Distribution channel for FMCG goods

Presented by….

Malovika SanyalPamela Sarkar

Srestha DasSubhasis 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 sectorThough 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

companycompanyCarrying and forwarding agentsCarrying and forwarding agentsRedistribution stockiestRedistribution stockiestwholesalerswholesalersRural retailers

Rural retailersUrban retailersUrban retailersconsumersconsumers

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

ITC’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.

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