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Wednesday, 10th October 2012

Organized by
NEW DELHI- 110025

A Study on the Distributors’ Perception of the Ethical Sales Practices by FMCG Companies in
National Capital Region


Dr. Rahela Farooqi. Associate Professor. Centre For Management Studies, Jamia Millia Islamia, Jamia
Nagar, New Delhi. Email:

Animesh Singh, Assistant Professor, I.T.S – Institute of Management, 46 – Knowledge Park - iii, Greater
Noida. Email:, Mo.

Keywords: Business Ethics, Sales Ethics, FMCG, Distribution

Abstract: understanding the distributors’ perception of ethical sales practices by Fast Moving
Consumer Goods Companies (FMCG) is the key to understand the areas of strengths and
weaknesses of these companies. This will enable the companies understand what are rights and
wrongs in the perception of distributors related to various sales practices. This in turn, shall help
the FMCG Companies in developing a strong relationship with distributors enabling them to
cover more market, a better feedback mechanism, better retailing and better sales. This study
focuses on finding the distributors perception of ethical sales practices by FMCG companies in
Rationale for the study

Ethics is a field of study that attempts to establish principles about what is right or wrong on the basis of

Ethical decision making is influenced directly by Cognitive Moral Development (CMD) (Trevino and
Youngblood 1990)1. The relationship between professional decision making and factors related to moral
development is one that could provide unique insights into the area of ethical decision making. Yet, this
area has remained relatively unexplored (Knouse and Giacalone 19922; Ford and Richardson 19943;
Pennino, 20044). Jones (1991) defines ethical decision as one that is morally acceptable to the larger

According to Kohlberg (1969, 1984) moral development5 (moral reasoning) is the thought process in
which children develop proper attitudes and behaviours toward other people in society based on social
and cultural norms, rules and laws. He believed that people progressed in their moral reasoning (i.e., in
their bases for ethical behaviour) through a series of stages. Kohlberg described six identifiable stages of
moral reasoning which could be more generally classified into three levels: pre-conventional,
conventional, and post-conventional.

Business Ethics can also be described as a study of moral right and wrong that concentrates of moral
standards as they apply to business institutions, organization and behavior. (Velasquez, Manuel G.) 6. In
the present world of cut throat competition, the fight for survival has reached alarming proportions. In this
competition era, it important for individuals and organizations to have an understanding of ethics. This is
applicable for business organizations as well. Application of ethics in business decision making can be
termed as the discipline of Business Ethics.

In the contemporary business world, it is realized that the businesses should act in morally acceptable
way, it should be socially responsible and accountable to stakeholders that are – customers, employees,
suppliers and community as this will help businesses to be sustainable in the long run.

Ethically correct businesses create a productive work environment and build motivation in employees.
Employees’ turnover tends to be less in companies that are ethically sensitive. Ethical business
organizations are conscientiously aware of their accountability to various stake holders. In turn, the stake
holders are aware of this ethical sensitivity of the business organization and they develop a positive image
for it. This is increasingly becoming important as the world is narrowing and becoming a global village.
Business organizations following the high ethical standards are also the profitable and successful in the
long run as there share value consistently rises. (W.L. LaCroix, 1970, 71)7. Most companies operating for
the long term choose an ethically sound business practices. Most have codes of moral conduct in place.
This practice may cost them some earnings in the short term but allows for a strong reputation translating
into a corresponding healthy long term business strategy.

The financial reform processes in India were initiated in 1991 in form of liberalization, privatization and
globalization. These initiatives were instrumental in de-licensing, bringing more businesses in private
hands and increased FDI in different industries that led to an increased completion in India like never
before. The markets and industries were unleashes and consumers in India had better choices of products
and services. An open and free market evolves into a near perfect market, which theoretically takes care
of ethics in business as an invisible hand of god.8

The concept of invisible hand implies the self regulating nature of business in case of increased
competition where business become efficient in order to survive to satisfy the stakeholders and this hand
(of god) benefits the society at large. In the real world however this invisible hand is debatable. Some
economists like Stephen Leroy, professor emeritus at the University of California, Santa Barbara, and a
visiting scholar at the Federal Reserve Bank of San Francisco, USA have criticized this theory citing the
financial crisis and advocates strongly about the proper balance between markets and government control
for business to flourish sustainably and ethically.9

