rural marketing- haat report (balianta haat- bhbaneswar)

Xavier institute of management, Bhubaneswar

VISIT TO BALIANTA HAAT

RURAL MARKETING

Xavier Institute Of Management, BhubaneswarPGDM-RM(Rural Management)- 2009-11

Submitted by

Babu Phanish (U309012)

Bibhushree Jena (U309013)

Divya Thomas (U309017)

Nikhil Akhouri (U309033)

Nishant Kumar (U309034)

Simi Mohan (U309053)

Sonal Agarwal (U309054)

INTRODUCTION:

Haats are periodic markets. Periodic markets mean that people assemble at a particular place at least once a week in order to buy and sell products. Haats operate in a weekly cycle. They may vary in the intensity of their transactions depending upon the season but they seem to have a fairly stable periodicity. They serve the village in which it is located and also the surrounding village.

Consumers and traders who form a major part so the population attending these markets do not necessarily attach much importance to the population of the village in which the market is held. In their view, the importance of a market is based on the number of stalls it has specially the number of stalls selling urban consumer goods.

MACROPICTURE OF BALIANTA HAAT:

The Balianta haat is a bi-weekly haat which is located 5 kms from the NH5, in Balianta region of Bhubaneshwar. The haat’s main commodity of trade is vegetables, especially potatoes and onions. It is held on Tuesdays and Sundays, every week, from 12 noon to 9 pm; the peak hours of business being 5 to 8pm, when most people are free from the day’s work. The regions /areas serviced by the haat are: Balianta, Benupur, Hanspal, Naharkantha & Padre.

The haat area is owned by the village panchayat, which leases out the land through tender, to the highest bidder, for a period of 1 year. This year, the highest bid was of Rs1 lakh and with this money, the panchayat organises recreational and entertainment events in the village.

Balianta Haat Report

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There are 132 shops in the haat, and the rent collected from each shop is 5-10 Rs depending upon the area of the shop.

For the convenience of the traders and the customers, the facilities provided in the haat are an electric generator and a tube-well for drinking water. The owner of the generator charges 5-6 Rs. per day to every seller. Warehouse facility is not available although a few concrete sheltered structures are present, where temporary storage can be done.

Retailers collect market information from wholesalers, who, in turn, get information from suppliers and newspapers

Geography of the Haat:

The shape of the haat is triangular, which runs along the banks of a river.

Based on the response of the sellers we spoke to, there are two strategically ideal locations to set up a shop in Haat- one is at the entrance of the haat and the second one is at the middle of the Haat. At the centre of the haat, there is a very old peepal tree, around which people assemble to rest and to chat with each other. This is hence an ideal spot to set up a shop.

Number of shops (Product wise)

Table A

Sl.No Name of the product Number of shops

1 Vegetables 74

2 Fruits 9

3 Betel leaves and related product 12

4 *Readymade clothes 7

5 *Tailors 3

6 *Food grains 3

7 *spices 3

8 Plastic items (powder, cream, bangles e.t.c)

4

9 Sweet shops 3

10 Datun and Pan Masala 4

11 *Egg 1

12 *Fish 4

13 *Shoes 2

14 Locks repairing & fish net wires 3


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Table B

Sl.No. Nature of shops Number of shops

1 Specific 23

2 General 109

3 Permanent 2

4 Temporary 130

Details of pricing:

The sellers are free to decide the price of their products and there is no formal union or any other authority which controls prices in the haat. Most of the sellers are retailers, who buy products from wholesalers present in the same Haat. They decide the price of their products taking in consideration the margin of profit which they want from the goods. The margin ranges from Rs. 1 to 20. On any particular day, the price of products generally decreases as day proceeds and it is very rarely that the price increases during the day. Every seller is free to decide the price of the products and so, for the same product prices vary. Prices also depend on the quality of product & volume of purchase.

ADMINISTRATION / MANAGEMENT OF HAAT

There is no local association /union for the haat. The local panchayat officials loosely oversee the administration of the haat and also interfere in case of petty disputes, in order to resolve the feuds. If the need arises, the help of the local police force is also employed. Apart from daily rent of the shops, no other fees are paid by the traders.

Norms & conditions followed by traders in this market:

There is an unspoken agreement among the traders that there shall be no disputes regarding the prices set by them.

Sellers are supposed to set up their shop at the location only which is allotted. Generally, they co-operate with each other, trying to maintain fair prices of products through mutual understanding.

