final copy of the distribution channel - copy

8/3/2019 Final Copy of the Distribution Channel - Copy

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Sr.No Particulars

ASSIGNMENT

ON THEDISTRIBUTION CHANNEL

SUBJECT:-SALES ANDDISTRIBUTIONMANAGEMENT

Submitted to:-Dr. Hemlata Agrawal

Submitted by :-Ketan SavalyaKeyur ModiPratibha ChaudhariNikita Pereira


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THE DISTRIBUTION CHANNEL(1.1) LEVELS OF DISTRIBUTION CHANNEL(1.2) NEED / IMPORTANCE OF DISTRIBUTIONCHANNEL

(1.3) SCOPE(1.4)ANALYSIS & EVALUATION OF

DISTRIBUTION CHANNELS IN VARIOUS

SECTORS(1.5) CONCLUSION(1.6) BIBILIOGRAPHY

THE DISTRIBUTION CHANNEL

Introduction


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Distribution is also a very important component of Logistics & Supply chain

management . Distribution in supply chain management refers to the distribution of a good from

one business to another. It can be factory to supplier, supplier to retailer, or retailer to end

customer. It is defined as a chain of intermediaries; each passing the product down the chain to

the next organization, before it finally reaches the consumer or end-user. This process is known

as the 'distribution chain' or the 'channel.' Each of the elements in these chains will have their

own specific needs, which the producer must take into account, along with those of the all-

important end-user.

You know that the main purpose of trade is to supply goods to the consumers living in far

off places. As goods and services move from producer to consumer they may have to pass

through various individuals.

Example A farmer in Srinagar has an apple orchard. Once the apples are ripened he sells the

apples to an agent of Delhi. The agent collects the apples from Srinagar, packs them, and sells

them to a wholesaler at New Delhi sabzimandi. The wholesaler then distributes them to various

retail fruit vendors throughout Delhi by selling smaller quantities.

Finally, they purchase apples from those vendors as per our requirement. Thus, they find

that while coming from the producer at Srinagar, the product reaches the consumers by passingthrough several hands like an agent, a wholesaler and a retailer. All these three are called

middlemen.

These middlemen are connecting links between producers of goods, on one side and

consumers, on the other. They perform several functions such as buying, selling, storage, etc.

These middlemen constitute the channels of distribution of goods. Thus, a channel of distribution

is the route or path along which goods move from producers to ultimate consumers. The route

taken by goods as they move from producer to consumer is known as Channel of Distribution.

(1.1) LEVELS OF DISTRIBUTION CHANNEL


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Normally goods and services pass through several hands before they come to the hands of

the consumer for use. But in some cases producers sell goods and services directly to theconsumers without involving any middlemen in between them, which can be called as directchannel. So there are two types of channels, one direct channel and the other, indirect channel.

From the above diagram it can be found that there is just one direct channel i.e. from producer to

the consumer. There are many indirect channels like

Agent

Retailer

Producer

Wholesaler

Consume

Channels of Distribution1. Producer to consumer

2. Producer to wholesaler to customer

3. Producer to retailer to customer

4. Producer to wholesaler to retailer to customer

5. Producer to broker to wholesaler/retailer to customer


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Let us discuss about some of the common channels.

Direct Channel

In this channel, producers sell their goods and services directly to the consumers. There is

no middleman present between the producers and consumers. The producers may sell directly to

consumers through door-to-door salesmen and through their own retail stores. For example, Bata

India Ltd, HPCL, Liberty Shoes Limited has their own retail shops to sell their products to

consumers. For certain service organizations consumers avail the service directly. Banks

consultancy firms, telephone companies, passenger and freight transport service s, etc. are

examples of direct channel of distribution of service.

Producer-Customer :- This is the simplest and shortest channel in which no middlemen is

involved and producers directly sell their products to the consumers. It is fast and economical

channel of distribution. Under it, the producer or entrepreneur performs all the marketing

activities himself and has full control over distribution. A producer may sell directly to

consumers through door-to-door salesmen, direct mail or through his own retail stores. Big firms

adopt this channel to cut distribution costs and to sell industrial products of high value. Small

producers and producers of perishable commodities also sell directly to local consumers.

