, an average

haat has 300 stalls. A haat usually serves around 5000 visitors. So if we consider average

population of an Indian village to be 1000, then oneh aa t caters to the needs of 5 villages.

There are almost 47,000h aa t s in India. The sale perha at per day is Rs. 2.25 Lakh

(approximately) and average sale per outlet is Rs. 900 (approximately).

large number of retailers also buy products fromha at s for their village stores. About 90% of
sales onh aa t s are on cash basis. The participation fees ath aa t s are a flat Re. 1 to Rs. 5 per
stall which is very low.
MELAS

Over 25,000me la s are held every year all over the country. Out of these, 5000 are

Commercial melas, 2,000 are cultural melas and 18,000 religious melas. The following facts

Regarding melas will help us to understand their importance to marketers: -

 Number of visitors per mela is approximately 7.5 lakh.

 On an average, 850 outlets are set-up in every mela.
 Average sale per day in a mela is Rs. 25 Lakh.
 Visitor turn-out in a mela is very high.
 A large part of the visitors in these melas are women and children, which is significant
because rural women are restricted to leave village often.
 Melas are generally used to sell durables, high-priced items and new products launched.
 Examples of effective use of melas by marketers are: -
o Active participation of Maruti in rural melas like the kisan mela (Ludhiana),
Sonepur mela (Bihar), Kila Raipur sports mela (Punjab) and Pushkar mela
(Rajasthan). The melas provide both a platform for demonstration and improving
product awareness, and also booking new sales.
o In 2001, HLL ran a campaign at the Allahabad Kumbh Mela to demonstrate to the
visitors the importance of usage of soap for better health and hygiene. Rural
people in general believe that washing hands with water alone is enough, so there
is no need to use soaps. HLL representatives educated them about use of soap
for better health and hygiene. This awareness campaign has helped HLL to
increase the sales of Lifebuoy in rural market.

HUB & SPOKE METHOD OF DISTRIBUTION

The urban model of distribution in which the products are transported directly from the bottling

plant to retailers is not very effective in rural markets as taking stock directly to retail point

would be costly due to the long distance to be covered. So Coca Cola has opted for a hub

and spoke method of distribution system. It worked this way: -

Coke bottles were transported from the bottling plants to the hubs (large distributors) and from
hubs to spokes (smaller distributors) situated in small towns. These spokes then distribute the
stocks to village retailers who cater to the demand in rural market.
 RURAL MARKET
IT SERVICES

Indian villages are finally getting to benefit from the IT revolution in India.

E-Panchayats are slowly taking over rural India and an 'E-medicine' scheme for rural areas has
been

launched by the Gujarat government's health department in May 2008. A study by internet
research firm

JuxtConsult reveals that one out of every seven regular internet users is from the rural belt and

surprisingly, the rural net users are younger than their urban counterparts.

Moreover, BPOs are slowly growing roots in rural areas.

• Comat Technologies (P) Ltd, a Bangalore-based global business solutions

organisation has 800 rural business centres in Karnataka and 290 centres in
Haryana. It will soon open centres in Sikkim, Tripura, Uttarkhand and Uttar
Pradesh.
• SerWizSol, a Tata enterprise, has a 250-seater BPO at Ethakota in rural Andhra
Pradesh, and one in rural Gujarat in Mithapur which is a 100-seater.
• SREI Sahaj e-Village Ltd will set up 25,000 IT kiosks to be known as common
service centers (CSC) across West Bengal, Bihar, Orissa, Assam, Uttar Pradesh
and Tamil Nadu, by 2010.

AUTOMOBILES

The Indian automotive industry currently has a turnover of US$ 34 billion. However, the
automobile market remains untapped in rural India which has a strong purchasing power.
Nearly 50 per cent of the Indian rural market, which includes 220 million households, is
potential car buyers. Two-wheeler penetration in rural belts is still very low with less than 10 per
cent households owning a two-wheeler.

Sensing a huge opportunity many automobile companies are trying to woo the rural consumer.

• Hyundai Motors India has introduced a new marketing initiative – 'Ghar Ghar Ki
Pehchaan'—to tap the India rural car market. The company has rolled out special
schemes for government employees in rural areas and members of gram
panchayats on the purchase of Santro.
• After establishing a strong foothold in urban and semi-urban markets, Maruti
Suzuki has launched a pan-India campaign - 'Mera Sapna Meri Maruti' - to tap the
rural market.
• Hero Honda has devised a major expansion strategy for the rural markets and is
planning to strengthen retail financing to support the initiative, which could lead to
setting up of its own finance arm.
 • M&M, Bajaj Auto and TVS Motor have also launched special marketing schemes
for rural markets.

