A PROJECT REPORT ON CHANNEL OF DISTRIBUTION OF FMCG COMPANY

(SPECIAL REFERENCE WITH NESTLE INDIA LTD RUDRAPUR)

SUBMITTED FOR THE FULFILLMENT OF REQUIRMENT OF DEGREE OF

MASETER OF BUSINESS ADMINISTRATION

UNDER THE GUIDANCE OF

SUBMITTED BY DHANANJAY MBA (2009-11) 4rt semester Roll No. 09290500019

Dr.Gulnaj siddiqi
(Assistant Professor) Management Department

SARASWATI INSTITUTE OF MANAGEMENT & TECHNOLOGY (AFFILIATED UTTAREKHAND TECHNOLOGY DEHRADUN)

ACKNOWLEDGEMENT
I would like to express my sincere gratitude towards Sidcul for providing me the opportunity to work and learn through this end-term project. I am extremely grateful to my esteemed project guide, Dr. Gulnaz Sidique Assistant Professor( Management Departmen), for giving me an opportunity to work with her indispensable help and guidance throughout this project and for inspiring me to strive to achieve the best in difficult situations.

Student Declaration
I DHANANJAY student of MBA IV SEMESTER, SARASWATI INSTITUTE OF MANAGEMENT AND TECHNOLOGY RUDRAPUR, hereby declare that all information, facts and figures presented and work experience during the research project, under the Guidance of Dr. GULNAZ SIDDIQUI. This is my original work and it has not been presented earlier in this manner. The information provided is purely of academic interest.

DHANANJAY

PREFACE
Channels of distribution are of vital importance to all types of firms producers wholesalers and retailers. Each member of a channel is a link in a distribution network of organizations that extends from the producer to the end users of products or services. Although some firms perform all channel functions, typically several organizations are linked together in a distribution channel to carry out the various activities of storage, transportation, and warehousing, material handling service. Sorting and re-packing organizations that perform these marketing functions between producers and end users are called middlemen, intermediaries or resellers.

Table of Contents
Title Preface Acknowledgement Student Declaration Objectives of the study Limitations Executive Summary Statement of the problem Introduction Scope & Importance Company Profile Sales and Wages Administration Research Methodology Analysis and Interpretation Findings Conclusions Recommendations Bibliography Questionnaire

INTRODUCTION TO THE TOPIC

An organization 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. The channel decision is very important. In theory at least, there is a form of trade-off: the cost of using intermediaries to achieve wider distribution is supposedly lower. Indeed, most consumer goods

manufacturers could never justify the cost of selling direct to their consumers, except by mail order. Channels of distribution are of vital importance to all types of firms producers wholesalers and retailers. Each member of a channel is a link in a distribution network of organizations that extends from the producer to the end users of products or services. Although some firms perform all channel functions, typically several organizations are linked together in a distribution channel to carry out the various activities of storage, transportation, warehousing, material handling service. Sorting and re-packing organizations that perform these marketing functions between producers and end users are called middlemen, intermediaries or resellers. The people and organizations that assist in the flow of goods and services from producer to customer are known as marketing intermediaries. The following are the common types of intermediaries.

Middlemen: Middlemen refers to just about anybody acting as an intermediary between the producer and the customer.

Agent or Broker: Intermediaries with legal authority to market goods and services and to perform other function on behalf of the producer are called agents of brokers. Agents generally work for producers continuously, whereas brokers may be employed for just any deal. In some cases, agents sell to another intermediary such as an industrial distributor. In addition, an

agent or broker can work for the buyer rather than the seller. This situation is becoming more common in real estate business.

Wholesaler : Wholesalers are organizations that buy from producers and sell to retailers and organizational customers. Wholesalers primarily deal in bulk and will ordinarily sell to the retailer or other intermediaries.

Retailer : As the last link in many marketing channels, retailers sell directly to final customers. They purchase goods from wholesalers or in some directly from the producer.

Distributor: Distributor is a general term applied to a variety of intermediaries. These individuals and firms perform several functions, including inventory management, personal sale and financing.

OBJECTIVES OF THE STUDY

To study the concept of channel of distribution with special reference to Nestle India in Rudrapur. To analyze the satisfaction level of the dealers in respect of distribution channel. To study the various products and their prices offered by Nestle India.
To study the effectiveness of distbution channel in the success of any

company.

RESEARCH METHODOLOGY DEFINITION OF RESEARCH

The term research is also used to describe an entire collection of information about a particular subject. Research is defined as human activity based on intellectual application in the investigation of matter. The primary purpose for applied research is discovering, interpreting, and the development of methods and systems for the advancement of human knowledge on a wide variety of scientific matters of our world and the universe. Research can use the scientific method, but need not do so. Scientific research relies on the application of the scientific method, a harnessing of curiosity. This research provides scientific information and theories for the explanation of the nature and the properties of the world around us. It makes practical applications possible. Scientific research is funded by public authorities, by charitable organisations and by private groups, including many companies. Scientific research can be subdivided into different classifications according to their academic and application disciplines. Historical research is embodied in the historical method.

TYPES OF RESEARCH Quantitative research:- Quantitative research is descriptive and provides

hard data on the numbers of people exhibiting certain behaviours, attitudes, etc. It provides information in breadth and allows you to sample large numbers of the population. It is, however, structured and does not yield the reasons behind behaviour or why people hold certain attitudes. Techniques commonly used in HE/FE include postal surveys (particularly appropriate in the case of student populations where name and address information is available), telephone surveys (appropriate for surveys of employers), on-line or web-based surveys (very cost-effective for reaching audiences where e-mail penetration is high, such as students and university/college staff) and mystery shopping (in this case to test quantifiable aspects of the service).

Qualitative research:- Qualitative research allows you to explore

perceptions, attitudes and motivations and to understand how they are formed. It provides depth of information which can be used in its own right or to determine what attributes will subsequently be measured in quantitative studies. Verbatim quotes are used in reports to illustrate points and this brings the subject to life for the reader. However, it relies heavily on the skills of the moderator, is inevitably subjective and samples are small. Techniques include group discussions/workshop sessions, paired interviews, individual in-depth

interviews and mystery shopping (where the researcher plays the role of a potential student, etc in order to replicate the overall experience).

Secondary or desk research:- The collating and analysis of secondary

data is called desk research. Secondary data is data that already exists and may be found within your own organisation or is published by another party and readily available.

