Assignment due tomorrow
owonsrosando
contentserver_14.pdf
ISSN– 2348-0092 Journal for Contemporary Research in Management January 2016 | 1 DAWN
A Study of Marketing Strategies for Formation of
Effective Distribution Channels by SHGs
Ms. Anjali Mandke Dr. P. G. Deshmukh Mr. Pranav D. Mandke
DYPIMCA, Akurdi ATCACS, Bhor MITACSC, Alandi (D)
Abstract
The self-help movement is said to represent
an alternative development strategy, one
that involves the process of social economic
empowerment and whose long term
objective is to rebalance the structure of
power in society. It is centered on people
and their environments and argues for the
rectification of imbalance in social,
economic and political power.
This study has been conducted with the
objective of understanding the process of
innovative marketing models in the SHG
sector and to draw lessons from the success
stories to upscale and replicate in a similar
socio-politico-economic scenario in other
parts of the country. The Internet provides
retailers with powerful opportunities to
increase sales, augment market share, and
create new business.
Now-a-days, we observe a dilemma
between two ideologies:
1. Gandhiji’s “Swayampurna Gram” i.e.
Produce and Sell in the same Village /
City, etc. AND
2. Feasibility of a “Swayampurna Gram” –
If the products are sold locally, lack of
knowledge about the optimum price for
their produce and the market where the
produce has the maximum demand
often drives the SHGs to desperation.
They sell their products to commission
agents(middle men) which does not
result in full market potential of their
produce.
So, development of proper Distribution
Channels for marketing of SHG produce,
not only in the village, but also in other
areas where they are in demand, is
inevitable.
This paper considers a theoretical model of
e-marketing the SHG products so that they
can maximise sales and hence, profit.
An attempt is being made to theorize a
comprehensive model to: Take orders
online, Collect from manufacturers &
Deliver at doorstep, Process information in
real time.
Keywords: SHG, distribution channel, e-
commerce.
Introduction
SHGs in India
The SHG approach in India was first
developed through the Self-help Affinity
Groups facilitated by the Mysore
Resettlement and Development Agency
(MYRADA) in 1985, and since then more
than two million self help groups have been
created across the country (NABARD 2005-
2006). In 1986-87, there were about 300
SHGs in MYRADA’s projects, many of
which had emerged from the breakdown of
large cooperatives because of lack of
confidence in the leadership and poor
management. In areas where the
cooperatives had broken down, several
members (usually in groups of 15-20
people) approached MYRADA requesting it
to revive the system. MYRADA staff
realized that they would need training in
organizing meetings, and so efforts were
made to train the members in a systematic
ISSN– 2348-0092 Journal for Contemporary Research in Management January 2016 | 2 DAWN
way. From an analysis of these members’
activities, (Fernandez 2006), it emerged that
they were linked by a degree of affinity
based on relations of trust and support.
The real effort to support SHGs in India,
however, came in the late 1990s when the
central government of India introduce a
holistic program, Swarnajayanti Gram
Swarozgar Yojana (SGSY) based on the
group approach for rural development.
In 1991-92 NABARD started promoting
self-help groups on a large scale. And it was
the real take-off point for the ‘SHG
movement’. In 1993, the Reserve Bank of
India also allowed SHGs to open saving
accounts in banks. Facility of availing bank
services was a major boost to the
movement.
The movement of SHG was nourished in the
states of Gujarat, Maharashtra, Andhra
Pradesh, Rajasthan, Tamil Nadu and Kerala.
Now nearly 560 banks like NABARD, Bank
of Maharashtra, State Bank of India,
Cooperative Banks, Regional rural banks,
the Government institutions like
Maharashtra Arthik Vikas Mahamandal
(MAVIM), District Rural Development
Agency (DRDA), Municipal corporations
and more than 3,024 NGOs are collectively
and actively involved in the promotion of
SHG movement.
IT Revolution & Status in India
India is considered one of the prominent IT
hubs in the world. We have the biggest IT
service industry and software services
export according to NASSCOM for the year
2012. At the end of March-2010, the
internet penetration stood at 13.54 million
non-broad band, 6.22 million broad band
and 117.82 million wireless internet access
in India. Given the state of internet and PC
penetration in India, even though it is
lagging behind Japan & Korea, these figures
if not outstanding are not disappointing
either. So with this many netizens, safely
assuming 90% having operational
knowledge of the computer, India’s online
retail landscape was lagging behind other
countries at the end of 2011.