CONSUMER DURABLES

A survey carried out by the Federation of Indian Chambers of Commerce and Industry (FICCI),
indicated that the consumer durable goods sector is all set to witness 12 per cent growth in
2008. The rural market is growing faster than the urban markets, although the penetration level
in rural area is much lower. The rural Indian market, which accounts for nearly 70 per cent of
the total number of households, witnessed a 25 per cent annual growth while the urban
consumer durables market reflected an annual rate of 7 to 10 per cent.

Many leading companies are now increasing their presence in rural India.

• LG has set up 45 area offices and 59 rural and remote-area offices.

• Samsung rolled out its 'Dream Home' road show which was to visit 48 small towns
in 100 days in an effort to increase brand awareness of its products.

THE ROAD AHEAD

The rural revolution is fuelled by rising purchasing power, changing consumer habits, increased
access to information and communication technology, better infrastructure and increased
government programmes to boost the rural economy.

The recent study by Associated Chambers of Commerce and Industry of India (ASSOCHAM),
disclosed that around 200 million out of 700 million rural population in India are engaged in
agricultural and non- agricultural activities, and have a decent per capita income. A large
section of the rural population is choosing dairy, food processing and packaging as professions,
beyond traditional farming. Furthermore, large retail players like Reliance, Spencer's and
Subhiksha are procuring farm commodities in bulk directly from farmers, giving them better
money for their produce. The rural population is now looking at better options beyond post
offices and commercial banks for higher returns on their surplus earnings.

However, Rural India lacks a good distribution system. Rural Indian purchasing habits exhibit
an "earn today, spend today" mentality. Most rural homes have restricted storage space and no
refrigeration so villagers tend to only buy their immediate requirements.

To succeed, corporations need to understand the psyche of the rural family along with the rural
distribution network. For example, Hindustan Lever used a strategy of volume driven growth in
rural
markets, which was hugely successful.

INSURANCE

According to a report, 'Insurance in Next 2 Years', by The Associated Chambers of Commerce

and Industry of India (ASSOCHAM), in May 2008, the insurance sector size was estimated at
US$ 12.8 billion, and it is likely to see an unprecedented growth of 200 per cent, touching US$
51.2 billion by 2009-10. Rural India may offer a business opportunity worth US$ 23 billion for
the insurance companies if the segment can be wooed with innovative saving schemes at
affordable premiums.
Presently, only eight to ten per cent of rural Indian households are covered by life insurance.
The remaining ninety per cent offer a huge potential for insurance companies. India's untapped
rural market holds tremendous growth opportunities for life insurance companies with business
worth US$ 231.67 million for insurance firms.

According to international consultancy firm Celent, the rural market will grow to a potential of
US$ 1.9 billion by 2015 from the current US$ 487 million.
• MetLife India Insurance Company Ltd is planning to launch 'MetSuvidha', an
affordable endowment life insurance plan, aimed at tapping the rural market
through Viswas, a rural retail chain of agricultural inputs.
• Life Insurance Corporation of India (LIC) has set a target of selling four million
policies in rural areas in the current financial year.

Another opportunity lies in offering low-interest personal loans to the rural population, at the rate
of six to seven per cent compared to 10 – 12 per cent in the urban areas, for renovating or
modernising their houses and at the time of marriages of family members or relatives.

PHARMACEUTICALS

The Indian pharmaceuticals market is regarded as one of the fastest growing in the world. In
2006-07, this market was valued at over US$ 7 billion with the rural segment having a
remarkable share of this market. Driven by factors such as rising rural incomes and a strong
distribution network, India's rural pharmaceuticals market is also experiencing strong growth.
Industry estimates say that while small towns contribute 20 per cent to the country's
pharmaceuticals market, rural areas account for 21 per cent. In 2006-07, the rural Indian market
was estimated at around US$ 1.4 billion, having grown at about 40 per cent in 2006-07 against
21 per cent in the previous year.
• Most of the pharmaceuticals companies use local post-offices as their distribution
platform. Some companies are conducting health-care workshops in the rural
areas by tapping the local doctors.
• Nicholas Piramal has focused on general practitioners to cater to rural markets to
increase its penetration with a field-force of 800 people.

TELECOM

A Gartner forecast revealed that Indian cellular services revenue will grow at a CAGR
(compound annual growth rate) of 18.4 per cent to touch US$ 25.6 billion by 2011, with most of
the growth coming from rural markets.