The profit maximation objective of the business organizations that seeks to maximize the return to the
shareholders in its nature sacrifices the other benefits to the society and can be questioned on ethical
grounds. Some economists believe the term 'business ethics' is an oxymoron. The famous company
Goldman Sachs was charged by the US government in not informing the customers about the lower grade
of one of the mortgaged bonds as Goldman Sachs violated the law by putting customers into the risk
deliberately in 2010.10

Examples of Worldcom, Arther Anderson, Enron in the USA and Satyam in India are evidences that the
ethical practices in business have been neglected.11

Rationale for Research in FMCG Area

The FMCG sector is the fourth largest sector in the India .It has a strong MNC presence and is
characterized by a well established distribution network, intense competition between the organised and
unorganised segments and low operational cost. Availability of key raw materials, cheaper labour costs
and presence across the entire value chain gives India a competitive advantage. FMCG sector can be
broadly segmented into Household Care, Personal Care, Food & Beverages. In Household Care, Laundry
is the largest whereas Personal Care has Personal wash, Hair wash, Oral care & Skin care. Tea/ Coffee,
Biscuits & Soft drinks are the largest consumed packaged food products. Penetration level as well as
consumption in product categories like MFDs, FemCare, Premium skin care in India is low indicating the
untapped market potential. Increasing Indian population, particularly the middle class and the rural
segments, presents an opportunity to FMGC players of branded products to shift consumers from
unbranded to branded products. Growth is also likely to come from consumer 'upgrading’ in the matured
product categories. 12

In India, the FMCG sector has seen continuous growth as the consumers’ disposable income has
increased and consumer preferences and tastes have undergone a major shift. India is among the world's
youngest nations, with a median age of 25 years as compared to 43 in Japan and 36 in the US. This,
coupled with a large population and rapidly evolving consumer preferences, has translated into a large
market opportunity for FMCG players. Indian cities are expected to add 379 million people to the
consumer base for FMCG companies, as the urbanization rate is expected to increase from the current 30
to 45 per cent in the next 40 years. According to recent estimates, household income in the top 20 boom
cities in India is projected to grow at 10 per cent annually over the next eight years.13, 14, 15

The Indian FMCG sector, with a market size of US$ 25 billion (2007–08 retail sales), constitutes 2.15 per
cent of India’s GDP. The industry is poised to grow between 10 to 12 per cent annually. A well-
established distribution network spread across six million retail outlets (including two million in 5,160
towns and four million in 627,000 villages) low penetration levels, low operating costs and intense
competition between the organised and unorganised segments are key characteristics of this sector. The
Indian retail market size is estimated at US$ 350.2 billion and is projected to grow at 13 per cent per
annum to reach US$ 590 billion by 2011–12. The current share of organised retail is estimated to be 4 to
5 per cent and is expected to increase by 14 to18 per cent by 2015. Organised retail has created new
channels for FMCG players through diverse retail formats such as departmental stores, hypermarkets,
supermarkets and specialty stores. With organised retailing emerging in a major way across the country,
the revenues of FMCG companies are expected to surge.16, 17, 18
India’s FMCG Business Environment Ratings
India is ranked 10th in BMI’s Q1 2012 Asia Pacific Risk/Reward ratings, reflecting a poor balance
between investment risks and rewards. India scores relatively high on investment rewards, with a reward
score of 61, but this appeal is weighed down by its difficult operating environment. India receives an
investment risks score of only 37.4, below the regional average score of 61.6.

India’s investment appeal is underpinned by the relative immaturity of its food and drink (F&D) sectors, a
massive population and its favourable demographic profile. With a massive and youthful population,
India is perceived as one of the most exciting consumer growth stories in the world, as consumer goods
investors would typically find a growing market among this demographic group. The relatively
undeveloped and immature nature of the Indian F&D sectors means that foreign investors would face
lesser competitive headwinds when expanding their presence in the country. Although existing low
incomes mean that Indian consumers are still largely filling their shopping baskets with food staples and
daily essentials, this also presents massive scope for growth in the mass market as an increasing number
of Indian consumers, supported by rising purchasing power, trade up to higher value consumer goods.