RESEARCH DESIGN
Plan outlining how information is to be gathered for an assessment or evaluation that includes identifying the data gathering method(s) , the instruments to be used/created, how the instruments will be administered, and how the information will be organized and analyzed.

DATA COLLECTION
Data collection is a term used to describe a process of preparing and collecting data - for example as part of a process improvement or similar project. A method of data collection in which the situation of interest is watched and the relevant facts, actions and behaviors are recorded.

PRIMARY DATA COLLECTION METHODS

In primary data collection, you collect the data yourself using methods such as interviews and questionnaires. The key point here is that the data you collect is unique to you and your research and, until you publish, no one else has access to it.

SECONDARY DATA COLLECTION METHODS

All methods of data collection can supply quantitative data (numbers, statistics or financial) or qualitative data (usually words or text). Quantitative data may often be presented in tabular or graphical form. Secondary data is data that has already been collected by someone else for a different purpose to yours. DATA SOURCES DATA COLLECTION METHOD RESEARCH INSTRUMENT SAMPLE SIZE SAMPLING UNIT SAMPLING METHOD : Primary & Secondary data. : Survey :Questionnaire :20 :etailers :Personal Interview

LIMITATIONS OF PROJECT WORK]

 Accuracy: It is observed that it is rather difficult to measure the degree of approximation used in the collection of information as well as the competence of the investigator in motivating the persons to supply the desired information. Difficulty to find secondary data that exactly the needs of some specific research investigation. Relevance: The data may not fit into the needs of investigation. There may be difference in the units of measurement, there may be surrogated data, discrepancy of class & data may pertain to some other period of time. Difficulties in the identification of the source. Error may be there in recording or transferring information from secondary sources.
The facilities or capabilities of the agency that originally collected the data

might be questionable.

EXECUTIVE SUMMARY

Nestl has been a partner in India's growth for over nine decades now and has built a very special relationship of trust and commitment with the people of India. The Company's activities in India have facilitated direct and indirect employment and provides livelihood to about one million people including farmers, suppliers of packaging materials, services and other goods. The Company continuously focuses its efforts to better understand the changing lifestyles of India and anticipate consumer needs in order to provide Taste, Nutrition, Health and Wellness through its product offerings. The culture of innovation and renovation within the Company and access to the Nestl Group's proprietary technology/Brands expertise and the extensive centralized Research and Development facilities gives it a distinct advantage in these efforts. It helps the Company to create value that can be sustained over the long term by offering consumers a wide variety of high quality, safe food products at affordable prices. The willingness of channel intermediaries to market product is also a factor. Retailers in particular invest heavily in properties, shop fitting etc. They may decide not to support a particular product if it requires too much investment (e.g. training, display equipment, warehousing). Another important factor is intermediary cost. Intermediaries typically charge a "mark-up" or "commission" for participating in the channel. This might be deemed unacceptably high for the ultimate producer business.

Each member of a channel is a link in a distribution network of organizations that extends from the producer to the end users of products or services. Although some firms perform all channel functions, typically several organizations are linked together in a distribution channel to carry out the various activities of storage, transportation, and warehousing, material handling service. Channels of distribution are of vital importance to all types of firms producers wholesalers and retailers. Each member of a channel is a link in a distribution network of organizations that extends from the producer to the end users of products or services.

STATEMENT OF THE PROBLEM

These are real conditions that exist in too many distribution channels across the country, preventing some supply chains from operating efficiently. Theres no doubt that the end game of solving these problems would be significant cost reduction, improved profits, and better service. It seems to me there are two main obstacles to making the most of the synergy and the capacity. The first is the inability or unwillingnessto collaborate effectively. The second is that even though technology exists that could develop a formula by which manufacturers could share in the cost reduction and savings, such a formula has rarely been achieved. The statement for the problem for the proposed study is as follows: "Channel of distribution of FMCG companies (special reference with Nestle, Rudrapur)"

SCOPE & IMPORTANCE

An important market factor is "buyer behaviour"; how do buyers want to purchase the product? Do they prefer to buy from retailers, locally, via mail order or perhaps over the Internet? Another important factor is buyer needs for product information, installation and servicing. Which channels are best served to provide the customer with the information they need before buying? Does the product need specific technical assistance either to install or service a product? Intermediaries are often best placed to provide servicing rather than the original producer - for example in the case of motor cars. The willingness of channel intermediaries to market product is also a factor. Retailers in particular invest heavily in properties, shop fitting etc. They may decide not to support a particular product if it requires too much investment (e.g. training, display equipment, warehousing). Another important factor is intermediary cost. Intermediaries typically charge a "mark-up" or "commission" for participating in the channel. This might be deemed unacceptably high for the ultimate producer business.

NESTLE INDIA

COMPANY PROFILE
The Company insists on honesty, integrity and fairness in all aspects of its business and expects the same in its relationships. This has earned it the trust and respect of every strata of society that it comes in contact with and is acknowledged amongst India's 'Most Respected Companies' and amongst the 'Top Wealth Creators of India'. Nestl India is a subsidiary of Nestl S.A. of Switzerland. With seven factories and a large number of co-packers, Nestl India is a vibrant Company that provides consumers in India with products of global standards and is committed to long-term sustainable growth and shareholder satisfaction. After Indias independence in 1947, the economic policies of the Indian Government emphazised the need for local production. Nestl responded to Indias aspirations by forming a company in India and set up its first factory in 1961 at Moga, Punjab, where the Government wanted Nestl to develop the milk economy. Progress in Moga required the introduction of Nestls Agricultural Services to educate, advise and help the farmer in a variety of aspects. From increasing the milk yield of their cows through improved dairy farming methods, to irrigation, scientific crop management practices and helping with the procurement of bank loans. Nestl set up milk collection centres that would not only ensure prompt collection and pay fair prices, but also instil amongst the community, a confidence in the dairy business.

