Distribution channel for FMCG goods Presented by…. Malovika Sanyal Pamela Sarkar Srestha Das Subhasis Das Sharmini Ghosh Baishakhee Ghosh
Definition of Distribution ChannelPath or pipeline through which goods and services flow in onedirection (from vendor to the consumer), andthe payments generated by them flow in the opposite direction (fromconsumer to the vendor).A distribution channel can be as short as being direct from thevendor to the consumer or may include several inter-connected(usually independent but mutually dependent) intermediaries suchas wholesalers , distributors ,agents , retailers.Each intermediary receives the item at one pricing point and movesit to the next higher pricing point until it reaches the final buyer. Alsocalled channel of distribution or marketing channel.
Definition of FMCG goodsFMCG are products that have a quick shelf turnover,at relatively low cost and dont require a lot of time andfinancial investment to purchase. The margin of profiton every individual FMCG product is less. Examples-Pepsi, Lux, Colgate,etc.
FMCG goods in Indian marketIn 1990s FMCG market grew up at 15% p.a.The growth slowed down and decline for nextfew years.Interest rates drop from 18% to 8% in durablesincreases the demand for durables anddecreases the demand for FMCG goods.In 2004 the FMCG market shows a revival andit capture 6.4% of total market capitalization.To lessen role intermediaries the companiesinnovate new distribution channels.
Importance of strong distribution channel in FMCG sector Though the FMCG companies are big multinational or Indian companies , they face some market challenges in the face of intermediaries. The intermediaries obtain a profit of 2%-5%. To benefit both the companies and the customers, the companies innovate new distribution channel.
Distribution Channel in Maintaining Inventory Increasing demand for FMCG. Huge geographical location like India. Fast information sharing. To be prominently present across the country. To maintain the inventory to fulfill the demand of the customers.
Distribution structure company company Carrying and Carrying and forwarding agents forwarding agents Redistribution Redistribution stockiest stockiest wholesalers wholesalers Rural Rural Urban Urbanretailers retailers retailers retailers consumers consumers
Distribution channel for rural IndiaRural india buys 46% of all soft drinkssold, 49% of motorcycles and 59% ofcigarettes.11% rural women use lipstick.Empowering women- self help group,shaktiITC’s e-choupal.Coverage of village.Use of cooporative.Mandi towns.
Some Important Facts for Modern Distribution Channel Maintaining favorable trade relations, providing innovative incentives to retailers and organizing demand generation activities among a host of other things. Today, the goods are transferred from the factory to the company warehouses and are sent to the distributor from there on a daily basis. From the distributor, the stock reaches the market through daily sales. These include the salesman registering the order of a retail outlet and delivering the goods the next day. Modern trade Kiosk.
Evaluation of distribution model• Phase1-• Large retailers and wholesalers placed large orders.• Companies grouped salesmen to selected region.• Salesmen distributed the goods.
• Phase2-• Companies aimed at distribution of both product and service.• One “Registered Wholesalers” in each maket. He was assigned to 1% margin to cover warehousing cost .• Salesmen used to distribute the products from him.
• Phase3-• Redistribution stockist• Company depots