Distribution channel for FMCG goods

Presented by.
Malovika Sanyal
Pamela Sarkar
Srestha Das
Subhasis Das
Sharmini Ghosh
Baishakhee Ghosh
Definition of Distribution Channel
Path or pipeline through which goods and services flow in one
direction (from vendor to the consumer), and
the payments generated by them flow in the opposite direction (from
consumer to the vendor).
A distribution channel can be as short as being direct from the
vendor to the consumer or may include several inter-connected
(usually independent but mutually dependent) intermediaries such
as wholesalers , distributors ,agents , retailers.
Each intermediary receives the item at one pricing point and moves
it to the next higher pricing point until it reaches the final buyer. Also
called channel of distribution or marketing channel.
Definition of FMCG goods
FMCG are products that have a quick shelf turnover,
at relatively low cost and don't require a lot of time and
financial investment to purchase. The margin of profit
on every individual FMCG product is less. Examples-
Pepsi, Lux, Colgate,etc.
FMCG goods in Indian market
In 1990s FMCG market grew up at 15% p.a.
The growth slowed down and decline for next
few years.
Interest rates drop from 18% to 8% in durables
increases the demand for durables and
decreases the demand for FMCG goods.
In 2004 the FMCG market shows a revival and
it capture 6.4% of total market capitalization.
To lessen role intermediaries the companies
innovate 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
Caiiying anu
foiwaiuing agents
Caiiying anu
foiwaiuing agents
Reuistiibution
stockiest
Reuistiibution
stockiest
wholesaleis wholesaleis
Ruial
ietaileis
Ruial
ietaileis
0iban
ietaileis
0iban
ietaileis
consumeis consumeis
Distribution channel for rural India
Rural india buys 46% of all soft drinks
sold, 49% of motorcycles and 59% of
cigarettes.
11% rural women use lipstick.
Empowering women- self help group,
shakti
ITCs 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.
Distribution chain for rural market
Distribution chain for urban market
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
2,3,4,-malovika
5,6,-suvasish
7,8,9,10-baisakhee
11,12,13,14-pamela