Progress involved the creation of prosperity on an on-going and sustainable basis that has resulted in not just the transformation of Moga into a prosperous and vibrant milk district today, but a thriving hub of industrial activity, as well. For more on Nestl Agricultural Services. Nestls relationship with India dates back to 1912, when it began trading as The Nestl Anglo-Swiss Condensed Milk Company (Export) Limited, importing and selling finished products in the Indian market. Nestl has been a partner in India's growth for over nine decades now and has built a very special relationship of trust and commitment with the people of India. The Company's activities in India have facilitated direct and indirect employment and provides livelihood to about one million people including farmers, suppliers of packaging materials, services and other goods. The Company continuously focuses its efforts to better understand the changing lifestyles of India and anticipate consumer needs in order to provide Taste, Nutrition, Health and Wellness through its product offerings. The culture of innovation and renovation within the Company and access to the Nestl Group's proprietary technology/Brands expertise and the extensive centralized Research and Development facilities gives it a distinct advantage in these efforts. It helps the Company to create value that can be sustained over the long term by offering consumers a wide variety of high quality, safe food products at affordable prices.

Nestl India manufactures products of truly international quality under internationally famous brand names such as NESCAF, MAGGI,

MILKYBAR, MILO, KIT KAT, BAR-ONE, MILKMAID and NESTEA and in recent years the Company has also introduced products of daily consumption and use such as NESTL Milk, NESTL SLIM Milk, NESTL Fresh 'n' Natural Dahi and NESTL Jeera Raita. Nestl India is a responsible organization and facilitates initiatives that help to improve the quality of life in the communities where it operates. Beginning with its first investment in Moga in 1961, Nestls regular and substantial investments established that it was here to stay. In 1967, Nestl set up its next factory at Choladi (Tamil Nadu) as a pilot plant to process the tea grown in the area into soluble tea. The Nanjangud factory (Karnataka), became operational in 1989, the Samalkha factory (Haryana), in 1993 and in 1995 and 1997, Nestl commissioned two factories in Goa at Ponda and Bicholim respectively. Nestl India has commissioned in 2006 its 7th factory at Pant Nagar in Uttarakhand.

NESTLE IN THE COMMUNITY

Nestl India has always focused on long term, sustainable and profitable growth and helped communities around its factories to improve their quality of life in a similar manner. Nestl Agricultural Services has used the experience gained by Nestl across the world to set up a system of direct and efficient contact with the farmers. Company veterinarians and agronomists supervise the milk routes and advise farmers on various issues including proper feed for the herds. Milk storage facilities have been set up close to the farmers. Veterinary services are provided free, and medicines provided at wholesale cost. The company assists farmers in artificial insemination programs for their cattle, provides subsidy and helps them in procuring loans.For more on Nestl Agricultural Services,

Safe Drinking Water

Water is a scarce resource. In India, availability of clean drinking water is a major concern for many communities. Almost 200 million people do not have access to clean drinking water. Nestl India is committed to improving the situation and believes that the first step is to create awareness in the communities around its factories. A key focus area of our Corporate initiatives is to help provide Clean Drinking Water and educate children in schools to conserve this scarce resource.

Education and Training

Nestl supports initiatives to create awareness about the right to education and encourages the communities around its factories to send their children to school. Nestl India employees have developed a special play 'Let Us Go to School' for this purpose. This has been staged amongst the communities around our factories, and its recordings screened at smaller gatherings along the milk routes. The Company also recognizes the active role that village women play in adopting good dairying practices in dairy farms and regularly conduct special programs that help them. Nestl India supports local schools, helps in the maintenance of public parks and green belts, facilitates blood donation camps and health awareness programs. The key messages of conservation, hygiene, health and wellness are progressively built into the communities where the Company is present. All these initiatives strengthen the bond between Nestl India and the community. "Creating Shared Value is a very different approach to corporate social responsibility (CSR), because it is not focused on meeting a set of standard external criteria, or on philanthropy. The idea of winners and losers doesnt fit this model of CSR." Read more about Nestl'a approach to corporate social responsibility on nestle.com.

BRANDS

MILK PRODUCT AND NUTRITION Nestl India has a wide portfolio for Milk Products and Nutrition. Nestl has a very clear Charter of ethics and responsible behaviour in selling infant nutrition products. Nestl India follows this Charter and also complies with The Infant Milk Substitutes, Feeding Bottles and Infant Foods (Regulation of Production, Supply and Distribution) Act, 1992 that guides the sale of infant nutrition products in India. Nestl India does not advertise its Infant Nutrition products. NESTL EVERYDAY Dairy Whitener is a creamy Dairy Whitener which is specially made to add a rich, smooth taste to your tea. Every time, every day. NESTL EVERYDAY Dairy Whitener was launched in India in 1986 and this innovative product created a separate category of Dairy Whiteners in India .

NESTL EVERYDAY Slim

EVERYDAY SLIM is a low fat tea whitener that has been specially made to give your tea that perfect taste, while helping you stay in perfect shape. EVERYDAY SLIM, which is 99% sugar free, has 70% less fat and 30% less calories than milk*, is for the urban health conscious consumer and offers the same great taste and consistency that the highly successful NESTL EVERYDAY Dairy Whitener does. EVERYDAY SLIM is the first low fat tea whitener in India and the first in the Nestl world. The new product has been launched in the six Metros and is available in 200gm and 50gm packs.

NESTL EVERYDAY Ghee

is 100% Shudh [pure] Ghee which is untouched by hand and hygienically packed.

NESTL Milk

Nestl has over 135 years of dairy expertise and NESTL Milk ensures high quality and safety. NESTL Milk goes through Ultra Heat Treatment to provide bacteria-free milk to its consumers. The product also goes through stringent quality checks and can be consumed straight from the pack as no boiling is required. The sealed pack of NESTL Milk has a shelf life of 120 days without refrigeration. However, once opened, it must be refrigerated. The packaging is tamper-evident.

NESTL Slim Milk

Nestl has over 135 years of dairy expertise and NESTL Slim Milk ensures high quality and safety. NESTL Slim Milk has a fat content of less than 0.5%. NESTL Slim Milk goes through Ultra Heat Treatment to provide bacteria-free milk to its consumers. The product also goes through stringent quality checks and can be consumed straight from the pack as no boiling is required. The sealed pack of NESTL Slim Milk has a shelf life of 120 days without refrigeration. However, once opened, it must be refrigerated. The packaging is tamper-evident.

NESTL CEREVITA

Introducing NESTL CEREVITA Multigrain Cereal, a nutritious breakfast for the whole family. With the goodness of wheat, corn and real fruits, NESTL CEREVITA offers all the 7 Signs of ALL ROUND NUTRITION. In addition, as it requires no cooking, it makes it easy for you to ensure that your family gets a healthy start every morning. NESTL CEREVITA is available in two delicious variants Wheat & Corn and Mixed Fruit in 350g boxes and affordably priced single serve sachets. The product has been launched in select outlets in Bangalore city.

