Problems in rural marketing as Warehousing and Transportation

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Problems in Rural Marketing: Warehousing and Transportation

1. Transportation Problems

Infrastructure Deficiencies:

  • Connectivity Issues: Many rural villages lack access to railways and waterways. Approximately 50% of the 576,000 villages in India are not connected by roads, and many areas have only kacha (unpaved) roads.
  • Common Modes: Animal-drawn carts are frequently used due to the inadequate road network. Although India has a large railway system, it does not cover all rural areas.

Impact on Distribution:

  • Delivery Challenges: Poor infrastructure makes it difficult to deliver products and services efficiently, resulting in increased costs and logistical issues.

2. Warehousing Problems

Lack of Facilities:

  • Storage Shortages: Suitable warehousing facilities are scarce in rural areas. Central Warehousing Corporations (CWC) and State Warehousing Corporations (SWC) primarily serve major market centers, leaving rural areas underserved.
  • Private Warehouses: While private warehouses exist, they are often used exclusively by cooperatives or individual firms, not available for general public use.

Impact on Business:

  • Increased Costs: Firms may need to establish their own storage solutions or rely on limited public facilities, leading to higher warehousing costs and inefficiencies.

3. Communication Problems

Infrastructure Limitations:

  • Inadequate Services: Basic communication services such as postal services, telephones, and telegraphs are often insufficient in rural areas. This hampers effective marketing and coordination.

Impact on Marketing:

  • Coordination Difficulties: Poor communication infrastructure makes it challenging to manage marketing activities and maintain efficient distribution channels.

Cost-Service Dilemma

Challenges:

  • Higher Costs: Due to deficiencies in transportation, warehousing, and communication, distribution costs in rural areas can be 50% higher than in urban areas. In some cases, costs may be two and a half times higher.
  • Service Levels: Maintaining service levels becomes difficult as businesses face increased costs and logistical hurdles.

Solutions to Physical Distribution Problems

1. Shared Physical Distribution Responsibility

  • Stockists and C&F Agents: Collaborate with stockists or clearing and forwarding (C&F) agents to manage distribution. This helps reduce costs and ensures effective market presence without needing a full network of own stock points.

2. Combining Different Modes of Transportation

  • Multi-Modal Transport: Use a combination of rail, trucks, delivery vans, and bullock carts to cover various distances and terrains. Bullock carts, in particular, are useful for local transport in rural areas.

3. Company Delivery Vans

  • Direct Distribution: Firms like Hindustan Unilever and ITC use delivery vans to reach remote areas directly. This approach helps in market development and sales promotion, though it involves higher costs. The benefits include establishing direct sales contact and building market presence.

4. Syndicated Distribution

  • Shared Resources: Firms with fewer resources can collaborate to support independent agencies operating delivery vans. This shared approach helps reduce costs and improve distribution efficiency.

5. Assistance from Stockists

  • Logistics Support: Companies can work with stockists to own or hire transportation vehicles for distribution. Financial support from the company can help stockists manage these logistics.

6. Central Warehousing Facilities

  • Improved Storage: Encourage CWC and SWC to extend warehousing facilities to rural areas. Alternatively, firms can collaborate to establish shared warehousing facilities, possibly using cooperative models.

7. Sorting Out Communication Problems

  • Government Involvement: Advocate for improved communication infrastructure from the government. Explore private initiatives like small telephone exchanges and partnerships to enhance local communication.

Additional Insights

  • Infrastructure Investment: Addressing these challenges requires significant investment in infrastructure and collaboration between public and private sectors.
  • Long-Term Commitment: Firms should view investments in rural distribution as long-term commitments, considering the potential for growth and market development.

Effective solutions to these problems can enhance rural marketing efficiency and unlock the potential of rural markets.