Channel Management in Rural Markets

Channel Management in Rural Markets:

The second major task in rural marketing is organizing an effective distribution channel. This task too has many problems:

1. Multiple tiers, Higher Cost and Administration Problems: The distribution chain in the rural context requires a large number of tiers as compared to the urban context. In the rural context, at the minimum level the chain needs the village shopkeeper, the wholesaler, etc., whereas at the top level involves the manufacturer’s own warehouses, office operations at selected centers. Such multiple tiers make channel management a major problem area.

2. Scope for Manufacturer’s own Outlets Limited; Greater Dependence on Dealers: Scope for manufacturer’s direct outlets such as depots or showrooms is limited in rural markets unlike in the urban context since it is expensive and unmanageable.

3. Non-Availability of Dealers: There is also a problem of availability of dealers. Suitable dealers are limited even if the firm is willing to start from scratch and try out rank newcomers; the choice of candidates is limited.

4. Poor Visibility of Retail Outlets: Sales outlets suffer from poor viability in the rural market. Scattered nature of market and the multiplicity of tiers in the chain use up the additional funds the manufacturer is prepared to part with. Moreover the business volume is not adequate enough to sustain the profitability of all groups and the retail tier is the worst sufferer.

5. Inadequate Bank Facilities: Due to lack of bank and credit facilities distribution in rural markets is handicapped. Rural outlets need banking support for 3 important purposes;

1. In facilitating remittances to principals and to get fats replenishment of stocks.

2. In receiving supplies ‘through bank’ (retiring documents with the bank).

3. To facilitate securing credit from banks. It is estimated that there is only one bank branch for every 50 villages.

6. Inadequate Credit Facilities from Banks: Another constraint is the inadequacy of institutional credit. Rural outlets are unable to carry adequate stocks due to lack of credit facilities. The vicious circle of lack of credit facilities leading to inadequate stocking and loss of business, finally result in poor viability of outlets, getting perpetuated.