The attractiveness of the Indian consumer growth story is, however, dimmed by the relatively
inhospitable nature of its investment landscape. Although India holds massive untapped potential on the
consumer side, this potential can be difficult to exploit given the business environment challenges of
endemic corruption, poor infrastructure, restrictive regulatory environment and the lack of a well
developed food retailing sector. In the mass grocery retail sector, for instance, India does not yet allow
foreign investors to set up shop in the multi-brand retail sector and only permits up to 51% foreign direct
investment in the single-brand retail sector.

Poor distribution infrastructure is another major issue of concern. Poor roads, ports and railways are
commonly viewed as a key factor preventing the country from achieving the high growth rates seen in
China and other East Asian nations over the past decades. This is further compounded by the lack of a
formal food retailing sector, frustrating retailers’ efforts to distribute their products to the end-consumer
market.19, 20
In the pursuit of fighting competition and gaining market share, the FMCG companies have become
vulnerable to unethical sales practices. Also, the researcher in this study has worked in one of the leading
FMCG companies in India and in his short one year experience; he found major lacunae in the sales
practices in terms of the ethics in the handling of distribution channel. This has prompted the researcher to
carry out research in the area of application of ethics sales practices.

Sales Ethics Literature Review.

Author and philosophy professor David M. Holley in his research paper published in Business &
Professional Ethics Journal, 1986 argues that a salesperson has a moral obligation to ensure that the
person buying a product from him has the capacity to make rational judgments about the purchase and
understands what he is giving up to obtain the product. Holley refers to these moral benchmarks as
knowledge and rationality conditions in his essay, "A Moral Evaluation of Sales Practices." This ensures
the transaction serves to benefit both parties and not just the salesperson and the company he is

Prof. Holley, in his paper Information Disclosure in Sales published in Journal of Business Ethics; Apr98
Part 2, Vol. 17 Issue 6, p631-641, 11p has established that there is a general obligation to disclose what a
buyer would need to make a reasonable judgment about whether to purchase the product through an
analysis of the social role of salesperson and ethical argument.


Ethics Quarterly. Apr2001, Vol. 11 Issue 2, p275-306. , Author Thomas Carson argues that salespeople
have important duties to warn customers of potential hazards, refrain from lying and deception, fully and
honestly answer questions about what they are selling, and refrain from steering customers toward
purchases they have reason to think will harm the customers.

In the research paper titled “Ethics and Personal Selling: Death of a salesman as an ethical primer”
published in Journal of Personal Selling & Sales Management. Aug 86, Vol. 6 Issue 2, p81. 8p authors
Clarice L.Caywood and Gene R. Laczniak, has proposed that ethical conflicts and choices are inherent in
personal selling and a sales person faces situations of ethical dilemma. Also, in the same research paper,
the authors have mentioned that the ethical behavior transcends the boundary of law and that there is no
single formula of defining one action to be ethically correct over the other. They have given the
preposition that there are diverse and sometimes conflicting determinants of ethical action and that a
strong code of ethics in sales is needed when the business environment is turbulent and uncertain.
In the article titled ”Sales Ethics” published in Electrical Wholesaling in July 2002, author John
McCarthy mentions that sales people generally consider business ethics as an oxymoron that is, business
and ethics are two different things, which is a blunder. McCarthy mentions that though this is a prevalent
thought process, it is important for the sales people not to give ethics a miss as a sales person will be able
to win customers only through trust and credibility.

Thomas N Ingram, Raymond W LaForge, and Charles H. Schwepker, Jr., in their article title
“Salesperson Ethical Decision Making: The Impact Of Sales Leadership and Sales Management Control
Strategy” published in Journal of Personal Selling & Sales Management. Fall2007, Vol. 27 Issue 4, p301-
315. 15p. have mentioned that sales managers need to take a multifaceted approach in trying to enhance
the moral judgment of salespeople. The authors also mention that sales organizations have traditionally
focused on the development, communication, and enforcement of ethical codes and rules to increase the
ethical behavior of salespeople and that these efforts need to be continued, but supplemented with
attention to the interpersonal dimension of sales organization ethical climate and salesperson cognitive
moral development. The research paper also focuses that correct moral judgment in complex sales
situations very challenging for salespeople.