The wholesalers often act as middlemen by buying vegetables from producers and selling these products to the retailers at the Haat. Some of these sellers have also formed a group and deal in “Chit funds”.

CUSTOMER PROFILE:

Average number of customers per day- Tuesdays: 250-300, Sundays: 550-700

Age pattern of customers: Varies from 20 years to 45 years

The customers belong to a wide range of socio-economic background from the well-to-do government employees to the humble daily wage earners. Majority of the customers belong to the brick factory workers.


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COMPETITION

The Balianta haat faces competition from Palasuni Haat which is located 1.5 km away and opens on Mondays and Fridays. As a result of this haat, the number of footfalls in Balianta haat reduces since the farm produce is available to them on 4 days of a week rather than just 2 days. Within the Haat, competition is due to the free pricing mechanism. There is stiff competition among traders of fruits and vegetables, since the number of vendors selling these is high. But the competition among the other vendors is not as fierce.

There are around 7-10 sellers who are only 6 months old in this market. Number of sellers also varies with the day on which haat held. There are more sellers on Sundays than on Wednesday. In general, the number of sellers is not decreasing but increasing.

The haat faces competition from the permanent shops set up in the vicinity, which sell readymade clothes, sweets. The quality of the products sold by these permanent shops is superior to the haat shops and also they are present throughout the week. So, the permanent shopkeepers have more loyal customers. The entry of new sellers in this Haat is free and open to all. The new seller has to select a location which is not yet allocated to anyone and pay the requisite amount of rent.

FINANCE

While most of the transactions between buyers and sellers in the haat are cash transactions, credit sales are also prevalent here, though rare. Transactions between the traders are also predominantly cash transactions although transaction of good in kind also exists. Wholesalers often give credit sales to retailers and the size of the credit can extend up to 1000 rupees which must be repaid on the next haat date. Besides this there is no other mechanism for credit availability in the haat system of Balianta..


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PROFITS

The profit margin for different products in the haat:

Sl. No.

Item Whole sellers (Rs.) Retailers (Rs.)

1. Vegetables 15-25 per bag of 50 kg

1-3 per kg

2. Fruits N.A 2-4 per kg3. Readymade clothes N.A 10-20 per piece4. Fish5. Sweets N.A 50 paisa to2 rupees

per piece6. Spices N.A 15-25 per kg 7. Food grains 20-25 per bag of

50 kg1-3 per kg

8. Tailors N.A 2-15 per work done

From our interactions with the traders in Balianta haat, we found that Potato and Onion wholesale is considered to be the most profitable business, while tailoring is considered the least profitable since the number of people who buy the clothes is very less.

PROBLEMS

The common problems faced in the haat are:

1. Lack of space 2. Lack of electricity3. During rainy season, mud and slush in the haat creates unhygienic

conditions4. Bargaining

The traders are happy to claim that they are free from political problems, corruption in the haat system.


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CASELETS

CASE STUDY-1

Niranjan Behera, aged 36 years, is a resident of Trinath Bazaar ,Phulnakhara .He has chosen the Balinta haat since it is near his residence. He has been running the Dry Fish business over the past 23 years without any involvement of any of the family members. The average size of his business is around 50 kg or Rs 8000 per month. Other than Balinta Haat, he puts up his shop in Trinath market. Apart from Dry fish business he got no other alternative source of income.

He buys fish from wholesalers of Berhmpur, Astaranga, Paradip and Bhadrak. During profitable business period he procures around 1.5quintal of fish and in lean period 50-60 kg from the wholesaler. On an average he makes purchase from the wholesaler 4 times in a month and middleman interference is absent in the procurement of dry fish. The suppliers usually sell dry fish to him at a discount of Rs 1 -2/kg. The mode of transportation is bus or truck and the average cost of transportation of supply comes around Rs 300-600 depending on the distance travelled. He lack the access to any kind of storage facility which compels him to store the fish at his house leading to loss of dry fish of worth Rs 2000-3000 especially during rainy and summer season. The attributing factor to this damage is melting of salt, preservative for fish, leading to decrease in shelf life. The normal shelf life of dry fish is one month only.