NESTL Fresh 'n' Natural Dahi is 100% Fresh and Natural and is made from fresh, high quality pasteurised toned milk. It has all the goodness of natural Calcium and the Cultures used in NESTL Fresh 'n' Natural Dahi help improve digestion. Deliciously Thick! Deliciously Healthy NESTL Fresh 'n' Natural Slim Dahi Presenting yet another innovation from the Nestle dairy portfolio NESTL Fresh 'n' Natural Slim Dahi

The first low fat product in the category, this product is made from high quality pasteurized double toned milk and has no added preservatives. NESTL Fresh 'n' Natural Slim Dahi is made with all the goodness of natural Dahi, but is now even healthier and better - it is 98% fat free and every 100g serving provides as much as 35% * of your daily Calcium needs. All this in a Dahi that consistently matches consumer expectations in the core product deliverables of thickness, consistency and delicious taste NESTL Fresh 'n' Natural Slim Dahi the tasty, low fat way to a fit and healthy lifestyle.

NESTL Jeera Raita

NESTL Fresh n Natural Raita - Bhuna Jeera offers all the nutritional goodness of Dahi and real Jeera helping improve digestion. It is extremely versatile - Use it as a base to prepare your own favourite raita, by adding vegetable.

NESTL NESVITA Nestle the pioneer in probiotic yoghurts worldwide, now brings the probiotic revolution to INDIA in our everyday DAHI.

Nestl NESVITA Indias first Dahi with Probiotics For Healthy Digestion Nestle NESVITA Dahi is a deliciously thick n tasty low fat DAHI enriched with the goodness of more than 100 CRORE special PROBIOTICS in every serving (100g), which work hard everyday to ensure your digestive system is strong and healthy. What is Probiotic? Probiotic means for life. PROBIOTICS are good bacteria which unlike any other bacteria in ordinary DAHI are able to survive digestive juices better, to reach your intestine and help improve digestion.

NESTL NESVITA Fruit Yoghurt NESVITA Fruit Yoghurt is a unique fruit yogurt with a deliciously firm and set texture with the added goodness of probiotics. NESVITA fruit yogurts unique probiotic work hard everyday so your digestive system is strong and healthy.

What is PROBIOTIC? Probiotic means for life. Probiotics are good bacteria whichunlike other bacteria in ordinary DAHI are able to survive digestive juices better, to reach your intestine andhelp improve digestion. How does NESVITA Fruit Yoghurt help in Healthy Digestion? Most digestive problems are due to more bad bacteria than good bacteria in our digestive system Every tub (120g) of delicious Nestl NESVITA Fruit Yoghurt is enriched with more than 100 crore unique probiotics. When CONSUMED DAILY these cultures are more effective in the digestive system as they actively replace bad bacteria with good bacteria and keep your DIGESTION ROBUST & HEALTHY. What is special about NESVITA Fruit Yoghurt with Probiotic? Just like the Nestle NESVITA plain Dahi, the NESVITA Fruit Yoghurt contains a unique strain of probiotic- from the Lactobacillus Acidophilus probiotic family- whose unique action in the intestine delivers many positive benefits which lead to a healthy digestive system. The product is available in Strawberry and Mango variants in 120g packs for your everyday delight!

NESTL MILKMAID is a Partly Skimmed Sweetened Condensed Milk. NESTL

MILKMAID is a versatile product and excellent as a dessert ingredient. Lipsmacking desserts can be whipped up in the shortest possible time. NESTL MILKMAID is a globally recognised and popular brand of Nestl. It has been available in India ever since the Company first started importing and selling its products over 90 years ago. NESTL MILKMAID Fruit yoghurt Nestl has introduced the MILKMAID Fruit Yoghurts range in Strawberry and Mango variants. This new innovation combines the goodness of natural yoghurt and real fruit and has been developed inline with the key consumer health trends and feedback from consumers. Being 98% fat free, this product is perfect for that indulgent moment providing the healthy sweetness. Packaged in an attractive shrink sleeved tub and endorsed by the MILKMAID brand, Nestle MILKMAID fruit yogurts truly stand up to delivering on their promise - Anytime treat , Anytime health.

NESTL MILKMAID FUNSHAKES Introducing NESTL MILKMAID FUNSHAKES, a range of great tasting and healthy dairy based drinks, available in Chocolate, Mango and Banana flavours. Offering the goodness of toned milk and real fruit / cocoa, delicious MILKMAID FUNSHAKES make it fun to drink milk! What's more, two packs provide 100%* of the daily Calcium needs and more than 30%* of the daily requirement of Protein. Launched in select cities in South India, the products are available in 200ml UHT packs. So go ahead, grab one today! MILKMAID FUNSHAKES. Yum Milk, Fun Milk!!

NESTL NIDO Introducing NESTL NIDO, the worlds No. 1 childrens milk brand. NESTL NIDO is a nutritious milk, specially formulated for growing children from the age of 2 years onwards.

Fortified with 25 essential nutrients, two glasses# of NESTL NIDO provide 100% of the childs RDA* of calcium and vitamin D that help in the development of stronger bones for healthy growth. NESTL NIDO has been launched in select cities and is available in 500g tins.

BEVERAGES
NESCAF CLASSIC NESCAF CLASSIC has the unmistakable taste of 100% pure coffee and is made from carefully selected coffee beans picked from the finest plantations, blended and roasted to perfection. 100% coffee100% pleasure.. NESCAF SUNRISE is an Instant Coffee-Chicory mixture made from blends of Coffee and Chicory. Coffee 70% and Chicory 30%. The secret of great taste lies in the blend. NESCAF SUNRISE PREMIUM is a blend containing plantation beans to give you an incomparable experience NESTL MILO

The improved new MILO gives children the energy they need to enjoy their active lifestyle. Packed with Actigen - E, a unique mix of B-vitamins and other key micro nutrients which help optimise energy release effectively. In addition its extra cocoa and rich malt makes it so chocolaty and irresistible that they will always be asking for more. So give your kids New MILO and watch them Go! Go! Go! thru the day. NESCAF Mild Introducing new NESCAFE Mild, an exciting new addition to your home this season. Indulge in the mild, smooth and rich taste of NESCAFE Mild, created especially for you using the finest selection of carefully handpicked Arabica and Robusta beans, which are lightly roasted to perfection. The enticing aroma and smooth flavour of NESCAFE Mild will ensure that all moments and all conversations are as special and as smooth as MILD itself. Come, let's talk over a cup of NESCAFE Mild.