It is seen through the review of literature that there is a little research done in area of FMCG sales ethics
and hence a strong need is felt to carry out a research in this area. This study focuses on the distributors’
perception of ethical practices in the selling effort of FMCG companies in NCR.

This study tries to find out the distributor’s perception of the extent to which FMCG companies are
ethical is there sales practices. The study would further underline the importance of ethical consideration
for all those who are involved and affected directly or indirectly while selling FMCG.


To conduct study on the distributors’ perception of the ethical sales practices of 10 identified FMCG
companies in NCR.
1. To know where the FMCG companies fall in terms of the ethical sales practices in the perception
of distributors.
2. To suggest, on the basis of distributors’ response, ways to improve ethical practices in the selling
of FMCG products.
Research Design

The first part of the research is exploratory where the researcher had taken opinions and thought in
industry experts like sales managers, territory executives, distributors and conducted literature review.

In order to fulfill the objective the propositions, a questionnaire was developed and administered to the
distributors of the 10 selected FMCG companies in NCR.

1. Hindustan Unilever Ltd.

2. ITC Ltd.
3. Craft Foods India (Cadbury).
4. Colgate-Palmolive (India) Ltd.
5. Marico Ltd.
7. Dabur India Ltd.
8. Nestlé India Ltd
9. Coca Cola Beverages
10. Pepsi Beverages

The questionnaire was administered through a one to one interview of researcher with distributors. This
method facilitated collection of qualitative data along with the quantitative data as it gave the firsthand
account of the day to day experience of distributors of a variety of FMCG companies. The personal
approach also eliminated any non-response or low-response problems.

The questionnaire designed to test the propositions was based largely on the expert opinion by the sales
managers of various FMCG companies, distributors of the FMCG companies and the personal experience
of the author while he worked for a leading FMCG companies in India. The questions were asked
indirectly to help reduce the incidence of forced responses.

The second part of the research is descriptive and cross-sectional and the method employed is collection
of primary data from the respondents through a survey questionnaire.
Sampling Plan

The study is conducted in the NCR, which is the universe for the study. The sample size is 50 distributors,
where 5 distributors of each of the 10 FMCG companies are selected. The sampling design is Quota

The population for this study consisted of FMCG distributors who are active in the distribution in various
areas in NCR. In order to ensure that sub-groups of the sample were large enough for meaningful
analysis, a minimum sample size of 100 usable responses was targeted.

The sample consisted of the distributors of the select FMCG companies in NCR who could devote 30
minutes time with a view to complete the questionnaire and extracting secondary data. In order to
facilitate industry comparisons, convenience sampling was used to select 5 distributors of 10 FMCG

Questionnaire Design

There are 4 major constructs (dependent variables) selected for the purpose of this study, which can be
called as pillars of ethics6. These constructs are:

1. Overall Utility (Utilitarianism)

2. Justice and Fairness
3. Rights (of the distributors)
4. Ethics of Care (towards distributors) 6

Further, these constructs have been assigned to the different variables. The variables have been identified
by meeting the experts from the industry, experiential learning and literature review. These variables are
as follows:

