Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
172
173
174
5.2 General information about the companies and rural districts selected
5.2.1 Distribution channel companies studied
The two companies whose distribution channels were studied were: Hindustan Unilever
Limited (HUL) and Godrej Consumer Products. These companies have the highest
combined market share in rural markets Sangli and Kolhapur districts and have a strong
presence of their products in almost all villages. They have all types of channels members
to reach rural markets.
5.2.2 General Information about the two rural districts selected
There is a greater degree of rural base elite who goes in for greater consumption of
FMCG products with reference to Kolhapur and Sangli districts. It is interesting to note
that there is a greater degree of rural population more oriented towards urban patterns of
living and life style and their preferences for FMCG are on a larger scale. There is a
predominant concentration of well-to-do rural population who have recently migrated and
settled in urban areas of these districts, therefore their consumption pattern would sway
between the rural taste and the elite urban style of preference. Some impressive facts
about Sangli and Kolhapur districts are as follows: Sangli and Kolhapur districts have the
highest literacy rate in India, i.e. 77.23 and 77.19% respectively. Per capita district
domestic product82 is Rs 20,411/- and Rs 20,019/- of Kolhapur and Sangli districts
respectively which is one of the highest in the country. The prosperity and the resulting
spending prowess of Kolhapur and Sangli people38 was famously reported in a list of
districts with the highest number of Mercedes Cars in the state of Maharashtra, where
Kolhapur came second only to Mumbai. Sangli and Kolhapur districts literacy
improvement in the last decade got 13th and 14th ranks respectively all over India67.
Number of families below poverty line is 14.16% and 17.16% for Sangli and Kolhapur
districts respectively67 which is comparatively the least. So it is pertinent to focus on
these two important districts and hence it was considered an appropriate choice by the
researcher.
175
176
is reduced and lead time is also less; Shakti dealer gets chance to meet the distributor who
has very large assortments.
GODREJ Model 1: In this model, the super-stockist is only one for the district and
stockists are as good as rural distributors of HUL and he can not cover the retailers
directly unlike HUL distribution model. The turn over of rural stockists is considerably
lesser than the rural distributors of HUL in spite of the profile. The number of stockists is
more than double of the distributors. The GODREJ distribution does not have the self
help group like SHAKTI dealer.
GODREJ Model 2: In this model, the stockist covers the local retailers and the rural
retailers which are located in nearby areas in the range of 1 3 kilometers. The stockists
have lesser number of delivery vehicles as compared to the rural distributors of HUL.
The researcher would like to point out that though the nomenclature differs in two
companies, their role remains the same. Distributors of HUL are equivalent to stockists of
GODREJ and super-stockist is as good as the distributors of HUL except the superstockist does not cover retailers directly but the distributor does.
5.4 General information about distributors, wholesalers and retailers
It was found out that there are no distributors and wholesalers in the villages whose
population is less than 2500. However, retailers exist in all villages regardless of the
population. Majority of the distributors (45.45%) and wholesalers (48%) started their
businesses during the years 2001 2003, whereas majority of retailers started their
businesses during the years 2004 - 2006. There was no distributor appointed after 2007.
Not a single wholesaler was appointed by HUL / Godrej before the year 2000. However,
retailers existed before the year 2000 also. most of the distributors studied (63.63%), had
immovable products between the range of 11 15 annually because they have to keep
wide varieties due to higher sales so more demand is more inventory and more
immovable products also. Likewise, most wholesalers (50%) had them between the
ranges of 6 10, but retailers had very few immovable products, i.e. in the range of 0 5
and 6 - 10. The main reason for immovable products is damage in transit or on the shelf.
177
Hence they do not sell and are dead stock with them. Distributors spent more annually on
immovable products due to their large turnover as they are the suppliers to the
wholesalers. Wholesalers spent lesser as compared to distributors due to fewer turnovers
and retailers spent the least on immovable products. Marketers have introduced the
system of taking immovable products back from distributors recently not because its
damaged but unsold and compensated with another products. This process takes much
time so the money remains blocked.