With the next 100 million mobile subscribers expected to come from non-urban areas, many
Indian mobile service providers are targeting the rural market with aggressive tariffs and low-
cost handsets.
• Nokia has announced that it is taking up several initiatives in the areas of
microfinance, distribution and value-added services specifically for farmers, as
part of its strategy to address India's rural market.
• BSNL plans a US$ 125.383 million spend on its rural telecom infrastructure in
West Bengal, over the next one year.
• Spice Telecom will be launching local market rates for commodities across
Karnataka to connect with rural customers. Spice has localized contents available
in Punjabi and Kannada.
• Airtel has tied up with IFFCO to reach farmers directly. Farmers will receive free
voice messages twice daily on farming techniques, weather forecasts, dairy
farming, rural health initiatives, fertilizer availability, loan information and market
 rates. Additionally, farmers can also call a dedicated helpline, manned by experts
from various fields, to get answers to their queries.
• Airtel's new initiative will offer mobile handsets bundled with Airtel mobile
connection ranging from US$ 30.711 to US$ 36.843.
• Reliance Communication has also targeted the rural segment in a big way with its
low tariff initiative like the Grameen Programme for rural subscribers.
RETAIL

According to a study, conducted in Sep 2007, by the Confederation of Indian Industry (CII) on
the Indian rural retail sector, opportunities in rural retail were estimated to be over US$ 34
billion in 2007. This figure is expected to touch US$ 43 billion in 2010 and go up to US$ 58
billion by 2015. The rural markets in 2008 have grown at 25 per cent compared to the 7-10 per
cent growth rate of the urban consumer retail market.

The retail sector offers opportunities for exploration and investment in rural areas.

• ITC launched India's first rural mall, 'Chaupal Sagar', which offers products
ranging from FMCG to electronics appliance to automobiles. ITC has 23 stores
across India.
• The 'Hariyali Bazaar' by the DCM Sriram Group had initially started off by
providing farm- related inputs and services and now plans to introduce the
complete shopping basket soon. It has 180 stores across India. The centres are
also IT-enabled and provide farmers critical data like inputs and access to
weather forecasts, market prices and other technical knowledge.
• Tata Chemicals with Tata Kisan Sansar has set up agri-stores to provide products
and services.
• Indian Oil Corporation (IOC) is planning to invest US$ 189.103 million in rural
areas during the financial year 2009.
• Reliance, Spencer's and Subhiksha are also expanding in rural areas.

RURAL INDIA - THE KEY TO FORTUNES

A mention of rural India may conjure up an image of abject poverty in the minds of many
people. This, however, does not hold true in the case of a few fast moving consumer goods
(FMCG) companies that have over the years been giving their rural operations a renewed
thrust. Why would these companies be tapping into the rural markets in the first place?

First, let's take a look at the distribution networks of three leading FMCG companies in India -
Hindustan Lever Limited, Colgate Palmolive and Britannia. These three companies are
market leaders in their core areas and much of their success has to do with the intricate
marketing networks they have developed over the years. Hindustan Lever, as would be
expected, has the largest reach in terms of the markets serviced. Colgate, on the other hand,
has adopted a concentrated approach by focusing on fewer markets. Britannia, compared to
the first two, has a much smaller reach.
These companies, however, have one thing in common. A desire to step up their presence in
the relatively virgin rural markets. The facts reveal it all - Hindustan Lever ha stepped up the
share of rural turnover to 50% of total, while Colgate and Britannia now derive 35% and 30%
respectively of their turnover from rural markets. Why this infatuation with the rural markets?

Rural India accounts for over 75% of India's population and this in itself offers a tremendous
opportunity for generating volume driven growth. Contrary to general perceptions, incomes in
rural India have improved dramatically over the years mainly due to the eleven successive
normal monsoons and increasing crop yields. Foodgrain production topped 200 m tonnes in
financial year 1999 as compared to a production level of only 176 m tonnes in financial year
1991. Further, the tax benefits associated with incomes in rural areas boost spending power of
the average rural family. These factors have created a vast market that has led to a rush
amongst companies to tap this latent demand.

First off the block was Hindustan Lever, which identified the potential of the rural market some
years back. It launched 'Operation Bharat' to tap rural demand, focussing on personal care
products. The benefit of the strategy was apparent over the last three years. While demand in
urban India suffered due to an industrial slowdown, rural demand continued to remain
buoyant as a result of the sustained improvement in rural incomes. The company was thus
successful in attaining its growth targets - double profits every three years and revenues
every four. The advantages were apparent and the rush inevitable.

Britannia and Colgate, apart from Hindustan Lever, are the only FMCG companies in India

that derive over 30% of their revenues from rural markets. Britannia has rejuvenated its rural

thrust by the launch of Tiger biscuits, while Colgate has been attempting to woo the rural

masses by offering low priced products in convenient packaging.

The success of these companies has as much to do with understanding the psyche of the

rural family as it has to do with a rural distribution network. A typical rural family is a price

conscious consumer and this is where the key to success lies. Hindustan Lever, for example,

extended its strategy of volume driven growth into rural markets and met with much success.

Britannia on the other had launched Tiger to take on the existing economy brands in the

market.

The Indian rural markets are today witnessing competition in almost all product segments.
However, companies that have the first mover advantage, are still leading their peers in terms

of market shares. Whether the rural markets will meet with the expectations of the ever

increasing number of companies seeking to grab a chunk of the rural markets is yet to be

seen? One thing, however, is for sure: rural markets are set to play an important role in the

strategies of the FMCG companies.