Indirect Channel

If the producer is producing goods on a large scale, it may not be possible for him to sell

goods directly to consumers. As such, he sells goods through middlemen. These middlemen may

be wholesalers or retailers. A wholesaler is a person who buys goods in large quantities from

producers; where as a retailer is one who buys goods from wholesalers and producers and sells to

ultimate consumers as per their requirement. the involvement of various middlemen in the

process of distribution constitute the indirect channel of distribution. Let us look into some of the

important indirect channels of distribution.


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This is the common channel for the distribution of goods to ultimate consumers. Selling

goods through wholesaler may be suitable in case of food grains, spices, utensils, etc. and mostly

of items, which are smaller in size.

Under this channel, the producers sell to one or more retailers who in turn sell to the ultimate

consumers. This channel is used under the following conditions

1) When the goods cater to a local market, for example, breads, biscuits, patties, etc.

2) When the retailers are big and buy in bulk but sell in smaller units, directly to the

consumers.

1) Producer-Retailer-Customer :- This channel of distribution involves only one

middlemen called 'retailer'. Under it, the producer sells his product to big retailers (or retailers who buy goods in large quantities) who in turn sell to the ultimate consumers.

This channel relieves the manufacturer from burden of selling the goods himself and at

the same time gives him control over the process of distribution. This is often suited for

distribution of consumer durables and products of high value.

2) Producer-Wholesaler-Retailer-Customer :- This is the most common and traditional

channel of distribution. Under it, two middlemen i.e. wholesalers and retailers are

involved. Here, the producer sells his product to wholesalers, who in turn sell it to

retailers. And retailers finally sell the product to the ultimate consumers. This channel is

suitable for the producers having limited finance, narrow product line and who needed

expert services and promotional support of wholesalers. This is mostly used for the

products with widely scattered market.

3) Producer-Agent-Wholesaler-Retailer-Customer :- This is the longest channel of

distribution in which three middlemen are involved. This is used when the producer

wants to be fully relieved of the problem of distribution and thus hands over his entire

output to the selling agents. The agents distribute the product among a few wholesalers.

Each wholesaler distribute the product among a number of retailers who finally sell it to

the ultimate consumers. This channel is suitable for wider distribution of various

industrial products.


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An entrepreneur has to choose a suitable channel of distribution for his product such that the

channel chosen is flexible,effective and consistent with the declared marketing policies and

programmes of the firm. While selecting a distribution channel, the entrepreneur should compare

the costs,sales volume and profits expected from alternative channels of distribution and take

into account the following factors:-

(1.2) NEED / IMPORTANCE OF DISTRIBUTION CHANNEL


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There are hundreds of thousands of marketing intermediaries whose job it is to help move

goods from the raw-material state to producers and then on to consumers.

A channel of distribution is the whole series of marketing intermediaries who join together to

transport and store goods in their path from producers to consumers. Channels of distribution

enhance communication flows and the flow of money and title to goods.

1) Establishing channel relationship- Since channel members must be convinced to handle amarketers product it makes sense to consider channel partners needs in the same way

the marketer considers the final users needs. However, the needs of channel members

are much different than those of the final customer.

2) Intermediaries Manufacturers dont always need marketing intermediaries to sell their

goods to consumer and industrial markets. Intermediaries perform certain functions better

than most manufacturers. These functions include transportation, storage, selling,

advertising, and relationship building. Companies often outsource distribution to others.

Brokers are marketing intermediaries who bring buyers and sellers together and assist in

negotiating an exchange, but do not take title to the goods.

Intermediaries create exchange efficiency by decreasing the number of contacts needed

to establish marketing exchanges. Some manufacturers reach consumers directly on the

Internet. Retailers are now so closely linked with manufacturers that they can get deliveryseveral times a day. Some people think that if we could get rid of intermediaries, we

could greatly reduce the cost of the things we buy.