5.5 Attributes for satisfaction of distributors, wholesalers and retailers studied
The researcher studied various attributes such as mode of delivery, coverage pattern,
mode of payment, costs, number of assortments, lead time, execution of promo-offer,
display of products, understanding of channels requirements, communication, issues
handled, actions taken against channels request, responsiveness during implementation,
meetings with territory in-charge, time taken for query resolution, actions taken against
channels complaints, quality of sales-kit, domain knowledge with territory in-charge,
attitude of territory in-charge, and credit period for satisfaction of distributors,
wholesalers and retailers and their responses were found quite significant. Most of the
channel members were satisfied with the present system of FMCG distribution in the
rural market of Sangli and Kolhapur districts in Maharashtra.
5.6 Problems perceived by channel members in distribution of FMCG studied
Immovable products: All channel members spent considerable amount on immovable
products and the main reason was the damage of products in transit. Many times such
immovable products are sold at discount prices or returned to the manufacturers.
These results are partly in agreement with those of Thakur115 who found that the
commodities which have fixed life, pose special problems to retailers and distributors as
these have to be sold before their shelf-life. Retailers offer discounts on perishable
products nearing their shelf-lives to encourage consumers to buy and studied how many
units of the commodity they should stock on the shelf to maximize their expected profit.
178
Dumping of goods: There was a scheduled dumping of the goods by the Carrying and
Forwarding Agencies who were appointed by the marketers irrespective of the
requirements in a particular month at distributors level. This created huge inventories
which blocked the money. The frequency of coverage was less for the channels that were
located far away from the feeder village, taking cost factor into consideration.
These results are not totally in agreement with those of Sangameshwaran102 observed that
to remove the conflict between the manufacturer and its distributors, the consumer goods
giant Hindustan Unilever (HUL) has tied up with a third-party logistics service provider
to manage the entire back-end distribution chain to streamline distribution.
Payment terms: It was quite disturbing that some of the distributors had problems of
mode of payment. The reason behind this was that advanced cheques were issued to the
manufacturers; very same day of delivery it was to be cleared; distributors had to give 810 days credit period to their wholesalers and retailers, obviously had to have overdraft
facility with banks which was very costly so they felt it needed to be addressed.
These results are not in agreement with those of Banerjee et al9 who observed that
working capital crunch or expansion plans of channel members going haywire has
become the cause of payment issue.
Excessive costs: Shrinkage cost was the biggest threat distributors were facing in Sangli
and Kolhapur rural market; one distributor lost approximately Rs 22 24 lakhs in
previous years and it was learnt that one of the distributors bid goodbye due to excessive
shrinkage cost. Manufacturers requirement - number of employees, number of vehicles
and floor space the distributors should have, had become onus on them. The wholesalers
had a problem of reaching retailers due to lack of good roads and distance so fuel
consumption and cost of recovery of credit was more. The rural distributors could not run
their businesses without credit to the down line channel members and also many retailers
who were on-cash-buyers go to the places like BIG BAZAAR at district places who sold
them at wholesale price and demand discounts from rural distributors.
179
These results are in agreement with those of Nottingham78 who reported that the Indian
retail industry suffered a total loss of staggering Rs 9,691 cr due to shoplifting and waste
in 2007. The study found that the average shrinkage rate (stock loss from crime or waste
expressed as a percentage of retail sales) for India is 2.90 per cent of sales.
Excessive lead time: Some channels faced from over dumping of products and not
because of long lead time. Whereas few of the retailers had grievance over excessive lead
time due to lack of pucca road and hence inadequate transport facilities, therefore, their
waiting period was longer especially those who located far away from the distributors /
wholesalers.
These results are in agreement with those of Kashyap et al45 who reported that poor road
connectivity - lack of all-weather roads and inadequate transport facilities are responsible
for long lead time.
Dearth of promotional schemes: FMCG companies categorized wholesalers in 2 to 3
types depending on their monthly billing so extra commission was given if they achieved
the levels as prescribed by the manufacturers. Hardly any distributors got benefits and the
promo-offer was given directly to wholesalers and retailers.
Lack of cooperation and cohesiveness: Existing rural distributors were capable of
handling multi-distributorship of the same company in other areas of rural market to
cover the remotest places and smoothen the distribution system which could help in
reducing lead time and proper coordination and also might help in long association with
the same company. Some wholesalers and retailers also expected to have syndicate
distribution and found not being resolved getting mingled.