There is no formal pricing committee in the haat. Usually he decides the price on the basis of prevalent price in the market for dry fish. He is able to make a profit of Rs 5- 10 per Kg depending on the demand. In general there is no fluctuation in the price of dry fish in the same day in haat though seasonal fluctuations in the price exist. During rainy season price is high as the supply is very low due to the risk of dry fish getting wet and in winter price is low due to the abundant supply. Apart from purchase cost he has to incur the transportation cost. The difference in pricing between shops in the haat and those in outside market is on the basis of difference in quality. His family is involved in dry fish business for generations and he inherited the knowledge of this business from his father. Previously he was working along with his father in Trinath market. He gathers information related to the business from his


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discussion with other sellers in haat of Balinta and Trinath and the wholesalers from where he procures the supply.

On an average he has footfalls of 100-150 / day at his shop. Out of which generally 50-60 comes for only enquiry and 40-45 turns into final purchasers of fish. In general customers at his shop are of part of lower middle income class and poor class. Majority of the customers are labourers and farmers. Majority of customer are man and belong to age group of 20-60 yrs. There is on an average 20% repetition in his customers and the frequency of repetition is once in 15 days or once in a month or once in a week. The general buying behaviour of customers at his shop is kokoli dry fish, costing around Rs 40/kg, purchased by labour and farmers. Paniakhia, Hilsa dry fish which comes for Rs 100/kg, Rs 300 /kg respectively are bought by people of good financial base. The most important customers for him are labourers, though they purchase the cheapest variety the profit is more from them because the quantities of purchase is more and are often regular. Over the years customers have gained more affinity for quality and price conscious customers give more preference to price over quality. Younger generation customers compared to older generation are less demanding.

As a retailer his amount of sell is average. Selling by bulk is reducing day by day, before 10 years or so the bulk selling went up to an average amount of Rs7000/- but the catastrophe of super cyclone plunged the sell which never get recovered. Now the maximum sell in a favourable time is around 8-10 kg. During holidays especially Sunday sell is more, around 200 to 300 rupees deviation is seen in profit. There is no relation between festivals and dry fish business though some reduction in sell is noticed in religious rituals. As per season not drastic but slight augment is noticed in sell post harvesting period. He does not have any method to forecast his sale. He is forced to do distress sale during rainy season due to decline in shelf life of the product. During rainy season he faces several problems like discolouration of dry fish, melting of salt coating which compiles him to sell the product at a low price. As the quantity of unit sale is small most buyers try to get a discount of Rs 1 or 2 from him. There is no advance booking of products.

He has around 38 varieties of dry fish and there is not much variation in product portfolio. Decision on product portfolio is solely taken on the basis of inquisitiveness and demand of the customers.

He has not noticed any influence of big company in the haat. Though sometimes Eveready company agents come and advertise their products like batteries and torch, the frequency of visit is very limited to cause any impact on buying behaviour of customers.

Including him there are 4 dry fish vendors in the haat and there is not much price difference between them, so competition based on quality of product. According to him apart of periodic seller, who come for a period of 8 months there are no newcomers in his portfolio in the haat. He also faces competition from fresh fish seller of Unit-4 market. He considered potato and on selling as the most profitable business as it is one of the necessary commodity of everyday life.

In his business transaction always takes place in cash. He does not offer credit selling to any of the consumer. He does have access to financial facility through the account in the Indian Overseas Bank and he has the credit borrowing of Rs5000/- for dry fish business with an interest of 2%.


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His total income per day is around Rs 500-800/- and profit average of Rs 100-200/- per day. His business was badly affected in the super cyclone of Orissa in 1999 and he had no backup plan at that time, so he suffered a huge loss. In today`s context he does not have any back up plan either in case of emergency.

Among the problems seasonal damage of dry fish due to rain is a major one. Apart from this he also faces hurdles in transportation as most of the public transport like buses refuse to load dry fish due to their pungent smell.

Regarding threat from other consumable products his rivals are fish and chicken which can substitute dry fish position in consumer feeding habit if available at cheap rate.

He has plans of increasing size and variety of his product if granted loan from bank.

CASE STUDY-2

Saroj Prusty, aged 22, has been a trader in Balianta haat for 4 years now. This young man from Balikantia, which is 4 km away from Balianta haat, is a retail garment trader. He has been running the business alone. Apart from Balianta, he also does business in Bhanchua but he prefers the former because it is a larger haat. The average size of his business by value ranges from Rs 20000 – 2500. His alternative source of income is farming.