3) Delivery Resellers want the product delivered on-time and in good condition in order to meet customer demand and avoid inventory out-of-stocks.

4) Profit Margin Resellers are in business to make money so a key factor in their decision

to handle a product is how much money they will make on each product sold. They

expect that the difference (i.e., margin) between their cost for acquiring the product froma supplier and the price they charge to sell the product to their customers will be

sufficient to meet their profit objectives.

5) Packaging Resellers want to handle products as easily as possible and want their

suppliers to ship and sell products in packages that fit within their system. For example,


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products may need to be a certain size or design in order to fit on a stores shelf, or the

shipping package must fit within the resellers warehouse or receiving dock space. Also,

many resellers are now requiring marketers to consider adding identification tags to

products (e.g., RFID tags) to allow for easier inventory tracking when the product is

received and also when it is sold.

6) Training Some products require the reseller to have strong knowledge of the product

including demonstrating the product to customers. Marketers must consider offering

training to resellers to insure the reseller has the knowledge to present the product

accurately.

7) Promotional Help Resellers often seek additional help from the product supplier to promote the product to customers. Such help may come in the form of funding for

advertisements, point-of-purchase product materials, or in-store demonstrations.

8) Cost Savings in Specialization Members of the distribution channel are specialists in

what they do and can often perform tasks better and at lower cost than companies who do

not have distribution experience. Marketers attempting to handle too many aspects of

distribution may end up exhausting company resources as they learn how to distribute,

resulting in the company being a jack of all trades but master of none.

9) Reduce Exchange Time Not only are channel members able to reduce distribution

costs by being experienced at what they do, they often perform their job more rapidly

resulting in faster product delivery. For instance, consider what would happen if a

grocery store received direct shipment from EVERY manufacturer that sells products in

the store. This delivery system would be chaotic as hundreds of trucks line up each day to

make deliveries, many of which would consist of only a few boxes. On a busy day a truck

may sit for hours waiting for space so they can unload their products. Instead, a better

distribution scheme may have the grocery store purchasing its supplies from a grocery

wholesaler that has its own warehouse for handling simultaneous shipments from a large

number of suppliers. The wholesaler will distributes to the store in the quantities the store


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needs, on a schedule that works for the store, and often in a single truck, all of which

speeds up the time it takes to get the product on the stores shelves.

10) Customers Want to Conveniently Shop for Variety Marketers have to

understand what customers want in their shopping experience. Referring back to our

grocery store example, consider a world without grocery stores and instead each marketer

of grocery products sells through their own stores. As it is now, shopping is time

consuming, but consider what would happen if customers had to visit multiple retailers

each week to satisfy their grocery needs. Hence, resellers within the channel of

distribution serve two very important needs: 1) they give customers the products they

want by purchasing from many suppliers (termed accumulating and assortment services),

and 2) they make it convenient to purchase by making products available in singlelocation.

11) Resellers Sell Smaller Quantities Not only do resellers allow customers to

purchase products from a variety of suppliers, they also allow customers to purchase in

quantities that work for them. Suppliers though like to ship products they produce in

large quantities since this is more cost effective than shipping smaller amounts. For

instance, consider what it costs to drive a truck a long distance. In terms of operational

expenses for the truck (e.g., fuel, truck drivers cost) lets assume it costs (US) $1,000 to

go from point A to point B. Yet in most cases, with the exception of a little decrease in

fuel efficiency, it does not cost that much more to drive the truck whether it is filled with

1000 boxes containing the product or whether it only has 100 boxes. But when

transportation costs are considered on a per product basis ($1 per box vs. $10 per box) the

cost is much less for a full truck. The ability of intermediaries to purchase large quantities

but to resell them in smaller quantities (referred to as bulk breaking) not only makes these

products available to those wanting smaller quantities but the reseller is able to pass along

to their customers a significant portion of the cost savings gained by purchasing in large

volume.


