Satellite Distribution in Rural Area -
October 1st, 2010
A concept known as ‘Satellite Distribution’ can be tried in developing a distribution channel in the rural market. Under this system, the firm appoints stockist in feeder towns, who take care of financing, warehousing the goods and sub-distribution of goods. The firm also appoints a number of retailers in and around the feeder towns and attaches them to the stockist. The goods are supplied to the stockist either in cash or credit or on consignment basis.
The sales volume of the retailers will vary depending on the potential of the area covered and the capacity on the dealer concerned. Over a period of time, some retailers grow in terms of business turnover. If such retail points also happen to be transportation centers within the feeder town area, the firm elevates them as a stockist. The area of operation of the original stockist shrinks in this process, but care has to be taken to see that his volume of business does not shrink. This is achieved, in practice, on account of growth in demand and deeper market penetration.
If twenty retailers operate in the network of an original stockist, five or six of them get elevated over a period of time as stockist. Out of the retailers some remain attached to the original stockist and other relevant factors. The process continues as long as the market keeps expanding. And at any point of time, enough retail points in variably hover around or particular stockist, hence the name ‘Satellite Distribution’.
The main advantage of this system is that it facilitates market penetration in the interiors of market. However, the firm must ensure is that it facilitates market penetration in the interiors of the market. The firm must ensure that in the process, the motivation of the earlier generation stockist is not destroyed due to overzealous and premature elevation of the retailers into stockist.
After understanding the entire marketing mix for the rural markets, let us now see some practical examples of how companies have entered the rural markets and have been highly successful by modifying one or more P’s of the marketing mix to target the rural market. A few of the successful companies are as follows:
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