1. Barefoot competition
Neha Gupta (10DM-091)

2. Market Characteristics
Changing lifestyles
Increase in competition
Demand no more confined to purely basic/functional products
Increase in Brand Stickiness
Low volumes per retail outlet
Frequent Purchases

3. Reasons for demand growth
Rising aspirations
Increase in penetration of televisions in small towns
Exposure to urban life
Higher disposable income levels

4. Challenge?
Speed to service the rural distribution chains

5. Hub and Spoke Distribution Model
Company Depot
Large Distributor (Hub)
Small distributor in adjoining area
Full loads suppy twice a week on DD

6. Super Distributor Method
Company Depot
Territory Sales Rep
Super Distributor + 5 Pilot Sales Reps
Distributor
Retailer

7. Coca Cola’s Hub and Spoke Model
Coke started out by drawing up a hit list of high potential villages from various districts. To ensure full loads, large distributors (Hubs) were appointed, and they were supplied from the company's depot in large towns and cities.
Full load supplies were offered twice weekly against payment by demand draft. On their part, the hubs appointed smaller distributors (Spokes) in adjoining areas.
The smaller distributors undertook fixed journey plans on a weekly basis and supplied against cash. The distributors also hired rickshaws (cycle operated vans) that travelled to villages daily.
Providing low cost ice boxes
Result: Increase in penetration from 13% to 25%

8. Marico’s Distribution Network
Covers almost every Indian town with a population of over 20,000 ;1.6 million retail outlets spread across the country
882 direct distributors, 153 super distributors, catering to 2393 small stockists and 4523 van markets
 Dedicated team of Territory Sales Executives and Pilot Sales Representatives 

9. LG: Charting plans for Rural India
Plans for exclusive retail
65 remote area offices under branch offices directly linked to the central billing systems for orders
230 service centres
2,600 mobile authorized service personnel for villages having less than 10,000 residents.

10. Tailoring Product Portfolios
At present, 20% revenue from Rural India
Established connection through Sampoorna TVs
Introducing washing machines with plastic bodies, geared for supplies to coastal areas to guard against the high corrosive content of salt in the water supply
Refrigerators with built-in voltage stabilizers to protect the compressor from fluctuations in electricity supplies
Formed a special team, which will undertake an extensive study to introduce "the right products for the rural markets"

11. HUL: Modifying Rural Distribution
In discussion with top telecom firms and banks & financial services companies to create a joint distribution model
Operation Stream Line
Removed the layer of Star Stores
Reduction of the margins of the Rural Distributors by 2% from 6.76% to 4.76

12. How do RD’s cope with the situation?
Start Milk Runs
Retain Star Sellers for village clusters faraway from base town
Have its seller visiting retail outlets
Dropping a few retail outlets
Better quality of coverage to rural outlets
Increase in business, more absolute margin money
Lower Fixed Cost of Distribution
Value Unlocked

13. Conclusion Increase product availability
Design products keeping in mind rural preferences and constraints
No fixed distribution network serves Rural India
Exclusivity comes with price
Speed is important

14. Thank You