Vol. 8 Issue 2, February- 2018 ISSN(o): 2249-7382 | Impact ...

International Journal of Research in Economics and Social Sciences (IJRESS) Available online at: http://euroasiapub.org Vol. 8 Issue 2, February- 2018 ISSN(o): 2249-7382 | Impact Factor: 6.939 |

International Journal of Research in Economics & Social Sciences

Email:- [email protected], http://www.euroasiapub.org (An open access scholarly, peer-reviewed, interdisciplinary, monthly, and fully refereed journal.)

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“ISSUES OF SALES AND DISTRIBUTION IN RURAL MARKET OF UDAIPUR CITY WITH SPECIAL REFERENCE TO FMCG SECTOR”

Saurabh Mishra*

Assistant Professor, Department of Business Management & Commerce, Mandsaur University.

Dr. Tarika Singh**

Professor, Prestige Institute of Management, Gwalior

Abstract

Rural markets, as part of any economy, have untapped potential. There are several difficulties confronting the effort to fully explore rural markets. The paper “Issue of Sales and Distribution in Rural Market-FMCG Sector” aims to assimilate data about the various aspects of sales and distribution network of Fast Moving Consumer Goods in rural market. In the research the survey of the rural market retailers have been done and tried to find out the issues they are facing. Rural consumer’s beliefs in purchasing of small packets of products, small quantity of products, not easily move one to another product etc. So, in rural markets sales are less and limited, rural retailers are also not highly literate and financially strong, they have not attractive infrastructure of shop and not proper electricity and communication facility. They are less affordability of products and less awareness about new product and schemes on products, they do not properly promote the FMCG products in rural market etc problems in the distribution or sales of products.

For this paper the survey of FMCG products Distributors of Udaipur city and retailers of nearby rural areas is taken into consideration and collected the data about the issues or problems in sales and distribution of the FMCG products. It is found that distribution problems in rural market like poor transportation, Bad road infrastructure, illiteracy of retailers, financial problems, poor storage facility and unawareness of products etc. are the major issues which the retailers are facing. Study also suggested the better sales and distribution network in rural Market.

INTRODUCTION

Rural Market

In a diverse market like India, Out of the total of 1210.2 million populations in India, the size of rural populations is 833.1 million which constituted 68.84% of total populations as census survey of 2011, the urban-rural divide is quite significant. During 2001-2011 the rural population increased by 90.4 million, and the number of villages increased by 2,279 in between 2001-2011. The majority of world’s rural population lives in rural India. According to the 2011 census, 68.84 per cent of the population are scattered in 6, 41, 000 villages in India.

The demand and living pattern of Indian rural habitants are different and varies considerably. The cultural dimensions are also varies. These factors certainly make an impact on the need and behaviour of rural consumers. With its vast size and widespread array of consumers, marketers have been finding it difficult to understand and penetrate into rural areas, and finding difficulties to understand the norms of enter into the rural market.

Rural FMCG Market of India - Overview

The Rural FMCG Market of India is still unexplored and it provides tremendous growth opportunities. The Rural FMCG Market of India is on the verge of registering substantial expansion across the country. The Indian Rural FMCG market is mostly unorganized and it is

International Journal of Research in Economics and Social Sciences (IJRESS) Vol. 8 Issue 2, February- 2018 ISSN(o): 2249-7382 | Impact Factor: 6.939



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generally dominated by small time retailers. The organized FMCG market is only confined to the urban areas of India. Rural India mostly depends on agriculture, directly or indirectly for livelihood. Further, almost 70% of Indian population lives in rural India in around 6,41,000 villages. Rural India offers tremendous growth prospects for the FMCG industry. Facilitation of better rural infrastructure like roads, telecommunication, electricity, supply chain, and transportation would proper the growth of Rural FMCG Market of India. Further, very low per capita consumption of FMCG products also provide tremendous opportunity for the growth of Rural FMCG markets in India.

The FMCG sector, which offers tremendous growth prospects are Food and beverage sector, health care and personal care. Presently, rural India accounts for 34% of total FMCG consumption, but it accounts for more than40% consumption in major FMCG categories like as personal care, hot beverages, and fabric care.