Self Help Groups are producing a wide
variety of products like bakery, (masala),
pickles, chutney confectionery, toys, paper
products, chalk, candle, agarbattis, spices,
greeting cards, painting on fabrics, herbal
products, dairy products, pottery, vessel
making, etc.
Distribution problem is one of the main
areas of concern as SHGs are struggling
hard to handle this. The channel of
distribution is the route through which the
product passes from the hands of
manufacturers to the hands of consumers.
The decisions regarding channels of
distribution influence greatly the availability
of right product in right condition at right
time and right place which, in turn, affect
the success of the marketer and the level of
customer satisfaction. In India, SHGs are
following their traditional practices
regarding the channels of distribution. It
appears that they do not have any
knowledge to make the system of
distribution efficient.
The major problems relating to channels of
distribution are as under:
1. No distribution plan and strategy.
2. Misinformation about genuine
distributors / middlemen.
3. Middlemen demand more commission.
4. No attention paid to transportation,
inventory, warehousing etc.
5. Virtual absence of effective distribution
network in the individual unit.
A focus is placed, using India as a
geographical study area, on SHGs that take
part in the “Bhimthadi & Pavanathadi
Jatras”, annually organized in Pune City.
Relevance of Study
It is understood through various articles
& published information that there no
ISSN– 2348-0092 Journal for Contemporary Research in Management January 2016 | 3 DAWN
proper Marketing Strategies adopted by
SHGs to develop Distribution Channels
and no detailed research has been
carried out so far in this area. (Daily
Sakaal, dated 31 st October, 2008)
Marketing the products made by SHGs
is an important & difficult task as the
products are to be sold directly to the
people themselves. The SHGs will
have to emphasize on the quality and
affordable prices to enhance the sales.
Therefore SHGs will have to evolve
appropriate strategies for market
promotion.
[Source: R. Ganapathi and Malar S.
Anbu (2008); “Consumers’ Attitude
and Preferences towards SHG
Products”, Asia-Pacific Business
Review, Vol 4-2].
The operation of any SHG is itself
localized; this means that there is
limitation in terms of geographical
coverage. SHG members generally lack
literacy, technical competence; market
intelligence to even think of an online
distribution system on an individual
level.
In the present era of privatization &
liberalization of international trade &
globalization, information technology
(IT) plays a vital role to make a
produce competitive in the worldwide
market, through all its incarnations like
e-mail, multimedia, electronic banking,
internet, world wide web, etc. (Talathi,
2007). Internet is a rapidly growing
communication medium on earth at
present.
A web based campaign to market their
products allows the organizations to
generate a customer information
system, which is coupled to its
customer profiles, thus the ability to
focus on potential sales is a powerful
tool, enabling the organization to give
people what they desire rather than
applying a common advertising
campaign that may not reach its target
audience (Nicolas, 2006).
Aims & Objectives
This study has been conducted with the
objective of understanding the process of
existing online marketing models in the
online retail sector and to draw lessons from
the success stories to upscale and replicate
the same in SHG sector. It has been
conducted to provide a better understanding
of marketing by self-help groups (SHGs),
with the hypothesis that online Distribution
Channels in the marketing of SHG products
reduce the transaction cost and improve the
market access and its efficiency.
The main objectives of this paper are to
(i) Develop a theoretical model to e-
market SHG products.
(ii) Create a comprehensive Blue-Print for
a proposed Web / Android application
to sell SHG products.
Flow Of Study
A. Platform & Basic Architecture of
Online Ordering & Distribution
System
With the advent of affordable smart phones
(Rs.3,000–10,000) designed for the Indian
user from indigenous manufacturers such as
Micromax, Karbonn, etc., as well as ever
more low-costing mobile data options, more
people are shifting to smart phones and
mobile Internet. Other factors heavily
contributing to this move, include the fact
that 98.9% of India currently has no access
to broadband connectivity options and
industries like banking, retail, entertainment,
health and education have started to bring in
gripping mobile services. Predictably, the
contribution of Smartphone users of Internet
traffic has overtaken that of PC users and
the gap continues to broaden. The
ISSN– 2348-0092 Journal for Contemporary Research in Management January 2016 | 4 DAWN
Smartphone market grew by a whopping
229% last year.