These results are in agreement with those of Rajiv et al89 who found that co-operation
among distribution channel members could be fostered through the use of participative
and supportive activities which helped in improving performances of the channels and
fostered the relationship between co-operation and channel member performance.
180
Unresolved issues: Rural wholesalers were supposed to buy goods from rural
distributors but to increase sales urban distributors tried to jump their territory and
approached the rural wholesalers giving some 3 to 4% discount which was not being
given by their rural counterpart so there was a horizontal channel conflict and remained
unresolved.
These results are partly in agreement with those of Ramachandran et al91 who at All
India Distributors' Association Stirr reported that the distributors raised a strong protest
with leading fast moving consumer goods (FMCG) companies for bypassing them and
selling their products directly to large retail stores because making direct supplies would
have a negative impact on the turnover of distributors.
Lack of action: Few wholesalers had complaint against distributors about ill treatment
due to long distance, consequently more lead time which adversely affected their sales;
after lodging complaints against such distributors no action was taken and subsequently
they could not deliver in time to their retailers.
Discrimination: Distributors didnt get credit from companies but they had to give some
credit period to wholesalers and retailers and because of that they had to have overdraft
facility with bank. They expected to be given some credit period by the manufacturers.
These results are in agreement with those of Banerjee et al9. Their study revealed that
almost all organized retailers are seeking longer credit. Small format retailers, who dont
have an extensive network and therefore the bandwidth to negotiate with companies, are
feeling the squeeze more than the big retail players.
Menace of Fake Products: Many distributors, wholesalers lost profit margins due to
prevalence of spurious goods with the same brand name and packing colours and many
rural consumers were becoming victims of such menace.
Kaul56 also studied counterfeiting and how FMCG companies were facing problems due
to the spurious goods entered in the distribution channels. He added that other than
pulling down the profits of the FMCG companies, a counterfeit product of lesser quality
gave a "bad name" to the brand.
181
medicines, education and fuel and light etc. in proportion to their income. Many of the
respondents (52%) spent between Rs 301 500/- and were choosy of selecting packaged
food such as biscuits, tea & coffee etc. Many major brands of FMCG were available in
rural area, so all of them went for packaged toiletries and cosmetics irrespective of the
true quality of the products. 50% spent between Rs 301 400/- per month on these.
Rural Consumer shopping behaviour
Many of the rural customers (64%) bought their products from one shop only and the
main reasons were - shop is nearer to their home (64%), credit facility (64%) is available,
reasonable prices (50%), and the most important was the good behaviour and courtesy of
the retailers (50%) and had great influence on rural customers.
Rural consumers Habits with Regard to the Purchase of Commodities
There was awareness among rural customers that they (100%) bought products from
permanent stores only. Because of the monthly bulk purchase, food items they (69%)
were bought from main bazaar without credit and toiletries and cosmetics (83% & 64%)
were bought from the local shopping centre under the pretext that they were same
everywhere and that was the reason why they bought them on credit. Mostly, old people
preferred to buy from local shops. All the respondents (100%) bought food items monthly
and few of them (33%) bought toiletries weekly. Due to less consumption, cosmetics
were bought monthly (86%) and sometimes annually (14%) too. Consumption of
toiletries and cosmetics were less so they were choosy and wanted only a particular
brand, e.g. Fair and Lovely face cream. If required brand was not available they
postponed buying. FMCG shopping is still dominated by male (husband).
Rural Consumer Shopping Behaviour
Majority of the rural customers (81%) traveled a distance of 6 to 15 kms outside the
village to purchase goods. The reasons to buy outside the village were the variety
(100%). The high quality goods (86%) of their choice which they did not find in their
villages and reasonable prices (69%) and there was not a single customer who traveled
for better product services. The main conditions for purchasing on credit were mainly no
183
choice / no bargaining (67%); any substitute available (19%) to be bought and bargaining
was restricted and must buy from the same shop in future (19%). Rural customers could
buy their products on credit offered up to certain amount fixed by the retailers (64%) and
there was a time limit also (33%). It was observed that the customers were charged higher
prices (86%) and low quality goods (86%) if they bought on credit. All the respondents
(100%) did bargaining; most of them did it casually (50%) and also it depended on the
type of shop (36%). The main reason for bargaining was bulk purchasing (64%), so they
required discounts and the customers (14%) were under impression that traders charged
higher prices in the beginning. It was clearly observed that the advice of traders (64%)
attracted customers to buy a particular product / brand and television (36%) also had
moderate impact purchase.
