Selling and Distribution:

some perspectives………
K. Dasaratharaman
 Urban – Rural divide

How do we define what is Rural and Urban in

vast country like ours?
 Urban – Rural divide
An Urban town is defined as:
1. All places with a municipality, corporation,
cantonment board etc….
Or
2. a) Popn. > 5000
b) 75 % of Popn. engaged in Non - agri
activities
c) Popn. density > 400/ sq km
 India: the land of dispersion…….
Population No of Towns % Population Average Popn
Range / Town
Urban

> 10 million 3
22%
1 -10 million 50 530,000

100K – 1million 415

< 100 K 5698 10% 17,500

Total Urban 6166 32 %

Rural ~ 630,000 68% 1,100

Census Of India : 2011

 India … the land of shopkeepers
Country No. of Retail outlets No. of Retail
(millions) outlets / million
Popn.
UK 0.30 4900

USA 0.95 3150

Japan 1.00 7300

Brazil 1.20 6200
Indonesia 2.70 11500

China 4.50 3500

India Estd.15.0 12000

Source: Euromonitor, 2007 with extrapolation

 Opprtunities
• The main 2 opportunities lie in :

• Category penetration (No of people who

“consume” the category)

• Per capita consumption ( Quantity they

consume)
 Category Penetration
Category % Penetration
Toilet Soaps 96
Washing Powder 92
Detergent bar 88
Hair Oil 74
Toothpaste 66
Shampoo 56
Talcum powder 52
Fairness cream 17
Antiseptic cream 1.7
Cold cream 1.3
 Penetration – Urban vs Rural
Category Urban Pen % Rural Pen %
Shampoo 57 37
Hair Oil 80 67
Skin cream 32 18
Mosquito 59 18
repellent
Instant noodles 19 3
Floor cleaner 26 4
Hair Dye 5 2
Toothpaste 77 42
The rural opportunity
 Haats and Melas
• Over 50,000 Weekly Haats in the country

• Sales of about Rs 5,000 Cr p.a @ Rs 10 lacs

p.a.

• Over 25000 Melas @ Rs 25 lacs p.a

= Rs 6250 Cr p.a.
 ……….Infrastructure bottlenecks
• Road density (Km/ 000 people) India: 2.75
World Avg: 6.70

• % of Rural Popn within 2 Kms of a motorable road : 60 %

• National Highways as % to Total roads : 2%

• % Traffic in National highways : 40 %
• % of National Highways which are 4 laned : 14%
• % of State highways which are 4 laned : 1%

• Availability is not automatic, but needs to be created……….

– Physical distribution beyond the top 468 big towns is a challenge that
requires planning and proper design…….
– Rural distribution is another ballgame....esp. given the density of
demand !
– In smaller markets : Supply side economics works!
Retail Environments
Who knows the history of the Kirana Stores across our land?
 Retail environment challenges
• Traditional Retail environment is sub optimal:
• Buying patterns are haphazard
• Inventory holding is low / inconsistent
• SKU range is low / inconsistent
• Storage conditions are poor
• Display is poor
• Stock rotation is poor
• Advocacy is absent

• Modern Retail is in its infancy but growing……..

 Channel partnership……..
• It is impossible to get Availability without the
inclusion of trade members

• Trade channels can be your best friend or your

worst enemy – depending on how you partner
them……

• A good S & D system can deliver huge

competitive advantage……..
 The not so ‘dark side of the moon’…..
• Marketing creates demand…….
• S &D fulfils demand…….
• S &D also
– creates trials……
– develops new consumers and markets…..
– retains consumers……
– introduces new products…..
– delivers share and growth……
 S & D Tasks
• Task of Sustained Availability + Visibility + Advocacy :
strategic + operational………..

• Direct + Indirect Availability = Total Availability

(> 630,000 markets; 15 mln retailers; >500 K wslrs)

• Design of the Channel structure + Tasks + Remuneration

structures are Strategic

• Smooth running of system : Operational excellence…….

– Results in sustained availability + Trade advocacy
– Results in competitive advantage  share + growth 
sustained profits
S & D: Decision Hierarchy

Strategic

Operations

Transactions
 S & D: Transactional Decisions
• Transactional:
– Coverage
– Frequency of purchase for salesman / wholesaler
– Unique new outlets
– Lines per call
– Billing per call
– Inventory per outlet
– Beat productivity
– Beat optimisation
– Outlet level objectives
 S & D: Operational Decisions
• Operational:
– Channel Mgt: collaboration + conflict
– Servicing and Inventory optimization
– Trade Pricing, Discounts and Trade offer mgt
– Territory Mgt
– Sales planning, targets and performance mgt
– Sales force Mgt
 S & D : Strategic Decisions
• Strategic: Design of the S & D system:
• Distribution Footprint
• Channel Footprint and Structure
• Channel Tasks and Margins
• Trade Servicing – logic and deliverables, cost – benefit
• Supply Chain, Logistics and Inventory planning
• Distributor Mgt: selection, training, motivation
• Sales force: structures, selection, training, performance
mgt systems
• Modern Retail: TOT, Supply Chain, Servicing, Activation,
CRM, Category / SKU mgt.
 Influences / Competencies……….
• Contributions from:
– Business Economics
– Behavioral sciences
– Optimization techniques
– Data analytics and CRM
– HR and people management

• Leadership practice school: planning,

communication, performance mgt, environment
mgt, partnership mgt………
• S&D is both a science and an art……

……. Let’s enjoy