I. In rural areas, where hard line internet
connectivity is difficult, wireless internet
(By Facebook's internet.org or by Google's
efforts in this field) is easily and cheaply
accessible.
II. India's largest online retailer Flipkart has
decided to transform into an app-only
player. Flipkart's premeditated phase-out of
its web presence indicates phenomenal trend
among Indian consumers to make purchases
through the mobile apps thanks to manifold
growth of smart phones and mobile internet.
Considering the above two points,
Smartphone is the primary mode of internet
access to both Seller (SHGs) & Buyers.
Therefore, our planned Model is Android TM
or iOS TM
based.
B. E-Commerce Applied to the Model
In order to build an error-free model that
will withstand any and all possible threats it
may face, a detailed study of existing e-
trading websites and applications must be
undertaken so as to review their structure as
well as learn from any past mistakes. One of
the major drawbacks for companies selling
products via the Internet, is to deliver the
goods and thereby meet the customers’
expectations. Buying online requires a
considerable amount of faith from
customers. The potentials for Internet
selling are high, no doubt, but the promises
made by the website have to be realized
during the delivery processes. If the delivery
service falls short, or products lack the
expected price-quality ratio, and the post-
transaction service is not up to the mark,
then customers won't turn around. Many
Internet companies have already gone
bankrupt. A case in point is of a virtual
market that was launched in 2010
(www.virtualmarket.com) but collapsed due
to unreliable payment method. To overcome
these defects new techniques and trends
should be adopted that will involve banks
that will ensure the integrity in buying and
selling transactions of SHG products online.
Therefore, this paper attempts to solve the
above discussed problems by theorizing a
working and robust android application to
market SHGs’ products. The "application"
may integrate the net banking payment
system, a popular platform that is
operational in Indian banks for most e-
payment in India.
Despite these difficulties, benefits of e-
marketing surpass the challenges. The focus
area of this paper is to make a theoretical
model of a web / android application to sell
SHG’s products electronically.
The model includes an organization that
owns the e-commerce web site. The duty of
the agent is to make contact with the
member SHGs and collect their product
descriptions & scale of produce (no. of
articles produced per day or per month) &
store all relevant data on a central data
centre. Upon the collection of all data,
product information is placed on the agent's
website / app about the new products to
their customers. The buyers will have to
contact this website / app in order to
purchase these products & make necessary
payments including transportation. In turn,
the agent returns to the SHG when any order
is received, article is collected from
producer & delivered to the customer.
A network of SHGs should come together to
form federations which may be from grass
root level to national level. The structure of
federations will be from Village, Cluster of
Villages, Taluka, District, State & National.
These federations should work with the
above said intermediary for the upliftment
of SHGs. Also, this should be a deregulated
sector so that private investors can also
participate.
ISSN– 2348-0092 Journal for Contemporary Research in Management January 2016 | 5 DAWN
C. Distribution Strategy
Mallen addresses the problem of selecting
distribution channels for companies. For a
retailer, the basic questions are concerned
with the number of levels that are needed in
the distribution channel and how many
facilities (warehouses or stores) per level are
needed. A given product can also have
several channels. Mallen gives guidelines
for companies to assist in this choice, based
on the objective they have. Some major
determinants for this choice are the market
(number of orders), product characteristics
(such as product variety and product
properties), speed of delivery, and others
(including environmental aspects,
availability of resources, and business
conditions). The Internet offers a platform to
sell products worldwide what was not
possible earlier.
The distribution strategy of the online
retailer is the determiner of: the way the
orders are attended to, the number and type
of facilities used in this process, the area
where customers will be delivered, and what
will be the extent of outsourcing of said
methods. We introduce a concept
“distribution strategy,” which can be
divided into three different subparts.
1) Distribution channel : This contains the
type of facility (store or warehouse) from
which the fulfillment is carried out
2) Delivery area: The delivery area is the
area where the Internet company can
deliver, from its facilities.
3) Degree of outsourcing : The product
storage and order fulfillment processes as
well as the transportation can be outsourced
to full time logistics service providers.