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12) Create Sales Resellers are at the front line when it comes to creating demand

for the marketers product. In some cases resellers perform an active selling role using

persuasive techniques to encourage customers to purchase a marketers product. In other

cases they encourage sales of the product through their own advertising efforts and using

other promotional means such as special product displays.

13) Offer Financial Support Resellers often provide programs that enable

customers to more easily purchase products by offering financial programs that ease

payment requirements. These programs include allowing customers to: purchase on

credit; purchase using a payment plan; delay the start of payments; and allowing trade-in

or exchange options.

14) Provide Information Companies utilizing resellers for selling their products

depend on distributors to provide information that can help improve the product. High-

level intermediaries may offer their suppliers real-time access to sales data including

information showing how products are selling by such characteristics as geographic

location, type of customer, and product location (e.g., where located within a store, where

found on a website). If high-level information is not available, marketers can often count

on resellers to provide feedback as to how customers are responding to products. This

feedback can occur either through surveys or interviews with resellers employees or by

requesting the reseller allow the marketer to survey customers.


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(1.3) SCOPE

As we will see the marketer must take into consideration many factors when choosing theright level of distribution coverage. However, all marketers should understand that distribution

creates costs to the organization.

Some of these expenses can be passed along to customers (e.g., shipping costs) butothers cannot (e.g., need for additional salespeople to handle more distributors). Thus, the

process for determining the right level of distribution coverage often comes down to an analysisof the benefits (e.g., more sales) versus the cost associated with gain the benefits.

Additionally, it is worth noting that for the most part distribution coverage decisions areof most concern to consumer products companies, though there are many industrial products thatalso must decide how much coverage to give their products.

There are three main levels of distribution coverage - mass coverage, selective andexclusive.

Mass Coverage - The mass coverage (also known as intensive distribution) strategyattempts to distribute products widely in nearly all locations in which that type of productis sold. This level of distribution is only feasible for relatively low priced products thatappeal to very large target markets (e.g., see consumer convenience products). A productsuch as Coca-Cola is a classic example since it is available in a wide variety of locationsincluding grocery stores, convenience stores, vending machines, hotels and many, many

more. With such a large number of locations selling the product the cost of distribution isextremely high and must be offset with very high sales volume.

Selective Coverage - Under selective coverage the marketer deliberately seeks to limitthe locations in which this type of product is sold. To the non-marketer it may seemstrange for a marketer to not want to distribute their product in every possible location.However, the logic of this strategy is tied to the size and nature of the products targetmarket. Products with selective coverage appeal to smaller, more focused target markets(e.g., see consumer shopping products) compared to the size of target markets for mass

marketed products. Consequently, because the market size is smaller, the number of locations needed to support the distribution of the product is fewer.

Exclusive Coverage - Some high-end products target very narrow markets that have arelatively small number of customers. These customers are often characterized asdiscriminating in their taste for products and seek to satisfy some of their needs with


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high-quality, though expensive products. Additionally, many buyers of high-end productsrequire a high level of customer service from the channel member from whom they

purchase. These characteristics of the target market may lead the marketer to sell their products through a very select or exclusive group of resellers. Another type of exclusive

distribution may not involve high-end products but rather products only available inselected locations such as company-owned stores. While these products may or may not

be higher priced compared to competitive products, the fact these are only available incompany outlets give exclusivity to the distribution.


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(1.4) ANALYSIS & EVALUATION OF DISTRIBUTION

CHANNELS IN VARIOUS SECTORS

The following examples involved analyzing and evaluating distribution channels of various

companies belonging to sectors like:

1. Precious and semi precious stones,

2. Cement,

3. FMCG

(1.4.1) PRECIOUS AND SEMI PRECIOUS STONES

The Indian Gems and Jewellery industry is an age old industry and comprises mainly of two

types of markets, viz the organized sector and the unorganized sector. The organized sector with branded jewelers, Public Sector Units (PSUs), etc forms only 10% of the precious and semi-

precious stones market, whereas, the unorganized sector forms 90% of the gems and jewellery

market in India. The unorganized sector employs around 1.5 million workers serving over 0.1

million gold jewelers and over 8000 diamond jewelers.