1. Dependent variables
a. Overall Dependent Variables:
i. The company is ethically correct in its sales practices. X11
ii. You are overall satisfied with the Services of the FMCG supplier X44
b. Dependent variables related to the utilitarian principle of ethics X48
i. Company living up to its brand image. X8
ii. The company living up to distributor’s expectations in terms of the benefits to the
distributor due to its large size X10
c. Dependent variable/s related to the principle of fairness in ethics
i. Perception of distributors of overall fairness in treatment by the FMCG company
d. Dependent variable related to the principle of protection of rights in ethics
i. Perception of distributors about the protection of their rights X46
e. Dependent variables related to the principle of Ethics of Care
i. Perception of distributors about the FMCG company taking due care. X45
2. The overall dependent variables which are, distributors perception of the FMCG company being
ethical and the overall satisfaction of distributors are linked to the four constructs as mentioned
above, which in turn, are dependent on the independent variables as follows:
a. Overall Utility (Utilitarianism) X48
i. Company’s Brand image as one of the reasons for the distributor to take the
company’s distribution. X7 Independent
ii. Company’s Big Size and Large operation was a reason for the distributor to
choose the company’s distribution.X9 Independent
iii. Timely communication of the new sales promotion schemes by the company /
company’s sales person. X17 Independent
iv. Timely delivery by the Company’s C&F agency of the goods ordered by
distributors. X18 Independent
v. Settlement of claims for damages promptly X 21 Independent
vi. Settlement of claims for schemes promptly X22 –Independent
vii. Sale of products nearing expiry by FMCG company. X25 Independent
viii. Company’s sales person takes interest in guiding distributor to improve sales.
X38 Independent
ix. You are provided pamphlets, glow signs, danglers, posters, banners, pole kiosks,
etc by the company. X40 Independent
b. Justice and Fairness X47
i. The company and its sales person treat the distributor fairly vis-à-vis other
distributors. X13 Independent
ii. Sufficient distribution area to you vis-à-vis other distributors of same company.
X15 Independent
iii. No infiltration in your distribution area from the adjoining distribution areas due
to the differential in the sales incentives. X16 Independent
iv. The company’s sales person’s fairness vis-à-vis sales person of other company
whose distribution distributor has X34 Independent

c. Protection of Rights (of the distributors) X46

i. Force selling lines of products that do not sell much in the distributor’s territory.
X14 Independent
ii. Distributor’s rights to get the delivery as per order sent to C&F agent.X19
iii. Use of official power & undue influence by the company sales person to
overstock. X24
iv. Company’s adherence to the promised deadline of sales promotion schemes to
distributors. X30
v. Company’s sales persons giving truthful and accurate information about
competitors’ products? X31
vi. Company’s sales person wanting favors (extortion) from Distributors. X32
vii. Protection of the rights of the distribution to earn the official margin without the
pressure to undercut for the purpose of sales target achievement. X35
a. Ethics of Care (towards distributors) X45
i. Sales person enjoying healthy relationship with distributor. X12
ii. Availability of the stock with the company’s C&F agent as per distributors order.
iii. Action taken by the company on retailer grievances. X 27
iv. Action taken by the company on consumer grievances X28
v. Action taken by the company on distributor grievances X29
vi. Sales departments promptness in fulfilling training requirements X36
vii. Frequency of the company sales person visits. X37
viii. The company’s sales person helping retailers in guiding ways to improve display
and stacking for increased sales. X39
ix. Company providing the distributor with the past data in analyzing sales. X 41
Rating Scale. A five point rating scale is chosen to collect responses from the distributors where

1. Reply of 5 is Strongly Agree with the statement,

2. Reply of 4 is Agree,
3. Reply of 3 is Neither Agree or Disagree
4. Reply of 2 is Disagree
5. Reply of 1 is Strongly Disagree

Analysis of Data

* = .000 Significance, **=.05 Significance, *** = .10 Significance

Table No. 1: Interrelationship between the Independent variables of the Utility

X7 X9 X17 X18 X21 X22 X25 X38 X40

X7 1 0.093 -0.085 0.087 0.173 -0.219 0.16 -0.109 0.104
0.52 (-0.247)
X9 1 (-0.173) -0.104 (.719) (0.083) 0.056 -0.184 0.145
X17 1 (-0.216) (-0.179) (0.293) 0.057 -0.115 0.096
(-0.289) (-0.262)
X18 1 -0.009 0.123 (0.042) (0.066) -0.148
X21 1 0.067 0.012 (0.019) -0.182
X22 1 -0.064 0.19 -0.082
X25 1 0.011 0.014
X38 1 0.051
X40 1

Explanation of the table

1. There appears to be a positive relationship between “settlement of distributor’s claims for damage
promptly” (X21) and “company’s big size and large operation as one of the reasons for the
distributor to choose the company’s distribution (X9). The inference here is that the companies
with large operations are prompt in settling the claims for damages of their distributors.
2. There is a negative relationship between “Sale of products nearing expiry by FMCG Company”
(X25) and “timely delivery of the goods ordered by the distributors” (X18). It implies that in
order to timely deliver the goods; the companies are selling goods nearing the expiry period. This
further implies that the companies are not managing their inventory properly or there is a problem
in correctly identifying the demand different products that leads to high production of the goods
that are less in demand.
3. There is a negative relationship between “company sales person taking interest in guiding
distributor to improve sales” (X38) and “timely delivery of the goods ordered by the distributors”
(X18). This shows that the company sales person takes interest in guiding the distributors when
there is untimely delivery, which reflects that the sales persons try to compensate for untimely
delivery by meeting, building relations and guiding distributors to improve sales.
4. There is a positive relationship between “company sales person taking interest in guiding
distributor to improve sales” (X38) and “Settlement of claims of damages promptly”. This shows
that in most of the cases when the sales person takes the interest in guiding the distributor to
improve sales, the claims are settled promptly.