1. Distribution Channel
The distribution channel for an online
retailer can take the following:
1) Collecting & distributing from existing
stores;
2) Collecting & distributing from existing
centers (DC), those which supply
conventional stores;
3) Collecting & distributing from DCs that
directly supply the online customers;
4) Mixed structures, using the different
facility types mentioned previously.
2. Delivery Area
E-commerce retailers can decide for the
following different delivery areas:
• deliver goods regionally, in the vicinity of
the supply facility;
• deliver goods on a national scale;
• deliver goods on a global scale.
ISSN– 2348-0092 Journal for Contemporary Research in Management January 2016 | 6 DAWN
C. OUTSOURCING STRATEGY
Both the fulfillment and the transportation
process can be outsourced. As argued
earlier, not many firms shipping
internationally will organize the
transportation in-house. However, especially
retailers that deliver from existing facilities
in a relatively small area around the facility
and with own vehicles, will deliver
themselves.
According to McCullough, the fulfillment
outsourcing depends mainly on the number
of daily orders processed from the facility.
Retailers with less than 100 Internet orders
per day or over 10,000 orders per day
should tackle fulfillment in-house. The
number of orders is then either so little that
they can easily be handled at a cheaper rate
than a logistics service provider could do
this, or the volume is too large to be handled
by third parties. Peapod.com and
Amazon.com are examples of companies
that originally operated as a virtual company
outsourcing fulfillment and transportation,
whereas the fulfillment is now carried out
in-house to a large extent. If the daily
volume is between 100 and 10,000 Internet
orders, retailers should outsource the
fulfillment to gain economies of scale they
cannot get on their own. The outsourcers
can share warehouse space and resources
across online merchants. Demand should be
managed in-house and the fulfillers’
inventory and planning systems should be
integrated in the website, to make promises
based off true inventory and service
availability. In reality, however, other
solutions can be noticed, especially when
products are complex. Fresh food online
retailers, for example, have the tendency to
keep all warehouse operations in house.
Proposed Model Design
The proposed system is a secured web
application for agricultural products. This
section describes the design details of the
electronic market place for agricultural
products and also a secure transaction mode.
This application is designed taking into
consideration the following:
• Establishment of payment
transactions that provide confidentiality of
information.
• Authentication of customer's
payment to ensure integrity
In achieving this, the following parties are
involved;
• Customer
• Merchant
• Merchant Bank
• Inter-switch system
Proposed Database Design
The store house for the data that are used for
various processing by the system are
defined in the various tables available in the
database server used for the design. The
Merchant's app has interfaces that are
available through which online customers
can access the information in the server.
This is done through processing of the
various queries sent to the server by the
customers via these interfaces. The tables
and their attributes are listed here.
The User Profile Table
This keeps the detailed information of
registered customers. It contains the
following fields, User lD, email, password,
first name, surname, gender, date of birth,
phone No, Street Address, city and country,
making user lD as primary key.
The Items Table
This table holds the information of the
merchant's goods on the website. The fields
ISSN– 2348-0092 Journal for Contemporary Research in Management January 2016 | 7 DAWN
are Item id, Item Name, Item Price, Item
Category id, Item Images and Item Status.
The Category Table
This contains the categories of products
available online. The fields are category id
and category name.
The Order Table
This keep records of each transaction. The
following fields are present: Order id, User
id, item id, Quality, date, status and price.
Order id is made primary key.
The Payment Table
This keeps customers payments details. It
includes the following fields, Payment ID,
Amount, Account No, Account Name, and
Bank Name.
The Admin Table
This table consists of fields like, Full Name,
ID, Email, and Password
The Bank Table
This table keeps all records that involve
transaction. The fields present are Bank ID,
Bank Name, Account Name, Account No,
Balance and Status.
The Cart Table
This contains the attributes of various goods
selected by the customers. The fields are Id,
session id, Item id, Item Name, Item price,
Item qty, Item image, Date.
Dummy Run : Steps to order an SHG
Product Online
Step I You should have a Smartphone
running Android / iOS & have mobile data
connection
Step II Go to Google Play Store & install
“Akhil Bharatiya Bachat Gat Online
Shopping" app.
Step III Open the app.
Step IV Browse through available products,
search for products & click on description
for selected product.