5.8 Brand awareness and preferences
Food items had the biggest patronage between 3 to 5 years. Toiletries (washing soap and
powders) had mediocre patronage between 2 to 3 years. Shampoo in cosmetics had the
least support of the loyal patrons, kept changing.
5.9 Rural consumers response to brand change in different categories
Majority of the respondents (more than 80%) did not change the brands of food items,
whereas toiletries and cosmetics brands (approx 100%) were changed in the recent past.
100% respondents said that the reason for changing the existing brands was that new
brand was of better quality and quantity. Many rural consumers wanted to test the new
brand. In cosmetics category, some respondents shifted to new brands because of window
display and ads. There was not a single respondent who changed the brand because of the
reason that the new brand was cheaper. Traders had incredible influence on purchase by
rural customers. In all purchase he had small or greater role and respondents family
members were also asked for their preferences. The purchase decision was not limited to
one person from family but it is a collective decision. Peer group had almost no role in
their purchase decision. Neighbors and friends did not have predominant role in purchase
decision.
184
General Factors
Rural consumers were highly satisfied with the availability of food items (54%), and
satisfied with toiletries (70%) and cosmetics (67%) though the specific products / brands
not available. At least one product was available under all categories which just solved
their purpose without specific brand and they were least bothered about good / bad
quality products.
These observations are in agreement with those of Sarangpani et al104 who studied that
there are two distinct segments consumers in rural market. One set of rural consumers
who can not read, write and understand with ease. They do not buy branded products.
They have their own method of identification of products and communication with the
retailers. For instance, they ask for Erra Sabbu (for Lifebuoy), Pacha Sabbu (for Nirma),
Neeli Sabbu (for Rin), etc. Rarely do they purchase branded packaged goods and values
associated with them.
There was extremely high dissatisfaction (69% food items, 80% toiletries, and 60%
cosmetics) among the rural consumers regarding range of products because product
length was too short that only 2-4 products were available under each category;
customers had no choice but to buy the available ones.
These observations are in agreement with those of Saran103 who emphasised that the rural
FMCG market with its promise of millions of rural consumers is not yet touched by the
cornucopia of brands and products.
Once the frequently-purchased products were out of shelf it took a lot of time to reach
the shelf back, say min 5 days and max might be more than 10 days also. Therefore
customers were dissatisfied (69% food items, 80% toiletries, and 66% cosmetics) with
regularity of supply of products.
These observations are in agreement with those of Kucuk60 who provided clear insights
into the influence of product availability, and thus distribution on double jeopardy (DJ)
patterns, for frequently-purchased products (FPP). The distribution created behavioural
186
on retailers; producers to catch retailers who not doing malpractices and prosecuted and
producers to ensure implementation of any scheme (promo-offer) in villages.
5.13 Hypotheses validation
Hypothesis I: Existing FMCG Channels of Distribution in Rural Maharashtra Serve
the customers well.
The intent of the researcher was to find out whether there was any relation between the
distance traveled by the rural consumers and the availability of products, range of
products, regularity of supply of goods, and proximity of retailers, and the measures
initiated by the rural consumers if they find poor quality or duplicate brands in rural
market of Sangli and Kolhapur districts hence the hypothesis was formulated.
Spearmans rank correlation coefficient was negative in many variables such as range of
products, regularity of supply, and proximity of retailers and positive in few variables
especially in availability of products.
Range of products at local retailers vs distance traveled by the rural customers
A negative correlation and significance level was two tailed and p value = 0.01 and 0.05
between Distance traveled by the rural consumers to buy products with Satisfaction of
rural customers with range of products at local retailers.
Inference: The rural customers were dissatisfied with the range of food items, toiletries,
and cosmetics available at the local retailers, i.e. there was a lack of product width and
depth. Only a limited range had been observed in food items, toiletries, and cosmetics.
Therefore, it implies that the rural customers have to travel away from their villages to
towns / cities to buy their desired products. These observations are in agreement with
those of Seung-Eun et al109 who found that most strategies performed by small-town
independent retailers did not meet their local consumers' expectations. Specially,
merchandise assortment and their availability, such as offering a unique and large
selection of products, showed the largest discrepancy between respondents' expectations
and retailers' performance, indicating that independent retailers are not meeting their
consumers' needs in these areas.