CHOCOLATES & CONFECTIONARY

NESTL KIT KAT are crisp wafer fingers covered with chocolayer. NESTL KIT KAT has a unique finger format with a breaking' ritual attached to it.

NESTL KIT KAT is one of the most successful brands in the world and every year over 12 billion NESTL KIT KAT fingers are consumed around the globe. NESTL MUNCH

MUNCH is wafer covered with delicious chocolayer and is the largest distributed brand in its category. The new MUNCH campaign highlights the great crunchy taste that has made MUNCH so popular. To know more view the new ad here. Mera MUNCH mahan!

NESTL MUNCH POP CHOC "MUNCH POP CHOC" is a pack of delightful chocolatey nibbles Crispy wafer cubes covered with delicious chocolayer. There a new & easy way to eat this chocolicious treat - Just Open Pop & Enjoy!" NESTL MILKYBAR NESTL MILKYBAR is a delicious milky treat which kids love. Relaunched in January 2006 with a Calcium Rich recipe, NESTL MILKYBAR is a favourite with parents to treat their kids with. NESTL MILKYBAR CHOO NESTL MILKYBAR CHOO is a soft chewy fudge with the goodness of MILKYBAR. NESTL MILKYBAR CHOO is also available in Strawberry flavour, so "Get the power of CHOO!"

NESTL BAR-ONE is a luscious nougat and caramel with delicious chocolayer. NESTL BAR-ONE constantly reminds you that it is Time for Action'. NESTL FUNBAR Nestl FUNBAR is another exciting offering from the Nestl clairs range. It offers a delicious chocolatey delight at an affordable price, thus addressing a core target consumer need in the realm of confectionery. Bright colours on packaging and point of sale material make it especially attractive to the consumers. FUNBAR is now available across North India. NESTL Milk Chocolate NESTL Milk Chocolate is a milk chocolate with a delicious taste. Kids just love it! NESTL Eclairs NESTL Eclairs are rich milky caramel Eclairs that have a soft center. NESTL Eclairs are enjoyed by billions of consumers every year. NESTL MILKYBAR Eclairs are a delightful Eclairs with a creamy milky chocolate center - Big bite, white inside!

CHANNEL OF DISTRIBUTION

Channels of distribution are of vital importance to all types of firms producers wholesalers and retailers. Each member of a channel is a link in a distribution network of organizations that extends from the producer to the end users of products or services. Although some firms perform all channel functions, typically several organizations are linked together in a distribution channel to carry out the various activities of storage, transportation, warehousing, material handling service. Sorting and re-packing organizations that perform these marketing functions between producers and end users are called middlemen, intermediaries or resellers.

MARKETING INTERMEDIARIES The people and organizations that assist in the flow of goods and services from producer to customer are known as marketing intermediaries. The following are the common types of intermediaries.

Middlemen : Middlemen refers to just about anybody acting as an intermediary between the producer and the customer.

Agent or Broker : Intermediaries with legal authority to market goods and services and to perform other function on behalf of the producer are called agents of brokers. Agents generally work for producers

continuously, whereas brokers may be employed for just any deal. In some cases, agents sell to another intermediary such as an industrial distributor. In addition, an agent or broker can work for the buyer rather than the seller. This situation is becoming more common in real estate business.

Wholesaler : Wholesalers are organizations that buy from producers and sell to retailers and organizational customers. Wholesalers primarily deal in bulk and will ordinarily sell to the retailer or other intermediaries.

Retailer : As the last link in many marketing channels, retailers sell directly to final customers. They purchase goods from wholesalers or in some directly from the producer.

Distributor : Distributor is a general term applied to a variety of intermediaries. These individuals and firms perform several functions, including inventory management, personal sale and financing. The basic difference between an agent and distributor is that while agents work on a commission basis, distributors deal on their own account. Distributors are more common in organizational markets, although wholesalers also occasionally act as distributors.

Dealer: Another general term that can apply to just about any intermediary is dealer. Basically the same type of intermediary acts as a

distributor,

although

some

people

distinguish

dealers

as

those

intermediaries that sell only to final customers and not to other intermediaries.

Value-added resellers (VARs) : They are intermediaries that buy the basic product from producers and add value to it or depending on the nature of the product modify it, and then resell it to final customers.

Merchants : They are intermediaries that assume ownership of the goods they sell to customers or other intermediaries. Merchants usually take physical possession of the goods they sell.

Facilitating (C and F Agents) Agents : They are people and organizations that assist the flow of products and information to marketing channels and include banking and insurance functions. The following are the services where assistance is required. Transportation and Storage ( C & F Agent) Covering the Risk (Insurance) Financial Services

DISTRIBUTION STRUCTURE OF NESTLE INDIA

Mother Godown at RUDRAPUR,

Respective C&F Agents

Distributors as per assigned territories

Wholesalers in their area.

Retailers in their respective territories

End Consumer

FORMAL STRUCTURE INFORMAL STRUCTURE

Note: Wholesalers are not a part of the formal structure of Nestle Indias distribution network for NCR .They make bulk purchases from the distributors directly thereby leveraging on the margins.

OWNERSHIP TRANSFER

TYPES OF CHANNELS
Because of the wide variety of channel arrangements that exist, it is difficult to generalize the structure of channels across all industries. How, distribution channels are usually of two types. Director Marketing Channel (or Zero Level), and Indirect Marketing Channel Direct Marketing Channel (Or Zero Level) This type of channel has no intermediaries. In this distribution system, the goods go from the producer directly to the consumer, e.g., Eureka Forbes. Indirect Marketing Channel This may further be classified into the following categories.
1. One-Level Channel: IN this type of channel there is only intermediary

may be a retailer or a distributor. If the intermediary is a distributor, this type of channel is used for specialty products like washing machines, refrigerators or industrial products.
2. Two Level Channel: This type of channel has two intermediaries,

namely wholesaler/distributor and retailer.

