Social entrepreneurship series: Product distribution in Rural India A Tie Initiative 1
May 19, 2015
Social entrepreneurship series:
Product distribution in Rural India
A Tie Initiative
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• Status & opportunities • Rural mindsets • Rural challenges & opportunities • Distribution structure • Logistics & supply chain • Service strategy • Market communication
Contents
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Low Income influenced by seasonal fluctuations - Low literacy - Price Sensitive - Influenced by Traditions - Quality Conscious - Low risk taking ability - High Brand Loyalty - Moderate aspiration levels - Resistance to change - Diverse customs, social structures and languages - If they understand the value of product or service they will go for it.
Characteristics of Rural Indian Market
Rural consumers do not make brand discrimination They are highly loyal to the brand that satisfies them Rural market is growing faster than the urban market The literacy level in rural India going up according to NCAER Survey Rural India constitutes to 56% of national income
About 62% of villages have a population below 1000 and only 3% of the villages above 5000, most villages with less than 500 people do not have any shops. Complex Distribution & logistics management. In rural areas banking and credit facilities are not extensive. I t is estimated that for every16 villages there is one bank. Low Affordability in rural areas.
In rural areas almost 100% of villages Consists of Radio ,TV is 87%. It can also seen that about one-fifth of pharma sales occurs in Rural India. In respect of high priced durables, about one fourth of the television sales happens in rural areas. The rural population is three time that of Urban Population
The share of unbranded products is higher in
necessity items, mainly food items. Rural demand is more seasonal compared to urban demand. The pre dominance of agriculture in the income pattern is one main reason for this. Besides being seasonal, rural demand is somewhat irregular as well.
Rural India accounts for 64% of total expenditure
Opportunities Threats
Rural Economy is estimated to
be Rs. 18 Trillion by 2012-13
Share of rural India is 56% and is expected to grow to 60% in the near future
627,000 villages
3,768 town
INDIA
Strengths Weaknesses
Indian Rural - SWOT
Less than 200 92,541 15.6
200 -500 127,541 21.4
501-1,000 144,817 24.4
1,001-2,000 129,662 21.9
2,001-5,000 80,313 13.5
5,001 -10,000 18,758 3.2
Figures in % POPULATION No of Villages % of Total Villages
17% of villages account for 50% of rural population and 60% of rural wealth
Rural Landscape Distribution of Villages
Dev
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p E
asy
Pro
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ct F
inan
ce o
pti
on
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% of profit or turnover Financial Goal
Super distributor Segment
Service Differentiation
New Product Development
Retail Distribution
Business Drivers
Distributors, dealers, DSO, VLE, Consolidate and grow: • Depth before
breadth • Closer to target
customers • Village-based
reach and seed approach
Improve productivity: Model is No of partners x productivity= sales • Robust sales
management • Field working
norms & processes
Build service into a true differentiator: • Service within
customers’ arms reach
• Wide-spread, low-cost, self-sustaining business model
• Integrated distributor-based sales + service model
• Outsourced model for institutional
• Option of product Swap in case of defect.
Philosophy: • Low-cost-to-
service. • Quality , sturdy &
long lasting. Improve speed to market: • Core platforms to
address multiple applications
Offer choice to drive relevance: • Segment-wise
products
Core Approach
Measures of Success
Strategic Approach
Distribution
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People
Gain foothold : • Invest in building
relationships with Strategic Partners e.g. Microfinance Institutions, NGO / CSC /post offices, / DCCB/ Rural distribution co’s / CSD/ Pertol pums & cooking gas distribution outlets.
• Build capability: • Service
capabilities Introduce products based on customer needs
Create performance-orientation: • Closer to market
placement. • Local language &
culture knowledge. • Working long hrs. • Adj to Inedequate
boarding & lodging. • KRA setting and
performance measurement
• Capability building/ Training
• Rewards & recognition (R&R)
Build a transparent culture: • Common vision and
shared goals • Transparent
communications
Create and leverage distribution and service reach as key customer value creators
No of outlets Village coverage Suitable products Retention Productivity Productivity Reference
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State
Distributor
positioning
Dealer point
Micro-Agents /Distributor Sales
Officers positioning
Service Point
Service Point
State Sales Head
Territory sales
Manager
Distributor/Stockiest
Distributor Sales
Officers
Micro-Agents Dealer
Territory sales
manager
Territory sales
manager
Territory sales
manager
Distribution Structure
Feeder
Market
Blocks
Districts
Village
Logistics & Supply chain
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Locate the warehouse for cost effective & timely distribution
- Large shipments by road cost less. - Closer to market stock points for
faster deliveries & minimized the Inter state taxes .
- Product packing should avoid breakages during transportation.
- Comfortable packing size. - Local language product user
manuals to be inserted. - Product demand forecast to be
planned effectively. - Spares availability critical for
service.
Carry in & Stand by unit Service Model
All distributors & Partners would be involved in providing after sales service. Customer will walk in to the point of sale. After initial checks:
If the need arise. The person at Point of sales wouldbe empowered to handover the stand by unit to customer.
Customer
Walk- in customer at
Point of Sale
Distributor
Customer
satisfied
Distributor
Customer
State customer relations : Head Office customer relations :
Register service call: - Issue service call number- guide customer to nearest point of service
Company Advisor
Distributor sales person
Micro-franchisee
SHG members
BFPA BFPA BFPA BFPA DSO DSO DSO DSO MFE MFE MFE MFE Tech. Tech. Tech. Tech.
Customer call attended & closed
Walk In & given a stand by unit Call in customer
- Above the line advertising only if product are available in wide spread market. - Seasonal variations to be taken in account. Marketing & communication Touch points. - Haats & Melas Over 47,000 haats and 25,000 melas are held annually. - Wall Paintings - Distributor , dealer , Village level entrepreneur branding. - Bus displays. - Van campaigns - TV, Radio, SMS, Cinema campaigns - Temple site demos. - School demos - Targeting Opinion leaders - Direct call in facility for product / distributor enquiries. - Special campaigns during harvest time, festivals etc. - In case of demo based sales model, demo kits, flip folders, leaflets, posters,
sales camps, audio visual aids. - Village level entrepreneur activation tools like time to time incentives, feeling
of belongingness, recognition platforms, distributors certificates, distributors boards, dealer board etc
Local language to be used in communication.
Marketing communication
Rural India India is a population of over 1210.2 million with 0.83 billion living in Rural India while the rest .37 billion in the Urban India as per Indian Census 2011 153 million household are in Rural India and the rest 69 million in urban India. Rural India constitutes to 56% of total national income and accounts From 64% of total expenditure ( $67.57 billion) , rural economy is estimated to reach Rs.18 trillion by current year 2012-2013. Rural Eco-system: • 82 Regional Rural banks having 85,300 branches • Common Service Centers : 120,000 • Number of Rural Post Offices: 139,700 • 38 million active Internet users in Rural India • 298 million mobile subscribers in Rural India as compared to 256 million user s in Urban India. • 17 million retired soldiers mostly from Rural India. • 3 lakh co-operative societies like agriculture co-operatives, milk co-operatives. • Rural consumers spends averg. Rs. 4000/- per year on non-consumer items.
• Distribution plan will depend on Product & Services we offer. Consumable or Durables. My experience is from Durable Product sale background.
Deep Market Reach Supportive Eco-system Leverage strategy