Regarding the supply chain of products, he purchases garments from Jauliapati and Chaudhari bazaars in Cuttack. The purchase is made once in a month in sets of 6 pieces or 12 pieces at a time. There are no middlemen involved in the business. The mode of transportation is by bus and the average transportation costs amount to Rs 70. He stores the clothes in his house and there is no other storage facility. There is hardly any wastage in the stock that he holds. He bargains with his supplier to clinch a discount of Rs. 5- 10 per set.


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In the absence of market forces or a market committee to determine prices, Saroj fixes prices according to the quality of the garments. He makes it a point to reduce prices towards the evening so as to boost sales during peak hours. He also reduces prices during the rainy season. He is not aware of the pricing difference between shops in the haat and those outside the market. Since his family has been involved in this business for generations, he claims to be adept at understanding market dynamics and therefore does not depend on any other source for market information.

The majority of customers who visit his shop are men who are daily wage labourers mostly labourers engaged in brick making. The number of customers, both children and adult, range from 5 to 20 per day. He is able to command the loyalty of at least 5-6 % of his customer base. Though he does not find the younger customers more demandin, he tries to rope them in by catering to their changing fashion needs and displaying more varieties to keep in tune with the changes in customers’ base and needs over the years.


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His largest sale by value is Rs. 1000-1500. The maximum deviation in sale is observed in the rainy season owing to the reduction in the prices. He does not resort to any method (thumb rule / heuristics) to predict sales. The Durga Puja festival brings in maximum sales. He was driven to the point of making distress sales in the rainy seasons when he incurred losses. He was also forced to sell at very low prices on a couple of occasions when his stock remained unsold for several days. He considers the winter season to be most lucrative for him as far as sales are concerned. Naturally, winter garments show a marked change in demand with change in climatic condition. He does not receive orders in advance. His profit margin is, on an average, Rs 5-10 per piece. He usually offers a discount of Rs.10-15 per piece. Apart from offering discount, attractive display is another promotion strategy which he adopts. Since there is a demand for fashionable clothes, he accommodates them in his product portfolio often . According to him, shirts are the most profitable items in his portfolio. Currently, there are 7 different varieties available for sale. His product portfolio contains neither branded product nor duplicate products. He has never felt or observed an increase in presence of agents of big companies in the haat. He faces competition from a series of cloth shops just outside the haat. He observes that people with higher income prefer to make their purchases from these shops. Within the haat, he faces competition from other garments sellers. According to him, the sale of vegetables is the largest and most profitable business in the market. The sales transaction takes place in cash always. He neither offers nor avails credits and has no access to financial services. He dreams of putting of a garment shop outside the haat after availing loans from the banks.

CASE STUDY-3

We interviewed one of the Onion & Potato Wholesale dealer at Balianta Haat named Gangadhar Sahoo, who is of 22 years old and resident of Bhubanpur, Khurda. He has chosen the Balianta haat since it is near his residence and the market was good. He has been running the Onion & Potato Wholesale business over the past 22 years. Gangadhar and his one assistant are involved in the business. No one from his family is directly involved in the business. The average size of his business is around 355 and 900 kg of onion and potato respectively per day. Other than Balianta Haat he operates in Rasoolgarh, Shahid Nagar and Palasuni. Apart from Onion & Potato Wholesale dealer business he has a ladies corner shop.


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Supply Chain of Products

He buys his stock from whole sale operators in West Bengal. The quantity of purchase depends on the demand existing in the market. Generally the deals are made through the mobile phone. The supply from the supplier is generally on time and regular. He receives the stock twice a week. There are no middlemen involved between him and the whole sale dealer in West Bengal. The stock is transported through trucks. The transport system in place is very reliable. After calculation the cost of transportation came out to be Rs. 10 per quintal. There is no specific storage plant for the storage of his stock. Generally he stores them in his house. Due to lack of proper storage facilities and proper handling sometimes the onion and potato are damaged. He is in no position to bargain with dealer in West Bengal. He is a price taker from the market.

Pricing Details

As mentioned before he is a price taker from the market. He calculates his price by adding a certain margin to the cost incurred by him. Generally there are no fluctuations in price within a day. However the prices are influenced by the availability of stock some days. Also there is fluctuation in price due to seasonal factors. The prices in the new produce season are generally low. The prices increase during the rainy season. The major cost factors involved in the business are raw material cost, transportation cost and some storage cost. He takes a margin of Rs. 0.75 per Kg of sale. There is considerable difference in the price he offers and the price offered in the outside market. Generally the difference varies from Rs. 2 to Rs 5 per Kg of onion/potato. As earlier mentioned, the major source of stock is West Bengal market. The information from that market is known through the mobile phone. The same is used for giving orders and performing other trade with them.