The government of India new road map for the development of Indian agricultural sector will facilitate growth of rural FMCG industry. The rural market is not homogeneous. The individual sections of this market are not too big, although the overall size is large. There are Geographical, demographical, statistical and logistical differences. Positioning and realities regarding the potential of each of these market segments differ and lie at the very core of forming the strategy for the rural markets. Gone are the days when rural consumer went to nearby city to buy ‘branded products &services’. Direct selling through company delivery vans, syndicated distribution between non-competitive marketers, setting up of temporary stalls in rural melas / haats are few successful examples. Use of stockiest and their staff for effecting direct sales to rural consumers have also been found to be successful by companies like Hindustan Unilever / ITC / Colgate / Godrej.

Innovative distribution model that merits mention is the HLL’s Shakti project, which connects Self-Help Groups (SHGs) with business opportunities. Hindustan Lever promotes and uses the SHGs network present in the villages for increasing its sales in the rural areas. The SHGs are offered chance to become company’s local small scale distributor in the rural areas. The groups, typically of 15 to 20 people, buy a small stock of items such as soap, detergent or shampoo and then sell directly to consumers in their homes. Lower prices/smaller packaging has been the most common strategies adopted by FMCG companies to penetrate rural markets. HLL initiated Operation Bharat to tap rural market by rolling out low priced sample packets of its toothpaste, fairness cream, shampoo, cream and other products. Similarly LPG companies have introduced small sized cylinders ensuring that price remains in the affordable range for its rural consumers. The rural audience better receives tailor-made products as the consumers feel empowered and tend to identify with the offering.

Rural Market is an evolving concept, and as a part of any economy has untapped potential; marketers have realized the opportunity recently. Improvement in infrastructure and reach promise a bright future for those intending to go rural. Any macro-level strategy for these markets should focus on availability, accessibility and affordability. Constant scanning and sieving of ideas and plans is essential at all times. Focused attention needs to be paid to market research that goes on to reduce the uncertainly in dealing with these markets. More specifically, in relation to rural areas, demand is seen to a very highly price elastic. To break the price barrier is essential. Only this can keep the grey area local brands in check. There is no doubt that divides do exist between urban India and Rural Bharat.

Some major problems in the distribution of FMCG products in the rural market are:

◦ Lack of adequate transport facilities

◦ Large distances between villages

◦ Lack of proper retail out lets

◦ Difficulty in reaching rural consumers




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◦ Lack of pucca roads connecting villages to nearest townships

Sales and Distribution

Distribution is one of the four aspects of marketing. A distributor is the middleman between the manufacturer and retailer. After a product is manufactured, it may be warehoused or shipped to the next echelon in the supply chain, typically a distributor, retailer or consumer.

The other three parts of the marketing mix are product management, pricing, and promotion. Frequently there may be a chain of intermediaries; each passing the product down the chain to the next organization, before it finally reaches the consumer or end-user. This process is known as the 'distribution chain' or the 'channel.' Each of the elements in these chains will have their own specific needs, which the producer must take into account, along with those of the all-important end-user.

Distribution Channels are probably the most visible aspect of any company’s marketing efforts. A recent estimate puts the number retail outlets in India at 5 millions. The distribution function is currently undergoing tremendous changes in terms of both its span and productivity. As has already happened in the case of manufacturing activities, modern technology is fast transforming this sector beyond recognition. The focus of all these changes is on increasing the convenience to the end consumers, either by increasing the numbers benefits at lower rate.

RESEARCH METHODOLOGY

Research methodology is the systematic problem analysis, model building and fact finding for the purpose of improved decision making. It is the collection summary and analysis of data regarding goods and services it helps in deciding the nature and tend demand. Research may involve a scientific study or experimentation and result in discovery or invention, which would aid either scientific development or decision making.