3. Three level Channel: This type of channel has three intermediaries,

namely, distributor, wholesaler and retailer. This pattern is also used for conveyance products.
4. Four Level Channel: This type of channel has four intermediaries,

namely, Agent, Distributor, Wholesaler and Retailer. This channel is similar to the previews two. This type of channel is used for consumer durable products also. In addition to the above-mentioned channels, some different types of channel are possible. There is no watertight classification of channels. The use or selection of a channel also depends upon the product under consideration. Basically there are three or four types of products, viz., (i) Consumer nondurables, (ii) Consumer durables, (iii) Industrial products, and (iv) Agricultural products. Distribution channels of different types also depend on the nature of product and services. Therefore, we can say that for different products, there are different types of channels. CHANNEL STRATEGY DECISIONS Marketing managers face two sets of decisions when considering marketing channels. The first set of decisions leads to a selection of one or

more channels. The second set deals with the selection criteria and examines the three levels of distribution. The final sep is plan finalisation. Channel Selection Criteria Selecting marketing channels can be a complicated process, particularly if part of the channel is outside the producers direct control. In addition, there is no endless supply of available intermediaries sifting around waiting for producers to give them a call. The elements that managers examine as they define channel strategies can be grouped into market factor, product factors and producer's factors. Market Factors Analysing and understanding the target market is the first step in selecting marketing channels. There are several factors that an analysis of the market should explore, ranging from customers to the types of competitors :

Customer Preference : The channel which is most preferred by customers. Organisational customers : Organisational customers frequently have buying habits that are different from those of other consumers.

Geography : Customer location is another important factor determining the type of channel to be used.

Competitors Often a good channel choice is one that has been overlooked or avoided by competitors. In some cases, the marketer may try to duplicate his competitors channel in order to have his products replace that of a competitors. Nature and Availability of Intermediaries A question that arises very often in the channel decision is Are there enough of the right kinds of intermediaries to build the desired channel? We need to find intermediaries that can handle the products capably and provide adequate service to final customers. For new entrants, it is better to find the best available intermediaries in the market. Product Factors Even products that end up at the same retail location may need different intermediaries earlier in the channel. Life Cycle : A product categorys stage in the life cycle can be an important factor in selecting a channel and channels may have to be adjusted over time. Customers require less support once the product has established itself. Complexity : Some products are so complicated and require so much support that producers need to stay closely involved. This indicates either a direct sales force or a limits number of highly qualified intermediaries. Scientific equipments, jet aircrafts, nuclear reactors, pharmaceuticals and computers are products whose complexity affects the way in which they are marketed.

Value : The value of the product also affects its distribution channel choices. Items with low cost and high volume are usually distributed through large, well-established distribution networks such as grocery wholesalers. Size and Weight :A product with significant size and weight can face restricted distribution channel options, particularly if it is also of low value. Consumer Perceptions : The perceptions customers have of products and producers also play a role in channel decision making. Other Product Factors : Depending on the product in question, other factors may enter into the decision as well. Some of these include whether a product is fragile or perishable and whether or not it requires significant customer satisfaction. KEY ISSUE IN DETERMINING CHANNEL REQUIREMENT While a manufacturer faces an agenda of issues related to finance, marketing and industrial relations, attention is focused on selected topics that directly impact marketing channel arrangements. The key issues related to this are : 1. Product proliferation and dynamic; and 2. Total quality initiatives These two issues are significant drives for a typical firm in determining how channel requirements will be delineated.

Total Quality Initiatives

1.

Product Proliferation Initiatives and Dynamics : A major concern

throughout industry is the rapid expansion that firms are experiencing in the number of stock keeping units that they maintain in their product list. Fully understanding basic customer needs through marketing research is viewed as a key to a successful new product launch. IN practice, few firms have a highly successful new product track record. A large number of new products fail resulting in conflict within the distribution process and the need to remove obsolete inventory. The product life cycle is useful for planning a marketing and distribution strategy. Numerous examples are available from the food industry to illustrate the product proliferation dilemma. The industry is characterized by a constant effort on the part of manufacturers to introduce new products for distribution. Retailers and wholesalers want to enter into an agreement with manufacturers in which they agree to buy all unsold inventory back at the retail price if a product fails. Independent of the fairness of such agreements, the fact is that the inventory mistakes must be cleared from the channel.
2.

Total Quality Initiatives: Total quality initiatives represent the primary

focus of the revitalization drive. The concept of total quality is do it right the first time. The general concept of total quality is to focus managerial attention on the three key concepts of manufacturing: People, Process and Design.

Manufacturing Strategies There are two popular manufacturing strategies: (1) Flexible; and (2) Focused The goal of flexible manufacturing is to increase responsiveness of production to consumer demands. Having the capability to manufacture what is needed reduces the amount of inventory. For this strategy to succeed, a manufacturer must have an efficient marketing channel so that the demand of the product can be fulfilled effectively in time. The goal of focused manufacturing is the lowest possible per unit cost and fall safe quality. The basic idea is to adopt leading edge manufacturing technology and utilize it to the maximum capacity. Focused manufacturing requires building of significant inventories in anticipation of future sale. The trick is to plan manufacturing schedules to keep anticipatory inventories balanced to market demand. Each of these strategies requires different type of channel management support. The modern concept of manufacturing seeks to involve employees at all levels of the organization to effect process improvement and to take initiatives related to consumer service. Manufacturers, because of the nature of their brand products, are typically held responsible for the performance of the entire marketing channel. Both consumers and channel trading partners expect manufacturers to maintain a high quality product. It is clear that with emerging

manufacturing strategies a premium is placed on gaining and maintaining customers satisfaction through speed and quality. Quality is somehow based on manufacturers but the speed depends wholly upon the channels. Wholesaler Wholesaler trade is defined as all establishments or place of business primarily engaged in selling merchandise to retailers; to industry, commercial, institutional or professional users or to other wholesalers; or acting as agent in buying merchandise for or selling merchandise to such persons or companies. Wholesaling Wholesaling is concern with the actives of those persons or establishments, which sell to retailers and other merchants, and or to industrial, institutional, and commercial users, but who do not sell in significant amounts to ultimate consumers. It is important to understand that there are many different kinds of wholesalers, all of which differ in product categories handled as well as in specific marketing function performed. There are three basic types of wholesales institutions. Merchant Wholesalers Merchant wholesalers take ownership of goods in which they deal. Merchant wholesalers are independently owned, separate form suppliers on the one hand and from the retailers on the other hand. The distinguishing feature of

merchant wholesalers is that they take ownership and associated risks related to the goods in which they trade. Merchant wholesalers are of two general classes: Full function or service wholesalers and limited function wholesalers.