188
189
there are only 6 shops per village and 340 shops per town / city. There are hardly any
shops in 2.3 lakh villages.
Availability of products vs distance traveled by the rural customers
A positive correlation and significance level of two tailed p value = 0.01 and p value =
0.05 was seen between Distance traveled by the rural consumers to buy products with
Satisfaction of rural customers with availability of products.
Inferences: Availability means the presence of at least one product in one category of
FMCG, i.e. 1-2 products in bathing soap category, one product in washing soap category,
one product in edible oil category etc. irrespective of the brand and variants. The rural
customers are satisfied when the presence of the products at local retailers solves their
temporary purpose. At least one product was available under all categories which solved
their purpose without specific brand as they are not bothered about good/bad quality
products. These observations are in agreement with those of Sarangpani et al104 who
studied that there are two distinct segments consumers in rural market. One set of rural
consumers who can not read, write and understand with ease. They do not buy branded
products. They have their own method of identification of products and communication
with the retailers. For instance, they ask for Erra Sabbu (for Lifebuoy), Pacha Sabbu (for
Nirma), Neeli Sabbu (for Rin), etc. Rarely do they purchase branded packaged goods and
values associated with them.
Poor quality of products vs measures initiated by the rural customers
A positive correlation and significance level was two tailed and p value = 0.01 between
Measures initiated by rural consumers returned goods and took money back with Poor
quality with regard to purchase of products.
Duplicate brands vs measures initiated by the rural customers
A positive correlation and significance level was two tailed and p value = 0.01 between
Measures initiated by rural consumers switched over to other brands with Higher
prevalence of duplicate brands with regard to purchase of products.
190
Inferences: Whenever there is poor quality in FMCG bought by rural customers they
return the goods and take money back from the rural retailers. Most of the rural
customers can now differentiate between original and duplicate brands so they switch
over to other brands if duplicate ones are found. It implied that there was either poor
quality or prevalence of duplicate brands in rural market. Therefore, rural customers were
not getting good quality and authentic brands in rural market of Sangli and Kolhapur
districts. These observations are in agreement with those of Commuri20 who observed
that when premium brands are counterfeited, consumers adopt one of the strategies when
faced with the prospect of their favorite brands being counterfeited: flight, i.e.
abandoning the brand.
Hence the Hypothesis I: Existing FMCG Channels of Distribution in Rural
Maharashtra serve the customers well is not validated.
Hypothesis II: Channel members are satisfied with the distribution of FMCG in
rural market
The intent of the researcher was to find out whether there was any relation between the
FMCG channels satisfaction i.e. satisfaction of distributors / super-stockists / stockists,
wholesalers and retailers, and the attributes mode of delivery, coverage pattern, mode
of payment, costs, number of assortments, lead time, execution of promo-offer, display of
products, understanding of channels requirements, communication, issues handled,
actions taken against channels request, responsiveness during implementation, meetings
with territory in-charge, domain knowledge of territory in-charge, attitude of in-charge,
time taken for query resolution, actions taken against channels complaints, quality of
sales-kit and credit period. Hence the hypothesis was formulated.
To test this hypothesis, Chi-square test was thought to be the most appropriate test which
was designed for use with nominal or categorical data, and it can be used with continuous
variables if the data are first converted into frequency ranges. The Chi-square test is used
to see whether two discrete variables have a relationship or are independent. The
variables were discreet categorical measured on an ordinal scale.
191
Observations: There was a dependency and the two discrete variables had a strong
relationship. As the Chi-square statistic increased, the likelihood that a relationship
existed between two variables, i.e. the type of FMCG channels and attributes increased.
The researcher interpreted the results by looking at the difference between the observed
and expected counts. In this case, the level of significance is 0.001.
The above inference based on Chi-square Test points out satisfaction, though not total
satisfaction.
Result: X2 (2) = 28.369, p < 0.001
Hence Hypothesis II: Channel members are satisfied with the distribution of
FMCG in rural market is validated.