Objectives of Research

To examine the current rural market issues

To identify rural markets FMCG distribution network

To identify the challenges facing by the distributors in rural areas

To identify the problems facing by shopkeepers to sale out a FMCG product in rural market

To suggest effective strategies for sales and distribution in rural areas

Research Design

A proper plan was developed, finalized and descriptive research design chosen.

Sampling Design

Sample Size

Distributors - 15

Shop owners –45

Sampling method

Random sampling

Data Collection

Types of Data

Primary Data

Questionnaire filled up by FMCG Product Distributers and Shop owners in rural market.




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Secondary Data

Internet, Books from the College Library, Research papers and Journals, Business India, Rural development Magazine, other Journals and research projects available on rural marketing in the college library.

Data Collection Methods

The information on these aspects was collected through primary and secondary means. The study was descriptive and was conducted using two questionnaires, which formed the Primary source information, while literature provided from internet, some books, and company catalogue constituted the secondary source of information.

Place of Study

The sampling area was Udaipur city Distributor’s and Shop owners of rural areas (Salumber, Chikalwas, Thur, Ramgiri, badi, Bedla, Tidi, Jhadol phalasiya). It is small rural areas located at the nearby Udaipur city and forms a primary market for purchasing of FMCG products.

Sampling Frame

The shopkeepers and distributors were randomly selected from those who were coming out of shops selling FMCG products.

Tools and Techniques of Data Analysis

The data so collected will be analyzed through the application of statistical techniques, such as bar graphs, pie charts and Likert 5 Rating Scaling.

DATA ANALYSIS AND INTERPRETATION

Questionnaire for Distributors-

1. For how long you are in the trade of FMCG sector/ products?

Years of trade No. of Respondent % of Respondent

One year or less 3 20%

One to three years 5 33.34%

Three to five years 2 13.34%

More than five years 5 33.34%

Total 15 100%




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Interpretation: Total no. of Respondent-15

In this question the total respondent distributors are 15.In which 3 distributors are trading of FMCG products from one year or less, 5 distributors are one to three years, 2 distributors are three to five years and 5 are distributors are more than 5 years treading FMCG products. The respondents percentage are the respectively 20%, 33.34%,13.34% and 33.34%.It means the more than 50% distributors are less experience in Distribution and treading FMCG products.

2. Please select your level of satisfaction to the following statements –Analysis of statements based on Likert Scale A Likert scale is a psychometric scale commonly involved in research that Distributors Questionnaire. Likert scale is a 5 points rating scale which is used to determine the degree of satisfaction. For Highly Unsatisfied-1, Unsatisfied-2, Moderately Satisfied-3, Satisfied-4, Highly Satisfied-5 are scales.

S. No.

Statements/ Scale

Highly Unsatisfied 1

Unsatisfied 2

Moderately Satisfied 3

Satisfied 4

Highly Satisfied5

Arithmetic mean-(∑xi.fi/∑fi)

1.

Retailers satisfied with the profit margins they are getting

1 2 5 3 4 3.47

2. Sales efforts of the Retailers

3 3 4 4 1 3.2

3.

Storage facility of product in rural market

4 2 5 2 2 2.73

4.

The promotional efforts of the Retailers at the local level

3

3

5 3 2 3.06

0%5%

10%15%20%25%30%35%40%

One year orless

One tothree years

Three tofive years

More thanfive years

Trade Year

Years of Trade

Percentage ofRespondent




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All four statements has been evaluated using 5 point rating scale to analyze the responses the average has been taken using Arithmetic Mean (∑xi.fi/∑fi). The mean value comes out to be first statement is 3.47 which can be interpreted that on average distributors response is satisfied. Second statement mean value is 3.2 which response is moderately satisfied. Third Statement mean value is 2.73 means distributor’s response is moderately satisfied and fourth statement mean value is 3.06 it mean distributors response towards moderately satisfied. It means the maximum respondent distributors are moderately satisfied with the statements.

3. How effectively retailers help in promoting the product by way of:

Particulars Highly effective Moderatelyeffective Less effective

Visibility of product 10 3 2

Local level promotions 8 4 3

Credit Policy 9 5 1


In this sample size distributors are accept the Retailers help in promoting the product in three statements which are highly effective ,moderately effective and less effectiveness in promotion of products. In this graphs data show the numbers of distributors are accept the effectiveness of these statements.