Precious and semi-precious stones industry is a significant earner of foreign exchange.

This sector contributes around 17% of Indias exports. The bulk of the Indian gems and jewellery

exports comprise imports of rough diamonds, cutting and polishing in India, and re-exports. Cut

and Polished Diamonds (CPD) and gold Jewellery account for nearly 95% of Indias gems and

jewellery exports. India is the worlds leading diamond cutting and polishing center, accounting

for 53% share of the global polished diamond market in terms of value. India imports gold from

South Africa, Switzerland, Australia, Hong Kong and UAE. The domestic consumption of

diamonds have been 626.9 crores in 2001-02 to 483.4 crores in 02-03 and reached and all time

high of 1771.3 crores in 2003-04 and the trend has continued in 2004-05 as well. The market size

has also witnessed a rise of around 10% in 2003-04 over 2002-03. The value of domestic sales

has been 7200 crores, 7400 crores and 7650 crores in 01-02, 02-03 & 03-04 respectively. Exports

of cut and polished diamonds has been 5892, 7385 and 8240 million dollars in 01-02, 02-03 &

03-04 respectively, whereas, exports of Jewellery studded with diamonds has been 553, 719 and

934 million dollars in 01-02, 02-03 & 03-04 respectively.


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Consumer Demographics & Buying Patterns of Indian Consumers

There is a very high consumption in the western and the northern markets of India, viz,

Mumbai and New Delhi, New Delhi being the leader. In India, the purchase of Jewellery is quite

seasonal and occasion driven. There is a higher consumption during festivals like Diwali,

Dassera, Ganesh Chaturthi, etc. and also during the marriage season, which is spread from

November to March.

Mechanics of Distribution Channels of Sector

Since precious and semi precious stones industry is divided into organized and

unorganized sector, the mechanics of the distribution channels of the players belonging to these

sectors has also been different. Domestically, the branded jewelers of the organized sector cater to the consumers via a 1 or a 2 level supply chain which comprise of either only franchise retail

outlets and other retails or wholesalers and then retailers. The players of the unorganized sector,

on the other hand, either plainly sell their manufactured products to retailers or have branch

offices in cities where the products are transferred and sold to end consumers or to retailers in the

particular city.

Raw diamonds and other Jewellery is imported from sources, manufactured and polished

here and either shipped or transported by air to the final destination In exported countries the

products are either transferred to retailers who are clients or to branch office who in turn sell it to

the retailers. Whether domestic sales or exports, overall, the levels of intermediaries in the gems

and Jewellery industry do not really exceed 2 to 3 levels.


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(1.4.2) CEMENT

Cement production commenced in India as early as 1914. The first cement unit was set

up at Porbandar in 1914 with a capacity of 1,000 tonnes per annum. The cement industry in India

is estimated at Rs. 24-25 billion in value terms and 114 million tonnes by volume. The domestic

cement industry is highly fragmented, with over 50 cement players and more than 120

manufacturing plants. This apart, the industry is highly regionalized, as cement units are

concentrated in clusters, close to the limestone deposits. Competition is also regionalized since

the low-value of the commodity makes transportation over long distances uneconomical.

Concentration, in terms of the number of units and the dominance of large players, is

moderate. The minimum economic size of a cement plant is 1 million tonnes. However,

concentration has improved over the past 6 years with the top six players accounting for 52 per

cent of the total cement capacity in 2003 up from 33 per cent in 1997. The share of cement plants

with capacities of less than 3 million tonnes has declined over the past 6 years from 48 per cent

in 1997, to 28 per cent in 2003.

During 1999-2000 to 2003-04, the installed capacity of the industry increased at a CAGR

of around 7.5 per cent to 146.4 mtpa. (The capacity of the industry is taken as the sum of the

installed capacity of all the players in the industry.)The seven states: Madhya Pradesh, Andhra Pradesh, Rajasthan, Gujarat, Karnataka, Tamil Nadu

and Maharashtra, account for around 74 per cent of the total domestic capacity.

