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Possible Approaches for Effective Channel Management .docx

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International Business
INTB 2200
Luming Wang

Possible Approaches for Effective Channel Management in the Rural Context Taking due note of the difficulties, let us see how a firm can go about these tasks. The Existing Market Structure It has been estimated that the Indian rural market is composed of 22,000 primary rural markets and 20 lakh retail sales outlets of which nearly one lakh are fair price shops of the Public Distribution System (PDS). One retail shop serves on an average 60 to 70 families in the rural areas. The structure involves stock points in feeder towns to service these retail outlets at the village level. The stock points belong to either the manufacturer or the marketer / distributor for the area. In either case, the stock point in the feeder town is the key to rural distribution. The Available Channel Choices Today, the channel types that are available in the rural markets are as follows: The private shops The co operative societies The Fair Price Shops (FPS), (co operatives or private), of the PDS The village shandy or weekly market Out of the above, the cooperative societies are mainly concerned with the distribution of agricultural inputs and the FPS with the distribution of essential commodities consumed by the common man. The 'village shandy' is a widely used channel of the rural market. But its role in marketing branded products is somewhat limited. The Private Village Shops For a large variety of consumer products, the private shops are the main channel in the rural markets; they are also the cheapest and the most convenient channel to align with. As such, we shall examine in some detail how the private village shops are utilised by the business firms in their rural distribution effort. According to a census of retail outlets carried out by the Operations Research Group(ORG), there are 2.02 million sales outlets in rural India, with a major chunk constituted by the private shops. In fact, the private village shops are seen to be one of the cheapest distribution channels in the world. This is quite striking, considering the many handicaps with which the village shopkeeper in India has to operate. He is forced to deal in a large number of products in order to make his operations viable. That means a larger inventory. The longer lead time for replenishments from the urban based production point enlarges the inventory holding further. And as his
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