Full Function or Service Wholesalers: This type of wholesaler is also

referred to as a distributor or a jobber. Merchant wholesalers perform all or most of the marketing functions normally associated with wholesaling. They may carry a broad variety of goods. Generally, service wholesaler specialize in a narrow range of goods. The extent of product line specialization depends upon the particular needs and wants of the wholesalers target markets by taking ownership of the product possession flow. Service wholesalers maintain inventories of their product line. From these stocks, customer orders are filled in and delivered. Personal selling, advertising and sales promotion are functions in the marketing channel. Negotiation with buyers and determining terms of sale along with extending credit to buyers, are other tasks undertaken by full function wholesalers. Ofcourse, these customers pass along market information to their suppliers and accept payment of their customers purchase. Generally, service or full function wholesalers participate in most aspects of the marketing channel flow.

Limited Function Wholesalers: These merchant wholesalers perform

only some of the functions typically associated with wholesaling. Among the more common limited function wholesalers are cash and carry wholesalers,

drop shippers, truck wholesalers, mail order wholesalers, products, retail cooperatives and rack jobbers. AGENT WHOLESALERS Unlike merchant wholesalers, agent wholesalers do not take ownership and rarely take possession of the products they market. They are primarily involved in the buying and selling of goods and services. They typically negotiate sales as representatives of other firms and do not take title to merchandise. They also participate in the collection of market information, promotion and ordering. Agents receive a commission for performing these functions. Among different types of agents are manufacturers against, brokers, commission merchants, selling agents and auction companies. On the one hand, these agent wholesalers are largely involved in domestic trade and on the other hand, agent wholesalers also play an integral role in international trade.

Manufacturers Agents : There are independent firms which typically

handle non-competing lines of a variety of manufacturers and are often used in place of a they have neither the expertise nor the resources to develop their own sales force. Established firms rely upon manufactures agents when they wish to concentrate upon manufacturing and prefer to sub-contract their distribution activities or when they which to enter new markets. Manufacturers agents are generally more familiar with the market and can

provide more immediate representation than the producer could by developing his own sales force.

Brokers : Brokers are commonly used in the real estate industry where

they negotiable the buying and selling of property as well as negotiable its rental and leasing. They are the middlemen whose primary activity is to establish contact between the buyer and the seller. They negotiable and facilitate sales and are compensated by a fee or commission. They do not take title of merchandise. Brokers play a key role in the distribution of food products as well. Many small food producers and small food wholesalers rely heavily upon food brokers to provide them with outlets for their products and sources of supply respectively. Commission Merchants : Sometimes called factors, commission merchants receive products on a consignment basis and then sell them on a commission basis. They typically operate on an autonomous basis. They often participate in the physical possession, promotion, negotiation, financing, risk-taking, or ordering, payment and market information flow. They are most often used in distribution channels for farm produce, lumber products, etc. where the manufacturers identity is relatively unimportant to the buyer. Selling Agents : Selling agents differ from manufactures agents and brokers in that they normally carry a suppliers entire product line. Unlike manufacturers agents and brokers, they usually set prices and terms of sale, and also

undertake promotional activities. Thus selling agents, in effect, act as the manufacturers sale force. Note that as with other agent wholesalers, selling agents do not take title possession of the goods they handle. Commercial Auction Companies : Unlike other agent wholesalers, auction companies invite buyers and sellers to a single physical location, either at the sellers location or at the auction companys site. In addition to bringing buyers and sellers together, auction firms promote the goods they handle and actively negotiable the sale of those goods. These wholesalers participate to a lesser degree in the typically limited of facilitating a transfer of ownership. They are often used in marketing channels for such products as real estate, household goods, used a role in the marketing of some commodities such as tobacco.

ANALYSIS AND INTERPRETATION

Q.1. Do you know the concept of Distribution channel?

S.No. 1. 2. 3.

Options Yes No Cant say

Percentage 60% 30% 10%

Graph No. 1

INTERPRETATION: 60% respondents have chosen the option yes, 30% respondents have chosen the option no and remaining 10% respondents are unable to say anything. Q.2. How much time, are you doing that business?

S.No.

Options

Percentage

1. 2. 3. 4.

1 year 2 years 3 years More than 3 years Graph No. 2

20% 30% 30% 20%

INTERPRETATION: 20% respondents have chosen the option 1 year, 30% respondents have chosen the option 2 years, 30% respondents have chosen the option 3 years and remaining 20% respondents have chosen the option mare than 3 years.

.3. Do you sale the product of Nestle India?

S.No. 1. 2.

Options Yes No

Percentage 30% 70%

Graph No. 3

INTERPRETATION: 30% respondents have chosen the option yes and remaining 70% respondents have chosen the option no.

.4. If no, which other companys products do you sale? S.No. 1. 2. 4. Options Cadbury Amul Others Percentage 50% 20% 30%

Graph No. 4

INTERPRETATION: 50% respondents have chosen the option Cadbury, 20% respondents have chosen the option Amul and remaining 30% respondents have chosen the option others. Q.5. Is the distribution of product of Nestle India effective?

S.No. 1. 2. 3.

Options Yes No May be

Percentage 60% 30% 10%

Graph No. 5

INTERPRETATION: 60% respondents have chosen the option yes, 30% respondents have chosen the option no and remaining 10% respondents are unable to say anything. .6. How much times the company taken to deliver the product after processing order? S.No. 1. 2. 3. 4. Options Half day One day Two days More than two days Graph No. 6 Percentage 20% 40% 20% 20%

INTERPRETATION: 20% respondents have chosen the option half day, 40% respondents have chosen the option one day 20% respondents have chosen the option two day and remaining 20% respondents have chosen the option more than 2 days. Q.7. Do you get full quantity of product of your order? S.No. 1. 2. Options Yes No Percentage 50% 50%

Graph No. 7

INTERPRETATION: 50% respondents have chosen the option yes and remaining 50% respondents have chosen the option no. Q.8. If no, there have been always have a gap in demand quantity & delivered quantity? S.No. 1. 2. 3. Options Yes No Cant say Percentage 55% 30% 15%

Graph No. 8

INTERPRETATION: 55% respondents have chosen the option yes 30% respondents have chosen the option no and remaining 15% respondents are unable to say anything. Q.9. The distribution channel of Nestle India is

S.No. 1. 2. 3.