Customer profile

As the business if whole sale nature mostly the customers are retail vendors. The average number of customers that come to him are around 25 – 30 per day. The customers generally are the retail vendors in the same haat, retail vendors outside haat in the village or sellers on cart pullers. Mostly the customers are men of the age group of 25 – 45 years. The loyalty of


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the customers is high. This is ensured by the vendor through different ways which include lower price for repeat customer, credit sales etc. The customer profile is relatively homogenous when compared to other business in the haat. The vendor has not diversified into other varieties to improve his customer base. It is observed that the old customers were more price-sensitive and were more bargaining in nature when compared to the younger customers.

Sales

The sales are complete wholesale in nature and customer he addresses to are retailer in nature. The highest sale for volume recorded as of date by the vendor is about 72 quintals (both potato and onion). The lowest sales recorded were of 10 quintals in last year rainy season. The deviation in sales is high due to the seasonal fluctuations and the cultural implications. The sales increases considerably during the festive seasons like time during Dussera, Kartik maas, etc. The vendor uses his sales register to predict the sales and takes the festive season into account while calculating the sales demand. There are few occasions where the vendor has to do some distress sales. Few of the situations when the vendor was doing distress sale is when the stock is spoiling, when the sales are low for continuous weeks, when the stock is piling up etc.

As mentioned earlier the haat operates on two days of which Sunday is better in terms of sales. The season of Kartik maas is highly profitable as the localities consume very less non vegetarian resulting in high demand for potato.The vendor is in a good position to bargain with buyer. The vendor easily manages a margin of minimum Rs.0.75 per Kg. It is also observed that the vendor receives orders in advance. The vendor sticks only to potato and onion; he is not interested in diversifying his portfolio as he anticipates more risk in other products like vegetables.

Product portfolio

The only products in his portfolio are onion and potato.


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Competition

The main competition to this vendor is from three other wholesale vendors in the haat. However these three vendors are small in scale in comparison to our vendor. Our vendor ha loyal customer base so he do not see any serious problem in his operations in near future. According to our vendor potato and onion business is the largest business in the haat. The reasons he attributes for his thinking are more margin, low price high volume products and the risk is very less.

Finance and Profits

In his business transactions mostly takes place in cash. However there are few customers who transact through credit. These credits are not formal in nature. These operate at a personal level.

The minimum margin he maintains is at Rs. 0.75 per Kg. The more profitable business is of onion when compared tp potato. The margins can be as high as Rs. 7.25 per Kg.

Problems

The major problems for the vendor are disputes between the sellers and the market fair. Due to market fair the haat is generally displaced causing a lot of problems.

Future plan

The future plan is to expand into new areas.


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CONCLUSION:

The haat survey exercise at the Balianta Haat brings in its wake many learning experience for us. Not only it gave us a chance to intimate with the rural haat but we learnt the perspectives of the buyers, sellers and other stake holders like local government. Haat remains an important point in the lives of villagers. It caters to the many needs of the villagers at a single point.

We found stark buying differences in the buying pattern of different age groups. The youngsters were more attracted towards fashionable and attractive packaging whereas the older generation were inclined towards tested and economical goods. We also found a fair sized market of the duplicate product in the haat. The prices of those products were no less than the original product. On finding out we came to know that since the margin is more in the duplicate products the sellers are more inclined to keep them.

From the consumer’s point of view we learned that in case of clothes and other related accessories the rural buyers are ready for a trade off between quality of the products and the price. Thus many of the customers do prefer to buy from street vendors though the quality of goods is lower. In the case of products of daily use which are perishable such as vegetables and fruits, ease of availability and convenient location of the market becomes an important factor rather than the price.

One common problem that was faced by all the sellers was the credit crunch. Even when they want to expand their business they do not get institutional support. The sellers who are willing to upgrade to ownership of a permanent shop from being a street vendor cannot do so because with such a less amount of assets they cannot get credit from the banks for their business.


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rural marketing- haat report (balianta haat- bhbaneswar)

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