Table 2. Interrelationship between Independent variables of the Fairness

X13 X15 X16 X34

X13 1 -0.156 0.165 -0.172
X15 1 -0.046 -0.197
X16 1 0.067
X34 1

Explanation of the table

1. There is no relationship between “company’s fair treatment of distributor with other distributors
of the same company” (X13) and “no infiltration in the distributor area due to the differential in
sales incentives” (X16)” as per the analysis. For all logical reason, these should be a relationship
because the fair treatment of all distributors will not lead to leakages and infiltration in the
adjoining territories. This reflects that there is possibility of infiltration and that the fair allocation
of sales incentives / schemes is questionable.
2. There should ideally be a relationship between “company’s fair treatment of distributor with other
distributors of the same company” (X13) and “sufficient distribution area as compared to other
distributors of the same company (X15)”. The logic is that the fair treatment should be related to
the fairness in allocation of area for distributors. But there is no such relationship. This puts
question marks on the fair treatment of distributors by the FMCG companies as most of the
distributors have replied positively to the factor X15.

Table 3. Interrelationship between Independent variables of the Rights

X14 X19 X24 X30 X31 X32 X35

X14 1 -0.087 0.076 0.036 0.094 0.22 -0.179
X19 1 0.127 -0.159 -0.141 0.055 -0.012
X24 1 -0.15 -0.056 -0.06 (0.120)
X30 1 0.122 -0.074 -0.123
X31 1 0.002 0.01
X32 1 0.07
X35 1

Explanation of the table

1. Logically there should be relationship between “Force selling of the lines of products that do not
sell much in the distributor’s area” X14 and “Use of official power and undue influence by the
company sales persons to overstock the distributors” X24. The analysis is not showing any such
relation. The replies of distributors on the variable X24 give the negative result with most of the
distributors responding that they are overloaded. Hence, the inference is that the distributors are
forcibly oversold only those products those sell more in the territory.
2. The variables “company’s adherence to the promised deadlines of sales promotions schemes to
the distributors” (X30) and “company’s sales persons wanting favors” X 32 are not positively
related, which shows that overall the sales persons are ethical and do not extort.
Table 4.

X12 X20 X27 x28 x29 X36 X37 X39 X41

X12 1 -0.056 -0.092 0.135 -0.105 0.164 0.006 0.087 -0.1
(-0.233) (-.237)
X20 1 -0.056 (0.103) 0.141 0.007 0.115 0.18 (.098***)
X27 1 (0.012) 0.095 0.04 0.099 0.171 0.197
(-.297) (-.261)
X28 1 -0.15 (.037) (.067***) 0.091 -0.144
X29 1 0.112 -0.062 0.104 0.073
X36 1 -0.078 -0.205 -0.128
X37 1 0.222 (0.035)
X39 1 0.024
X41 1

Explanation of the table

1. There is a negative relation between “action taken by the company on retailers’ grievance” (X27)
and “action taken by the company on consumer grievance” (X28). This shows that the company
is not able to solve the grievances of consumers as well as retailers simultaneously. The
distributors who have replied that the consumer grievances have been handled properly say that
the retailers’ grievances have been relatively neglected and vice – versa.
2. There is a negative relationship between “Sales department’s promptness in fulfilling
distributor’s training needs” (X36) and “action taken by the company on consumer grievance”
(X28). This reflects that when the companies train the distributers, they do not take action on
consumer grievance and when the companies do not train the distributers, they handle the
consumer grievances well. It can be inferred that the companies expect the distributers to assist
consumer grievances redressal.
3. “Frequency of sales persons visit” (X37) and “company providing past data to the distributors in
analyzing sales pattern” (X41) are negatively related. This shows that when the frequency of sales
persons visits is more to the distributors where the company is not able to provide company sales
Table 5. : Relationship between Dependent Variables and Independent Variables under Utility