Step V Verify the details of the product &
enter your area's pincode to make sure that
home delivery is available for your area of
residence.
Step VI Click on Add To Cart to continue
shopping or click on checkout to proceed.
Step VII On checkout screen, verify if all
items added by you are present in the cart &
click on proceed.
Step VIII Enter Name, Contact Details &
address of Home Delivery & click proceed.
Step IX Enter Bank Transaction details viz.
credit card/debit card/net banking, Cash on
Delivery etc.
Step X You will be redirected to your
bank's website for Net Banking or to Card
Website for authentication of Debit / Credit
Card or Confirmation screen if COD.
Step XI On successful transaction, Invoice
will be displayed & order will be confirmed
by sms & email.
Step XII You will be given a tracking
number to track the delivery online.
Step XIII After specified time, parcel will
reach your home. Pay the delivery man if
Cash on Delivery selected at the time of
ordering.
Conclusions
1. Many products of SHGs are well
appreciated by the market. However there is
a missing link between Source of
Production & Consumers. The seasonal
fares like Bhimthadi & Pavanathadi Jatras
held in Pune drew large crowds.
2. There was demand for some
products of which supply could not take
care of. Consumers were eager to have
supply of some products round the year.
However, they were in the dark as to who
was to be contacted.
3. Once this system is up & running,
customers can easily order whatever they
ISSN– 2348-0092 Journal for Contemporary Research in Management January 2016 | 8 DAWN
want anytime of the year. Even the SHGs
will be benefitted by this as they will also
have demand to supply to throughout the
year.
4. Establishing Federations & e-
distribution channels will ensure that
products are manufactured according to
certain standards, packaged well & also
stored according to their requirements in
centralized warehouses.
5. This can be an important step
towards Local Brand Creation to compete
with MNC products & delivery services.
Here comes the importance of completing
the link & establishing effective Distribution
Channels for the Marketing of SHG
Products even online ones.
REFERENCES
•Yoram Jerry Wind, Garry Lilian,
“Marketing Strategy Models” J. Eliashberg
& G.L. Lilian Eds Handbook of OR & MS
Vol. 5 1993 Elsevier Publishers
•ACTED : @ http://www.acted.org “Self
Help Group Management Consultants”
•Planning Commission Govt of India: A
Report on Success & Failure of SHG in
India 2008
•Dr Kishor Jagtap, “Impact of Micro
Enterprises On Income Generation of SHG
Beneficiaries”, Indian Themes Research
Journal Vol. II, Issue 3 / April ISSN 2230-
7850
•“Workshop on Marketing Strategies for
SHG Members”, The Hindu, Tiruchi, Feb
10,2011
•http://jorhat.nic.in/drda/shg_marketing.htm
•“Types of Marketing Strategies” retrieved
from
http://www.public.iastate.edu/~sjwong/pdf5
40/leader_follower_strategy.pdf
• Saurabh Singh, Nilam Singh , B. K.
Sikka, “Marketing Practices of Livestock
Products by SHG in Burdwan District of
Wet Bengal” retrieved from
http://agris.fao.org/agris-
search/search.do?recordID=IN2011001003
•“Marketing Woes Hit SHG”, The
Telegraph, Calcutta, June 25, 2009,
retrieved from
http://www.telegraphindia.com/1090625/jsp
/siliguri/story_11154971.jsp
•“Problems & Prospects of SHG &
Suggestions Towards its Revival” By V S
Rangrajan in Society/ Government
submitted 2008-02-25 retrieved from
http://goarticles.com/article/PROBLEMS-
AND-PROSPECTS-OF-SELF-HELP-
GROUP-SHG-SUGGESTIONS-
TOWARDS-ITS-REVIVAL/810396
•“CII to support SHG Federations” Tamil
Nadu Corporation for development of
Women Ltd SHG Federation MYRADA
•”Steps in SHG Formation”
http://megselfhelp.gov.in/forms/Steps%20in
%20SHG%20formation%20-
%20English.pdf
• C S Reddy & Sandeep Manak
,“SHG:A key stone in Microfinance India”,
paper retrieved from
www.microfinancegateway.org
•A Handbook of forming SHG Microcredit
Innovations, NABARD retrieved from
www.cipfa.org/-
/media/files/.../vol%209%20no%202/kalaise
lvi92.pdf
•An Evaluation of Impact of SHG on the
Social Environment of Women in
Maharashtra: National Commission of
Women 2008, Drushti, Stree Adhyayan
Prabhodan Kendra.
