This Particular assignment deals with two questions related to the sales force and channel management. Q1) Hurdles in Direct Distribution Strategy Q2) Value Proposition of Distribution on marketing efforts

1. Sales Force and Channel
Management
ASSIGNMENT 2
Submitted To,
Mr. Prakash Sukhatme
Submitted By,
Bharat Bhushan | A-19 | 18020441079

2. 2Bharat Bhushan | A-19
Sales Froce and Channel Management | Assignment 2
Consider an FMCG Company trying to distribute its products directly to the
customers. What would be hurdles of such as strategy?
FMCG companies are reducing their dependence on wholesale trade as a medium of
distribution despite it being the strongest link to retailers.
Companies such as Marico, Dabur, Britannia and Godrej Consumer Products are seen to
focus on direct distribution channels and even cash-and-carry accounts to bypass wholesale
traders who are yet to adopt GST norms, or are yet to start making non-cash transactions.
This will lead to FMCG companies incurring higher direct distribution costs in the near term,
till such time as the wholesale traders fall in line and get organised, according to industry
observers.
Marico is already making structural changes in its distribution, moving to new forms such as
B2B and cash-and-carry.
However, the wholesale channel retains its advantages such as providing easy reach and
credit terms. FMCG majors such as Dabur and Britannia have 35 per cent of their sales coming
from wholesale and expect this channel to remain relevant even while increasing their efforts
to increase direct distribution.
Going forward, FMCG companies are also likely to change their priorities towards relatively
new distribution channels such as cash-and-carry.
In informal terms, direct distribution often is described as eliminating the middle man. It is a
distribution system in which manufacturers produce or create products and sell them directly
to a business or consumer buyer. This approach often has cost savings for the business and
value benefits for the customers. However, there are some drawbacks and risks.
Warehouse Management
To sell directly, you typically need your own distribution center or warehouse to hold
completed inventory. This means owning or renting a building, hiring labor to manage
storage, shipment and logistics, paying utilities and possibly throwing out inventory that goes
bad or expires. These costs can offset or even exceed the profits you give up when you avoid
the wholesale and retail steps in distribution.
Limited Expertise
A primary reason there are different providers at each step of the distribution process,
including wholesale and retail, is that each type of company has its own expertise. Distributors
are experts at receiving, organizing and managing inventory as well as logistics and
transportation. Retailers are experts at holding inventory for customers and providing sales
and service support. Manufacturers don't always have the requisite expertise to coordinate
Q:

3. 3Bharat Bhushan | A-19
Sales Froce and Channel Management | Assignment 2
all facets of the distribution process. To use the direct distribution approach may involve
greater investment than is worthwhile.
Delayed Response
Even if you quickly get products out the door when customers place orders online or on the
phone, you can't get a product delivered as fast as a customer usually can get it from a local
retailer. This is a competitive disadvantage because customers are notoriously in favor of
instant gratification. Thus, all other factors being equal, a customer normally would opt for
the local retail store versus ordering a product and waiting for you to deliver it.
Sales Requirements
Manufacturers normally have a sales staff that meets with distributors or retailers to convince
them to carry the products to market. If you distribute products directly, you may require a
full sales staff that sells directly to customers. This may coincide with other promotional
techniques like advertising. The ongoing task of managing and paying a sales force is another
element that goes beyond typical manufacturer expertise in designing, making and selling
products to distributors.
Advantages & Disadvantages of Direct Distribution
Choosing the right distribution channel is just as important for selling products as setting your
price correctly or creating catchy advertising. Distribution channels not only determine where
customers can find you, but also how they see your brand. One distribution channel is direct
distribution. This occurs when a manufacturer or marketer of a product sells directly to the
end user, rather than using an intermediary like a retailer or second-party website. Business
owners might think that cutting out the middleman will benefit the company by reducing
costs, but it’s not that simple.
 Advantage: Eliminates Intermediary Expenses
Using direct distribution eliminates the expense of using the middleman. Not only must you
pay a commission when you partner with an intermediary, you also have service costs. Service
costs can include shipping to the intermediary, training the intermediaries who sell your
products, providing marketing support materials and handling returns.
 Advantage: Increases Direct Customer Contact
When you use direct distribution, you interact directly with your customers beyond making a
sale. You have a more vested interest in their happiness than a middleman does, so you can
provide better customer support, including decreased wait times for customers to get an
answer, better product knowledge, and more sympathetic responses to complaints.
 Advantage: Provides More Control
When you sell direct to customers, you have more control over how products are displayed,
promoted, delivered and returned. If you put your product in a retail store, you are at the

4. 4Bharat Bhushan | A-19
Sales Froce and Channel Management | Assignment 2
mercy of the retailer, which has hundreds or thousands of other products to manage,
promote and sell.
 Disadvantage: Reduces Distribution Channel Options
One of the problems of selling direct is that you lose the other distribution channels offered
by intermediaries. The more places you can sell, the more convenient it is for your customers.
With this increased reach and ease of customer access comes more sales.
 Disadvantage: Increases Internal Workload
Just because you are expert at making a product doesn’t mean you are prepared to promote
and physically sell it. When you sell direct, you take on all of the work that an intermediary
would otherwise handle. This include taking orders, processing payments, fulfilling orders,
chasing down late-paying or defaulting customers, marketing tasks and customer service.
 Disadvantage: Raises Fulfilment Costs
Direct selling can increase your expenses to deliver a product to customers. You not only take
on the workload associated with fulfilling orders, but you also absorb expenses such as order-
taking staff, credit-card processing fees, postage and shipping expenses, software, website
maintenance, phone charges, fleet maintenance, billing and order tracking.
Choosing a distribution strategy
Determining the best method for getting your product to the consumer depends on what
you’re selling and how much you’re willing to invest in distribution. New small businesses
generally don’t have the capital to pursue multiple distribution avenues at the outset, so they
need to choose one that fits, and stick with it while the business grows.
Generally, if your product is perishable or if you’re selling B2B, you’ll want fewer distribution
channels between your point of manufacturing and your customer. In which case, direct