X7 X9 X17 X18 X21 X22 X25 X38 X40

X8 Square 2.757 3.08 13.071 20.582** 10.02 19.43** 5.003 9.175 3.097
Square -0.052 -0.082 0.299 -0.389 -0.214 -0.392 -0.105 0.121 0.231
T (Z 1.346
Test) 5.58* 8.192* 11.926* 4.83* 3.428** 2.52** 10.88* (0.135) 12.641*
X7 X9 X17 X18 X21 X22 X25 X38 X40
X10 Square 9.914 5.997 13.989 3.685 12.215 6.33 10.562 10.64 4.345
Square -0.186 0.006 0.134 0.034 0.035 0.033 -0.127 0.074 0.176
T (Z
Test) 6.861* 9.007* 11.123* 6.640* 4.881* 4.200* 10.701* 2.516** 11.906*

Explanation of the table

1. The factor that seems to be alone effecting “Company living up to its brand image” X8 is
“company sales person taking interest in guiding distributor to improve sale”. This shows that
personal touch and contribution of the company’s sales person is the most important factor that
makes the distributor feel that the company is living up to its brand image.

Table 6. : Relationship between Dependent Variables and Independent Variables under Rights

X14 X19 X24 X30 X31 X32 X35

X46 Square 6.46 18.263** 10.734 4.159 5.018 9.694 3.642
Square 0.32 0.197 0.087 -0.152 0.272 (-0.028) 0.035
T (Z
Test) (-8.077)* 4.185* (-2.107)** 2.759** 8.162* 3.455* 3.454*
Explanation of the table

1. There appears to be a relation between “Overstocking the line lines of products that do not sell in
the distributor’s territory” (X14) and the overall perception of distributor’s right protection by the
company (X46) in the minds of distributors. This means that the companies not overstocking low
sale products are able to show that they are concerned about the rights of distributors being
2. Another factor that appears to have relation with the protection of distributor’s rights is “the sales
persons giving accurate and truthful information about the competitors products” (X31)

Table 7: Relationship between Dependent Variables and Independent Variables under Fairness

X13 X15 X16 X34

X47 Square 8.958 2.316 3.99 0.543
Square (-.0294) 0.015 0.043 0.037
T (Z (- (-
Test) 1.635)*** 1.549*** 11.188)* 1.385

Explanation of the table

It is observed earlier that the independent factors under Fairness are not related to one another and also
the responses that show that the companies are not fair in the perception of distributers. Hence, no
relationship between dependent variables is getting established.

Table 8: Relationship between Dependent Variables and Independent Variables under Ethics of

X12 X20 X27 X28 X29 X36 X37 X39

X Chi
45 Square 7.94 3.667 8.159*** 4.536 3.131 4.832 0.142 2.783
R Square 0.2 -0.173 0.217 (-0.213) (-0.168) 0.275 0.024 0.008
T (Z (-0.860)
Test) -0.494 9.333* (-2.48)** 10.477* 9.092* 11.389* 3.510** (.394)
1. The key factor related to the overall perception of ethics of care being practiced by the company
(X45) in the minds of the distributers is “Company’s promptness in fulfilling training
requirements of the distributor” X36
2. There also appears to be a relationship between the overall perception of ethics of care being
practiced by the company (X45) in the minds of the distributers and “the action taken by the
company on the retailer grievances.

The scatter plots

X 48. The distributors’ perception of overall utility in terms of profit and gain

Overall Utility to Distributor

0 10 20 30 40 50 60


The scatter plot of the variable X48 shows that majority of the responses regarding the overall utility to
the distributor are agreeing to the statement that they are benefitted.

X47. The distributors’ perception of fair treatment by the companies

Fairness shown by the Company

2 X47
0 10 20 30 40 50 60

The majority of the respondents have replied they neither agree nor disagree to the statement that the
companies have been fair to them. This is an area that the companies have to improve change the
perception of distributors in their favor.