Highly effectiveModerately

effectiveLess effective

Visibility of product 10 3 2

Local level promotions 8 4 3

Credit Policy 9 5 1

0

2

4

6

8

10

12

no

.of R

esp

on

den

t

Retailers help in promoting the product




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For Retailers

1. Reasons for selling FMCG products?

Selling FMCG products No. of respondent % of Respondent

Margin 16 35.56%

Promotional Schemes 8 17.77%

Demand 10 22.22%

Dealer relationship 4 8.88%

Credit Policy 6 13.33%

Other Reasons 1 2.23%

Total 45 100%

Interpretation:

In this data total respondent 45 rural retailers.

In this question different reasons are for selling FMCG products in rural area by the retailers. The graph shows the 35.56% retailers for good margin, 17.77% retailers good promotional schemes on products, 22.22% for good demand, 8.88% for good dealers relationship, 13.33% because of better credit policy as compare to other products and only 2.23% retailers are some other reasons sale the FMCG products .

2. Please select the level of satisfaction on following statements: Analysis of statements based on Likert Scale. Likert scale is a 5 points rating scale which is used to determine the degree of satisfaction. For Highly Unsatisfied-1, Unsatisfied-2, Moderately Satisfied-3, Satisfied-4, Highly Satisfied-5 are scales.

0.00%5.00%

10.00%15.00%20.00%25.00%30.00%35.00%40.00%

35.56%

17.77% 22.22%8.88% 13.33%

2.23%

% of Respondent

Selling FMCG Products




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S No.

Statements

/Scale

Highly Unsatisfied

1

Unsatisfied

2

Moderately Satisfied

3

Satisfied

4

Highly satisfied

5

Arithmetic mean-(∑xi.fi/∑fi)

1 Delivery of products on time.

20 12 8 3 2 2

2 Behaviour of Representatives.

5 9 15 10 6 3.06

3 Credit policy of distributors.

13 6 10 12 4 2.73

4 Packaging of products.

10 8 13 9 5 2.8

5. Pricing of products.

5 11 16 10 3 2.89

Interpretation: No. of Respondent-45

All five statements has been evaluated using 5 point rating scale to analyze the responses the average has been taken using Arithmetic Mean (∑xi.fi/∑fi). The mean value comes out to be first statement is 2 which can be interpreted that on average retailers response is Unsatisfied. Second statement mean value is 3.06 which response is moderately satisfied. Third Statement mean value is 2.73means retailersresponse is towards negative degree means unsatisfied, fourth statement mean value is 2.8 it mean maximum retailer’sresponse towards unsatisfied and fifth statement mean value is 2.89 the maximum respondent retailers are between Unsatisfied and moderately satisfied it means the retailers response not toward positive degree.

FACTS AND FINDING

In the research many facts related with the sales and distribution of FMCG product in rural market found out by me. According to the data analysis in the rural markets many problems related with sales and distribution as well as rural retailers and rural consumers. The data was collected from Udaipur nearest rural areas which represent the poor conditions of rural FMCG market and its shows the all India rural market condition. In the research project following major facts are:

Rural India is a huge untapped market which offers great scope for the expansion of FMCG products.

Rural market has ample opportunities for selling different kinds of FMCG products.

The rural market is characterized with unfamiliarity with such products.

There is huge deficiency in the amount of products and services available in the market.

The rural population prefers going to the market often so products should be available in small packages.

The rural markets main issues the transportation facility, unawareness of new products, not proper marketing and promotions of products.




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The ruralFMCG market very vast but there main problem is rural market consumers are beliefs in purchasing small quantity of products.

Distributors attitude towards rural retailers are not much good. Distributors are facing lack of sales force for rural market. Rural retailers are facing problem related to the proper knowledge about the products,

not afford the large quantity and not easily accept the new products. Rural market infrastructure are not good no proper facility for Diary products and bakery

products.