Options More effective than other companies Less effective than others companies Cant say

Percentage 40% 30% 30%

Graph No. 9

INTERPRETATION: 40% respondents have chosen the option more effective than other companies 30% respondents have chosen the option less effective than other companies and remaining 30% respondents are unable to say anything. Q.10. Do you believe that Distribution channel play a pivotal role in the successful marketing of product? Options S.No. 1. 2. 3. Yes No Cant say 50% 20% 30% Percentage

Graph No. 10

INTERPRETATION: 50% respondents have chosen the option yes 20% respondents have chosen the option no and remaining 30% respondents are unable to say anything. Q.11. Do you think that dealers play a very important role in distribution channel? S.No. 1. 2. 3. Options Yes No Cant say Percentage 70% 10% 20%

Graph No. 11

INTERPRETATION: 70% respondents have chosen the option yes 10% respondents have chosen the option no and remaining 20% respondents are unable to say anything. Q.12. Do the company should evaluate the performance of the individual dealers? S.No. 1. 2. 3. Options Yes No Cant say Percentage 65% 25% 10%

Graph No. 12

INTERPRETATION: 65% respondents have chosen the option yes 25% respondents have chosen the option no and remaining 10% respondents are unable to say anything. Q.13. Does the performance appraisal must be done with a view to identifying the specific strength and weakness of dealers?

S.No. 1. 2. 3.

Options Yes No Cant say

Percentage 70% 20% 10%

Graph No. 13

INTERPRETATION: 70% respondents have chosen the option yes 20% respondents have chosen the option no and remaining 10% respondents are unable to say anything. Q.14. Does the decisions on channel have a vital bearing on other important decision areas of marking?

S.No. 1. 2. 3.

Options Yes No Cant say

Percentage 80% 10% 10%

Graph No. 14

INTERPRETATION: 80% respondents have chosen the option yes 10% respondents have chosen the option no and remaining 10% respondents are unable to say anything. Q.15. Are you satisfied by the distribution channel of Nestle India? S.No. 1. 2. 3. Options Yes No May be Percentage 60% 10% 30%

Graph No. 15

INTERPRETATION: 60% respondents have chosen the option yes 10% respondents have chosen the option no and remaining 30% respondents are unable to say anything.

FINDINGS
Maximum number of respondents knows the concept of Distribution channel.

Average number of respondents says that distribution of product of

Nestle India effective. Maximum one day the company taken to deliver the product after processing order. Half number of respondents gets full quantity of product of your order. Moderate number of respondents believes that there have been always have a gap in demand quantity & delivered quantity.

The distribution channel of Nestle India is more effective than other

companies.

 Half number of surveyed respondents believe that Distribution channel play a pivotal role in the successful marketing of product. Maximum number of respondents thinks that dealers play a very important role in distribution channel. Moderate number of respondents thinks that company should evaluate the performance of the individual dealers.

Performance appraisal must be done with a view to identifying the The decisions on channel have a vital bearing on other important Moderate number of respondents is satisfied by the distribution channel

specific strength and weakness of dealers.

decision areas of marking.

of Nestle India.

CONCLUSION
The distribution channel of Nestle India is more effective than other companies. Half number of surveyed respondents believe that Distribution channel play a pivotal role in the successful marketing of product. Another important factor is intermediary cost. Intermediaries typically charge a "markup" or "commission" for participating in the channel. This might be deemed unacceptably high for the ultimate producer business. The group is serving corrugating industries all over India through chain of distributors. Nestle India has established its name among leaders in industries due to its commitment

towards quality and timely delivery. Average number of respondents say that distribution of product of Nestle India effective. Maximum one day the company taken to deliver the product after processing order. Half number of respondents get full quantity of product of your order. Moderate number of respondents believe that there have been always have a gap in demand quantity & delivered quantity. Maximum number of respondents think that dealers play a very important role in distribution channel. The willingness of channel intermediaries to market product is also a factor. Retailers in particular invest heavily in properties, shop fitting etc. They may decide not to support a particular product if it requires too much investment (e.g. training, display equipment, warehousing).

SUGGESTIONS

The quality of services should be improved. The company should regularly watch the effectiveness of distribution channel regularly.

The company should conduct survey of dealers on distribution channel

and should listen the problem of dealers regularly. The company should try to reduce the number of steps of distribution channel.

BIBLIOGRAPHY

Rathore B.S., Advertisement Management: Himalaya Publishing House. Kotler P., Marketing Management, Prentice Hall of India Pvt. Ltd. Yadav: P.K., Marketing Strategies, Anamika Publishers & Distributors.

WEBLIOGRAPHY
www.nestleindia.com

QUESTIONNAIRE
This questionnaire is meant to collect information from the retailers about the available channel of distribution of nestle products. Q.1. Do you know the concept of Distribution channel? a. Yes a. 1 year c. 3 years Q.3. Do you sale the milk of Nestle India? a. Yes a. Cadbury b. No b. Amul c. Others Q.4. If no, which other companys milk do you sale? Q.5. Is the distribution of product of Nestle India effective? b. No c. Cant say b. 2 years d. More than 3 years Q.2. How much time, are you doing that business?

a. Yes processing order? a. Half Day c. Two days a. Yes

b. No

c. May be

Q.6. How much times the company taken to deliver the product after b. One day d. More than two days b. No

Q.7. Do you get full quantity of product of your order?

Q.8. If no, there have been always have a gap in demand quantity & delivered quantity? a. Yes b. No c. Cant say

Q.9. The distribution channel of Nestle India is a. More effective than others company b. Less effective that others company c. Cant say Q.10. Do you believe that Distribution channel play a pivotal role in the successful marketing of product? a. Yes b. No c. Cant say

Q.11. Do you think that dealers play a very important role in distribution channel? a. Yes b. No c. Cant say

Q.12. Do the company should evaluate the performance of the individual dealers? a. Yes b. No c. Cant say

Q.13. Does the performance appraisal must be done with a view to identifying the specific strength and weakness of dealers? a. Yes b. No c. Cant say

Q.14. Does the decisions on channel have a vital bearing on other important decision areas of marking? a. Yes a. Yes b. No b. No c. Cant say c. May be Q.15. Are you satisfied by the distribution channel of Nestle India?