X46. The distributors’ perception of protection of their rights by the companies

Rights of Distributors
0 10 20 30 40 50 60


The majority of distributors have replied that they neither agree nor disagree when asked questions on
their perception of the protection of their rights as distributors. Relatively less number of respondents has
said that rights have been protected.

X45. The distributors’ perception of Ethics of Care shown by the companies towards

Ethics of care shown by companies


2 X45

0 10 20 30 40 50 60

The majority of responses are again neither agree nor disagree in case of perception of ethics of care. The
next set of response suggests that distributors disagree that companies take good care of them.

Major Findings and Implications

1. The study shows that the FMCG companies that have large operations, keep the distributors
happy by promptly settling their claims for damages. Also, it can be logically inferred that these
companies have better understanding of the demand conditions in the markets so the claim for
damages in minimal. The companies must have better understanding of demand conditions and
2. There is a startling finding that the companies may be selling the products nearing expiry. This
could be because of poor inventory management or wrong production planning due to wrong
sales estimation. Again, better understanding of demand responsiveness is desired. .
3. The company sales persons resort to the relationship building in case of delay in delivery of
goods. The correct thing would be finding out the lacunae in the delivery of goods.
4. In most of the cases when the sales person takes the interest in guiding the distributor to improve
sales, the claims are settled promptly. This means that the distributors who have been able to
build relationship with the sales person are able to get their claims passed easily.
5. It is found in this study that there is a problem of infiltration of goods from other distribution
areas due to differential in the sales incentives/ budget and schemes, which must be curtailed to
provide more benefits to the distributors and protect his right to exclusively sell in his area. Also,
this would enable company to have better understanding for the sales potential in different
markers for efficient future planning.
6. The distributors have an overall perception that the companies are not fair with them and follow
discriminatory policies. This issues should be addressed promptly and the companies should try
to remove all kinds for discrimination.
7. The analysis suggests that the overstocking of goods with the distributors is commonly followed
and should be reduced in order to ease the pressure on the distributor so that he can focus more on
selling to retailers.
8. The study also shows that the sales persons do not extort from the distributors in order to get the
distributors’ work done.
9. The companies must be prompt in handling grievances of distributers
10. It can be inferred that the companies expect the distributers to assist consumer grievances
redressal. Hence, the frequent training should be imparted to the distributors.
11. frequency of sales persons visits is more to the distributors, where the company is not connected
through the internet and where the company is not able to provide company sales data. This
shows that the use of information technology helps the distributor know his market and the help
of a sales person is less needed in managing the market.
12. The personal relationship building of the Company sales person is the biggest factor that
contributes to the utility to the distributors and they develop a positive image for the organization.
13. The personal touch and contribution of the company’s sales person is the most important factor
that makes the distributor feel that the company is living up to its brand image.
14. The key factor related to the overall perception of ethics of care being practiced by the company
in the minds of the distributers is “Company’s promptness in fulfilling training requirements of
the distributor”. The distributor has a strong need to be educated on the latest offering, products,
incentives, schemes, and methods of sales, and the used of merchandising material.
15. There also appears to be a relationship between the overall perception of ethics of care being
practiced by the company (X45) in the minds of the distributers and “the action taken by the
company on the retailer grievances.

Key References

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4. Clare M. Pennino & Norman E. Bowie (2004). “Business Ethics, a Kantian perspective”. Journal
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6. Velasquez Manuel G., (2007), “Business Ethics”, Prentice Hall of India, Delhi, (2007), pages 67-
7. W. L. LaCroix (1970/1971). Patterns, Values, and Horizon: An Ethic. New York,Corpus Books.
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10. and
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and the Death of Enron (PublicAffairs, 2002) ISBN 1-58648-138-X

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15. Shailesh Dobhal (January 06, 2010), 'The Next Urban Frontier: Twenty Cities To Watch' The
Economic Times.
16. “GST, FDI can quadruple FMCG turnover in 10 yrs: Survey,” Business Standard, July 9, 2009;
Economic Survey 2009–2010
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print for future”; Dabur India Ltd, 5th Motilal Oswal Global Investor Conference, August
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20. A.N. Nielsen Report 24th Nov 2010, “INDIA’S RURAL FMCG MARKET TO GROW TO 100
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