SUGGESTIONS

The distribution channel structure in India is largely traditional and quite unique. The major channel components are the retail network, wholesale network, and the logistics infrastructure. The retail network in India consists of over nine million outlets. These include traditional outlets like paan shops; grocers or kirana stores; general stores.

Wholesaler-distributors will continue play an important role in marketing channels and supply chains. Distributors are remains an important role because they give credit facility to rural retailers, good attitude towards the retailers, give proper knowledge about the products at the time.

Manufacturers or distributors will explore new distribution options. Third-party logistics providers, who have traditionally been package-handling enterprises, are moving “inside the box” by offering product-handling services such as warehouse management, order processing, pick/pack/ship, just-in-time parts delivery, and many other “wholesale distribution” functions. Many other strategy are adopted by the companies for improvement in sales and distribution system in rural area like training to the rural retailers and small packets develop for rural customers which are low prices and proper advertising about the products, time to time conduct product awareness programmes in which tell about the products & its uses or features.

CONCLUSION

In rural market, the vast spectrum of courses to be followed require special care and attention with respect to the product, its quality, packaging, brand, pricing, advertisement, personal selling and channel of distribution. The strategy of rural marketing has to be appropriate appreciating fully the scattered character of rural markets. The government role lies primarily in developing the infrastructure, e.g. A good network of roads in the interiors of rural India, speedy arrangement for better light, water and irrigation facilities, financial and technical assistance in setting up the industries in villages, and distribution of their products. The government’s role will be equally important in conducting rural market surveys and compilation of vital statistics and their publication for the benefit of business and industry. Direct selling through company delivery vans, syndicated distribution between non-competitive marketers, setting up of temporary stalls in rural melas/haats are few successful examples.

In the end it is certain that FMCG companies will have to really gain inroads in the rural markets in order to achieve double digit growth targets in future. There is huge potential and definitely there is lot of money in rural India but the smart thing would be to weigh in the roadblocks as carefully as possible. The companies entering rural market must do so for strategic reasons and distribution network are must better. Literacy rate is low in rural area so people are unable to identify brand difference but now situations are changes so There is rapid development in infrastructure all these opportunities and The Rural market is a greater future prospect for the marketers and there are many opportunities available for them in rural markets.

In concluding remark, if the company wants to capture the rural market, they must first make the proper distribution network for continues supply of product and aiming at the particular characteristics of the rural market, and utilizing different marketing strategy according to concrete situations.




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REFRENCES

Kumar & Joseph(2014), A Study on Consumer Behavior towards Fmcg Products among the RuralSuburban Hhs of Ernakulam, Journal of Global Economics, 2014, 2-4

Kundu Surinder Singh,( 2013),‘Customers’ Perception towards the Fast Moving Consumer Goods in Rural Market: An Analysis’International Journal of Techno-Management Research’ Vol. 01, Issue 02,p.g.-1-2

Singh Priyanka,(2013), ‘Opportunities and Challenges in Rural Marketing’, International Journal for Research in Management’ Vol. 2, Issue 9,p.g.-1-4

Mulky Avinash G.(2013), Distribution challenges and workable solutions’,’ Marketing, Indian Institute of Management Bangalore’IIMB Management Review,p.g.1-2 and 179-195

G. Nagarajan, Sheriff J. Khaja ,(2013) ‘Emerging Challenges and Prospects of FMCG Product development in India’ International Journal of Marketing, Financial Services & Management Research,Vol.2, No. 1p.g-48-49

Behura KC and Panda JK;(2012)‘Rural Marketing of FMCG Companies in India’VSRD International Journal of Business & Management Research’,’ Vol. 2 (2)’pg.-65-74

Kumar Pawan, Dangi Neha,(2013),‘Rural Marketing in India: Challenges and Opportunities’,‘International Journal of Management and Social Sciences Research (IJMSSR)’Volume 2, No. 8,pg.-92-96

Kotni Prasad Devi V V,(2012), ‘Prospects and Problems of Indian Rural Markets’ ,ZENITH International Journal of Business Economics & Management Research’,Vol.2 Issue 3,pg.-202-211

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