Cement sector is characterized by the following

1. Units concentrated near raw material sources or markets

2. Power intensive

3. High freight costs

4. Small value chain

5. Regional variation and volatility in prices and margins

6. High debt levels

7. Regional distribution of demand

8. Seasonality of demand and cyclicality of the industry


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9. High entry barriers

However the future of Cement Sector is as follows

1. Steady price growth over the next 2-3 years

2. Housing and government infrastructure spending to translate into an 8 per cent CAGR in

demand

3. Greenfield/Brownfield capacity additions of around 35 million tonnes will be required to

match the robust demand growth

4. Blending to contribute around 10 million tonnes of capacity

5. Operating rates to touch 88 per cent by 2006-07

6. Production costs to increase moderately


The per capita consumption of cement in India is very low, as compared with the

developed economies and the overall world average per capita cement consumption. The per

capita consumption of cement in India is even less than that in Africa, a relatively

underdeveloped continent. Over the past decade, the per capita cement consumption of cement

has increased in most states, except Chandigarh, where it has declined by 7 %.


Companies invariably hire c & f agents or transport cements to own or government

warehouses either via roadway or railways. Incase of exports, cement reaches the nearest port via

roadways or railways and is then transferred to the importing country.

Domestically, from c & f agents or warehouses the cement is transported to the

dealers/distributors and in turn to sub dealers who finally sell it to the end users. There may or

may not be physical ownership of goods. In the second case, dealers and sub dealers take order

from buyers and place it to the companies, co ordinate and monitor the timely dispatch of said

orders, transportation of goods and final delivery.


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Distributor network in cement industry is highly dominating and companies are

compelled to hire as they do not really have that rapport and touch with the end consumer of

their product. Apart, from this, the distributors have storage facilities as well which help control

well in the entire supply chain as they are the ones who bring orders and therefore are directly

responsible for the business that a manufacturer would do. Industry dynamics in Cement Industry

do not favor entry of MNCs into the Indian market.


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(1.4.3) FMCG

Through the nineties, the FMCG markets grew at almost 15% per annum in value.

Suddenly, in 2000 FMCG market growth stalled and then declined for the next four years. The

rapid opening up of the economy resulted in many new avenues of expenditure for the

consumers growing income. A sharp drop in interest rates from 18% to 8% led to explosive

demand for consumer durables like white goods, two wheelers and automobiles. Mobile phone

ownership and usage exploded due to its amazing lifestyle and convenience benefits as well as

lower prices. Entertainment, leisure and travel sectors also boomed.

The lure of new avenues of expenditure in products and services led to consumers

restricting their spending on FMCG. Consumers downgraded to lower priced substitutes from

higher quality brands. As a result of this shift in spending patterns, the FMCG market declined in

value in the last four years creating a major challenge for growth.

The FMCG sector has had a much better time in recent months, with market showing

signs of broad revival. It accounts for about 6.4% of total market capitalisation, and is up,

compared to 6.1% in December04. The situation continues to be tough in the home and personal

care segments. Rising raw material costs in the petro-based intermediaries used in shampoos and

detergents have resulted in cost pressures and a competitive market means companies have not been able to pass on these costs fully to consumers through price hikes.

The FMCG sector is witnessing demand growth again, driven by improving reach, organized

retail and innovative channels, higher usage driven by affordability and rising incomes driving

aspiration levels.

As a result, we see an improvement in sales growth for the FMCG industry.


FMCG is one sector which caters to the daily and more basic needs of consumers and

therefore dont have a chance to run out of focus. From oral care products to packed food to

detergents, soaps, mosquito coils, etc, are the various categories of products that FMCG market

makes available to lakhs of consumers across the country.


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Initially, Indian buyers were a bit conservative partly due to lesser disposable income and

partly due to fewer competitive and more variety of products. But since almost a decade, brands

like Pepsodent, Pepsi, Coke, Mortein, various ITC brands, Dabur products, P & G products, etc,

have made a stern attempts in providing higher quality products with relatively competitive

prices, making Indian consumer enjoy brands which deliver high quality and adhere to global

standards.