5.14 Constructing a scale to measure effectiveness of FMCG distribution channels
The effectiveness of FMCG distribution channels in rural market was dependent upon the
satisfaction of the rural customers. If the rural customers didnt get the products of good
quality, acceptable size, affordable price, good packaging and also availability of
products, range of products, regularity of supply of products in case of stock-out, and the
proximity of the shops where all these products were available, then the entire
distribution channel was considered to be ineffective. Taking that into consideration, the
researcher developed a scale for nine Fast Moving Consumer Goods edible oil, tea &
coffee, biscuit, bathing soap, washing soap, washing powder, face powder, face cream
and shampoos to measure effectiveness of FMCG distribution channels, which in turn
was the rural customer satisfaction.
The researcher intended to develop a statistical model to predict customer satisfaction for
a product which was dependent on different parameters. The researcher believed firmly
that apart from the psychological factor, the following eight factors Quality, Size, Price,
Packaging, Availability of products, Range of products, Regularity of supply of products,
and Proximity of retail shops, would be predictors to predict dependent variable customer
satisfaction for that product.
192
In order to develop the statistical model to measure customer satisfaction, the researcher
thought Multivariate Linear Regression Analysis (MVLRA) was the best tool which can
be used only under the assumptions of normal distribution. Ordinal regression and log
linear regression are the tools that can be used when the measurement of variable is on an
ordinal scale. The researcher developed the statistical models (scale) for each of the
following products Edible oil, Tea and coffee, Biscuits, Bathing soap, Washing soap,
Washing powder, Face powder, Face cream and Shampoo.
For edible oil
Y=0.012 + 0.106 X1 + 0.102 X2 + 0.132 X3 + 0.129 X4 + 0.269 X5 + 0.108 X6 + 0.144 X7
For tea & coffee
Y=0.026 + 0.068 X1 + 0.122 X2 + 0.131 X3 + 0.118 X4 + 0.289 X5 + 0.107 X6 + 0.139 X7
For biscuits
Y=0.042 + 0.123 X1 + 0.097 X2 + 0.074 X3 + 0.130 X4 + 0.136 X5 + 0.130 X6 + 0.102 X7
+ 0.175 X8
For bathing soap
Y=0.024 + 0.095 X1 + 0.106 X2 + 0.096 X3 + 0.125 X4 + 0.299 X5 + 0.111 X6 + 0.143 X7
For washing soap
Y=0.043 + 0.143 X1 + 0.101 X2 + 0.098 X3 + 0.097 X4 + 0.270 X5 + 0.122 X6 + 0.134 X7
For washing powder
Y=0.027 + 0.151 X1 + 0.109 X2 + 0.091 X3 + 0.113 X4 + 0.283 X5 + 0.100 X6 + 0.130 X7
For face powder
Y=0.013 + 0.093 X1 + 0.113 X2 + 0.099 X3 + 0.131 X4 + 0.145 X5 + 0.147 X6 + 0.112 X7
+ 0.149 X8
193
Y = Customer Satisfaction for products (edible oil, tea & coffee, biscuits,
bathing soap, washing soap, washing powder, face powder, face cream
and shampoo)
X1 = Quality,
X2 = Size,
X3 = Price,
X4 = Packaging
X5 = Availability of Products,
X6 = Range of Products,
X7 = Regularity of supply of Products, and
X8 = Proximity of retail shop for buying products.
5.15 Conclusions
While the rural market certainly offers a big attraction to marketers, it would be nave to
think that any company can enter the market without facing any problems and walk away
with a sizable share. Distribution is the most important variable in the marketing plans of
most consumer goods manufacturers, because managing such a massive sales and
distribution network is in itself a huge task.
Firms rely mostly on their marketing channels to generate customer satisfaction and to
achieve differentiation over competition. Majority of the companies are incurring huge
costs to make their products available in the 3.5 million rural outlets. There are a whole
lot of channels involved in the distribution network. FMCG distribution has the
maximum channel partners in the Indian rural market. The wholesaler is the most
important source of information for the retailer. The wholesaler is also the most important
influence on the retailer. The marketer would try their best to motivate the wholesaler to
194
get the retailer in the rural market to stock his companys products, particularly the newer
products.
The extending of credit by retailers to customers depends upon their location and product.