• “WSHG : A vehicle for women self
reliance” retrieved from
www.researchgate.net/publication/2376430
97_WSHG_A_Vehicle_for_Women_Self_R
eliance
• SHG Bank Linkage Model
www.nabard.org/pdf/report_financial/chap_
vii.pdf
•C S Reddy NABARD, CMF workshop
31.10.2008 “Upscaling & Deepening SHG
Movement: Issues & Challenges”
ISSN– 2348-0092 Journal for Contemporary Research in Management January 2016 | 9 DAWN
•“Market Intelligence: “Making Market
Research work for Microfinance”,
ACCICON Insight No 7 www.accicon.org
•Marketing Strategies for Microfinance
Nino Mesarina
•Suresh Karuppasamy, Marketing of
products Produced by SHGs
http://ezinearticles.com/
•O F Nathan, M Banga, A Mukungu - 2004
- “Microfinance & Poverty reduction in
Uganda : Achievements & challenges”,
April 2004, Economic Policy Research
Centre, Research Series No 41
•Dr. Waheed Akhtar et al, “Islamic
Microfinance & Poverty Alleviation : A
case of Pakistan” Proceedings of 2nd
CBRC, Lahore, Pakistan Nov 14, 2009
•Gaamaa Hishigsuren, Tranformation of
Microfinance operations from NGOs to
regulated MFI, retrieved from
http://www.microfinancegateway.org/
•Avinash Kumar, GMR Varalaxmi
Foundation,
www.slideshare.net/kumaravinash23/chapte
r-3-market-segmentation
•William Grabriel Brafu-Insaidoo
“Understanding the Marketing Strategies of
microfinance institutions within the Accra
Metropolis of Ghana” African Journal of
Marketing Management Vol. X No. 3(2) pp
45-55, Feb 2011 ISSN 2141-2421@2011
Academic Journals
•Graham A N Wright et al, “Strategic
Marketing for MFIs” retrieved from
www.microsave.net
•Priyanka Jayshankar & Robert V
Goedegebuure, “Marketing Strategies &
Social Performances Outcomes, A Field
Study on MFI clients”, the IUP Journal of
Marketing Management Vol. X No. 2, 2011
•Monique Cohen et al, “Market Research
for Microfinance: Detecting the Need
beyond the Number”, Caribbean Round
Table, June 10-11, 2003
•Monica Brand, ACCICON International
Oct 1998, “New product development for
Microfinance, Design Testing & Launch”
retrieved from
www.jointokyo.org/mfdl/readings/NewProd
2.pdf
•Bikki Randhwa, Joselito Gallardo,
“Microfinance Regulations in Tanzania:
Implications for Development &
Performance of Industry”, Africa Region
Working Paper Series no. 51, 2003
•African Development Bank & African
Development Fund, “Microfinance Policy
& strategy for the Bank Group” retrieved
from http://www.afdb.org/
•Asian Development Bank 2000, Finance
for the Poor: Microfinance Development
Strategy
•S R Rahman, Director CDF,
“Commercialization of Microfinance in
Bangladesh” ADB Report,
http://www.gdrc.org/icm/country/bangla-
001.html 11.11.2004
•A Report on Women SHG Federation
Leader's session Dec 2008 ( National
Network of Research Organisations
(NNRO) Microfinance India supported by
Sir Ratan Tata Trust Ford Foundation
•”A Report on Situation Analysis of SHG
Movement in Bihar” Feb 2009, from
www.apmas.org
•Rene(M) B M de Koster, “Distribution
Strategies for Online Retailers”: IEEE
Transactions on Engineering Management.
Vol.50 No 4 Nov 2003
•Mr. T Thileepan & Dr K Soundararajan,
International Journal of Management(IJM)
ISSN 0976-6510(online) Vol 5, Issue 1
January (2014),pp,46-52IAEME:
www.iaeme.com/ijm.asap
Copyright of DAWN: Journal for Contemporary Research in Management is the property of Sadhu Vaswani Institute of Management Studies for Girls and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use.