The plethora of such brands was thrown open to Indian consumers during 1990s which

witnessed a rise and growth in the FMCG industry. But from 2000 onwards a there has been a

negative growth of this industry. The reasons are manifold; firstly, yesteryears amenities started

becoming necessities like, mobile phones, cars, branded clothes, accessories, etc. Secondly, the

disposable income of average Indian consumer rose sharply within the past 5 year and finally,availability of various financial aides made every reasonable and expensive purchas e, easy

thereby giving the Indian consumers an unlimited exposure to experience the same.

But since December04, the sales of various brands belonging to key players and the

overall FMCG industry performance have picked up and the intense sales promotional efforts,

cut throat competitive strategies, stronger distributional efforts have helped various brands

penetrate deeper into the markets and increased sales. Today, rural Indian consumers market has

by far become the highest revenue generator for many of the FMCG product companies and

availability of a wide variety of range has allowed todays Indian consumer to analyze and judge

each product accurately and make an ideal purchase decision.


The supply chain of products in the FMCG market in India is one of the longest supply

chains an industry could really have. There are as many as 5 levels of intermediaries involved in

the entire supply chain through which a product passes before reaching the end consumer.

What has been observed is that even though these FMCG companies are big

multinationals and Indian but face a major challenge of making their products available in the

market in the right quantities and in the right time. This is simply because these companies dont


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really have a wide network of sales agents and other force which is required and is ideal for

catering their products to the markets. This aspect is taken over by distributors, wholesalers and

retailer whose margins on these products actually double the price of these products when a final

consumer buys it. The margins kept by these intermediaries range from 2% to 5%. The products

in this industry are transported from manufacturing units via c & f agencies or warehouse to

distributors who further sell the same to wholesalers or stockiest who finally sell it to the retailers

in the market.

These products are transported either via roadways or railways within the domestic

markets and normally dont take more than a week to reach the retailers. FMCG products are

normally a high volume ball game and products have to essentially be available in the market at

all given points of time and at all given points of purchase and therefore the distribution activitiesare highly volatile and dynamic.

The supply of products takes place virtually on a daily basis in fixed quotas or otherwise,

to retailers as per their requisitions and the anticipation of demand and the performance of

products in the recent past. All such criteria are taken into consideration before the quantum of

products being dispatched to the next level of intermediary. Since its a volume game,

manufacturers make all possible efforts to boost sales and promote their distributors to earn more

and more orders from the retailers and wholesalers. A close check is maintained on the flow of

the products on a daily, weekly, fortnightly and monthly basis to determine the trend in the

business and flow of products and consumption. This activity also helps to find out drawbacks of

the distribution system, if any, and rectify them within time.


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(1.5) CONCLUSION

Product distribution (or place ) is one of the four elements of the marketing mix . Anorganization or set of organizations (go-betweens) involved in the process of making a product

or service available for use or consumption by a consumer or business user.

Distribution is also a very important component of Logistics & Supply chainmanagement. Distribution in supply chain management refers to the distribution of a good fromone business to another. It can be factory to supplier, supplier to retailer, or retailer to endcustomer. It is defined as a chain of intermediaries each passing the product down the chain tothe next organization, before it finally reaches the consumer or end-user. This process is knownas the 'distribution chain' or the 'channel.' Each of the elements in these chains will have their own specific needs, which the producer must take into account, along with those of the all-

important end-user.
http://en.wikipedia.org/wiki/Marketing_mixhttp://en.wikipedia.org/wiki/Marketing_mix


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(1.6) BIBILIOGRAPHY

http://en.wikipedia.org/wiki/Distribution_(business)

http://business.gov.in/manage_business/channels_distribution.php
http://en.wikipedia.org/wiki/Distribution_(business)http://business.gov.in/manage_business/channels_distribution.phphttp://en.wikipedia.org/wiki/Distribution_(business)http://business.gov.in/manage_business/channels_distribution.php

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