Earlier rural consumers purchased most of their requirements from nearby towns. But in
recent times, a shift has been seen towards purchasing locally. Rural retailers could
capitalize on consumer satisfaction and provide outstanding value and service to keep
local customers in local markets. Customer satisfaction was essentially the result of a
series of customer experiences. Hindustan Unilever Limited (HUL) and Godrej
Consumer Products have the highest combined market share in rural markets Sangli and
Kolhapur districts and have a strong presence of their products in almost all villages.
They have all types of channels members to reach rural markets. The distribution levels
identified were Distributors, Super-stockist, Wholesalers, Stockists, and retailers. The
conventional approaches to reach rural customers of Kolhapur and Sangli districts in
Maharashtra have different models. There is a distinction between urban and rural
distribution to create special focus on their individual market. The rural distributor covers
large market where road connectivity is available. The wholesaler keeps large
assortments which induce the rural retailers. The rural traders play a key role in the
buying decision of rural customers.
Generally distributors and wholesalers are not present in all the villages but retailers exist
in all villages regardless of the population. Most of the channel members spent huge
amount on immovable products and the main reason for immovable products was damage
in transit or on the shelf. Marketers have introduced the system of taking immovable
products back from distributors recently not because its damaged but unsold and
compensated with another products. Most of the channel members were satisfied with the
present system of FMCG distribution in the rural market of Sangli and Kolhapur districts
in Maharashtra. The frequency of coverage was less for the channels that were located far
away from the feeder village, taking cost factor into consideration. Shrinkage cost was
the biggest threat distributors were facing in Sangli and Kolhapur rural market. The rural
distributors could not run their businesses without credit to the down line channel
195
members. Some retailers had grievance over excessive lead time. There is a dearth of
promotional schemes in rural markets.
Channel conflict was there among the rural and urban distributors over the jumping of
territories allotted by the companies. There is discrimination as distributors didnt get
credit from companies but they had to give some credit period to wholesalers and
retailers. There is a prevalence of spurious goods with the same brand name and packing
colours and many rural consumers were becoming victims of such menace. It was
heartening to see that youngsters between the age group of 18 to 30 years and that too the
married ones had emerged as decision makers in the family who could communicate
well. Less educated people did not buy branded products and became victims of duplicate
products. The researcher felt elated to note that the majority of the families had less
members in family. The majority of the rural consumers had no investment at all. Many
major brands of FMCG were available in rural area. The good behaviour and courtesy of
the retailers had great influence on rural customers. If required brand was not available
rural consumers postponed buying. FMCG shopping was still dominated by male. The
rural customers traveled more distance outside the village to purchase goods.
The reasons to buy outside the village were the variety, the high quality goods of their
choice which they did not find in their villages and reasonable prices and there was not a
single customer who traveled for better product services. The reason for changing the
existing brands was that new brand was of better quality and quantity. Many rural
consumers wanted to test the new brand and not the new brand was cheaper. Traders had
incredible influence on purchase by rural customers. In all purchase he had small or
greater role and customers family members were also asked for their preferences. The
purchase decision was not limited to one person from family but it was a collective
decision. Peer group had almost no role in their purchase decision. Neighbors and friends
did not have predominant role in purchase decision. Once the frequently-purchased
products were out of shelf it took a lot of time to reach the shelf back. Very few rural
consumers had awareness about different consumer protection acts and also whoever
196
knew it was difficult to recall which had become again a serious concern for the
marketers.
It was again an eye opening for the marketers that there was a strong presence of
duplicate brands in rural areas which was perhaps difficult for the customers to identify
and less awareness. It was good that customer lodged complaint with retailers but most of
them had taken very strong measure by switching over to other shop and some of them
returned the goods and took money back in case of complaints against the goods. No
legal case filed and no replacement with the new goods. Retailers requested
manufacturers to provide information on new products and customers expected to give
good products, to provide discount at par with their urban counterparts, producers to have
check on retailers, producers to catch retailers who were doing malpractices and
prosecuted and producers to ensure implementation of any scheme (promo-offer) in
villages. There were limited stocks of products at village retailers. If the products were
out of stock, rural customers had to wait some days. So, it compelled them to travel
outside their villages to meet their demands. Whenever there was poor quality in FMCG
bought by rural customers they returned the goods and took money back from the rural
retailers. Most of the rural customers could now differentiate between original and
duplicate brands so they switched over to other brands if duplicate ones were found.
197