5. 5Bharat Bhushan | A-19
Sales Froce and Channel Management | Assignment 2
distribution may be best. If, however, you’re aiming for a wider market, with hopes of getting
your products in front of as many consumers as possible, you may need to sell to distributors
instead, and let them do the legwork while you focus on making the product better.
If you do partner with distributors, do some vetting to ensure that they are capable of selling
your products and finding the right market opportunities for them. Prioritize developing a
long lasting relationship. You’re the product expert, but you’re leveraging their sales
expertise. Lastly, the decision may not be whether to go direct or indirect, but when to favour
one over the other to find your optimal mix.
How Does Distribution add value to marketing effort?
Online shopping is the new trend in India. From mobile phones to expensive electronics, we
are game for anything. E-commerce is no longer limited to apparels, gadgets and white goods
— companies are even offering houses over the internet. We all do our research online
before buying a home but are you ready to buy homes online? Let’s first understand the pros
and cons of buying houses online.
The meaning of buying homes Online
We already have plethora of online marketplaces for listing properties. Brokers and owners
list their properties and home buyers can then contact them. The new trend that is catching
up is, booking your house online. Traditionally you would approach the developer directly or
through a real estate broker and make the booking by paying certain amount towards your
apartment.
Q:

6. 6Bharat Bhushan | A-19
Sales Froce and Channel Management | Assignment 2
In online booking of apartments, developers list the properties on E-commerce websites. Just
like any other product that is listed on E-commerce websites, apartment details about the
property shall be listed in product description.
What is the Process?
1. Based on the offering, buyer select the type (1BHK, 2BHK etc).
2. Buyer shall have an option to choose from various size of the apartment. e.g 955 sqft,
1350 sqft etc.
3. Add the apartment to cart.
4. Enter your personal details and make an online payment.
5. Buyer receives the confirmation from online portal for payment.
6. Buyer receives call from Developer to complete other formalities.
The amount mentioned under selling price is the initial token amount as an expression of
interest and booking of property shall always be subject to confirmation of Developer.
What are the Advantages?
The only advantage of buying a property online is the discount that companies offers.
Developers pay huge commission to real estate brokers for every booking. They see no harm
in passing on these benefits to customers through E-commerce companies
What are the Disadvantages?
This concept has just entered India and a lot need to be improvised. Let’s discuss the pros and
cons in detail and decode the fine print of the transaction.
1) No details about Unit and Tower
You just paid the token amount for an apartment and you don’t even know the
apartment number, floor and tower in the housing complex. You heard it right! There
is no real time inventory check. Once token amount is paid, you need to visit the
developer’s office and choose the apartment that sales team offers you. Developers
in such case always try to offer you unpreferred apartments. Portal clearly says — It is
the responsibility of Customer to check the unit availability with the Developer after
booking. What makes it worse is the next point.
2) Booking amount is not refundable
Imaging you did not like the unit offered by the developer and you want to move away
from the deal. The details provided on the website says, “The booking amount is non-
refundable“. You already know how difficult it is to get you money back from
developers. On top of this, there is a third party (e-commerce Company) involved.
3) Third party interest and liabilities
The online portal says, we shall not have any liability whatsoever for any aspect of the
arrangements between the Developer and the Customer as regards to the quality

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Sales Froce and Channel Management | Assignment 2
standards of construction, delay in construction or any other aspect relating to the
Property. In no circumstances shall we shall be liable for the services provided or
properties offered by the Developer. In already messed up Indian real estate industry,
it would be wise NOT to involve any third party between developer and buyer.
Developers are known for putting the onus on brokers for all discomfort to the buyer
and they shall not hesitate to do in such cases too.
4) No details about home loan and project approvals
Most of the home buyers go for home loans these days and there are no details about
home loan approvals. Contrary to belief that online systems increase transparency, no
details about project approvals are mentioned on the website.
The Logical Buyer’s point of view
On the surface, this approach to selling and buying real estate seems novel and even logical.
What works against it is the manner in which the real estate market actually functions in India.
Homebuyers should do proper due-diligence and understand the micro points before getting
into the deal.
Conclusion
Despite all odds, if the offer is too lucrative, we should not forget the basics of home buying
and only get into such deals when discounts offered are significant. Buyers should understand
the pros and cons of such offers. Research about the property on ground and find out all the
details before paying the token amount. Don’t forget to compare the prices available in
market.
eferences
 https://www.thehindubusinessline.com/companies/fmcg-companies-go-for-direct-
distribution-in-a-move-away-from-wholesaler-traders/article9838150.ece
 https://yourbusiness.azcentral.com/disadvantages-direct-distribution-13036.html
 https://wellsfargoworks.com/marketing-center/article/direct-vs-indirect-distribution-
channels
 http://www.thelogicalbuyer.com/blog/advantages-and-disadvantages-of-purchasing-
homes-online/
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