CHAPTER- 1

1.1 INTRODUCTION TO TOPIC

Channels of distribution have a vital role to play, especially in the distribution of consumer
goods. The most innovative product offered at an attractive price would be of no use unless there
is an efficient distribution system. The consumer will not search for the product; it has to be
made available at a convenient place from where he can obtain it easily. The distribution channel
provides three types of utilities –time, place and ownership. Time utility means the products
should be made available when consumers want them. Place utility is provided by making the
product available at a location where a consumer wants it. Ownership utility is created when the
physical possession and title to the product are transferred to the consumer. Market channels play
a far more important role than the mere transporting of goods from producers to consumers. The
economic function of the various institutions that make up a channel are cost reduction,
financing, co-operation in setting prices, communication link between the buyer and the user,
promotional assistance, and reduction in the number of transactions.

1.2 COMPANY PROFILE

Hangyo Ice Creams Pvt. Ltd., is a flagship company of Srikrishna Group, which is an Rs.100
crore entity with interests spanning various sectors like milk and milk products, ice creams and
fresh foods, restaurants, and hospitality. Srikrishna Group has the distinction of being the first
organized private sector venture in the milk industry in Karnataka state. Continuing in the same
pioneering tradition, Hangyo Ice Cream Pvt. Ltd., is also Karnataka's first private ice cream
manufacturer in the organized sector. Incorporated in 2002, Hangyo, is today a leading ice cream
brand loved by consumers across all segments of society in its rapidly growing market spanning
the states of Karnataka, Kerala and Goa.
ISO Certification:

Hangyo Ice Cream Pvt. Ltd., is an ISO 22000:2005 certified company for both its divisions -
Dairy and Ice Cream. Hangyo is probably the first ISO certified company in the private sector in
ice cream manufacture in the state.

Market Reach:

Hangyo ice creams are offered in a variety of presentations like cups, cones, and candies. At
present 138 varieties of ice creams are available in these novelties and also in larger take-home
family packs. Hangyo Ice Creams are presently marketed throughout Coastal Karnataka from
Mangalore to Karwar and in major cities of the state like Bangalore, Mysore, Hubli, Dharwad,
Belgaum, Haveri, Gulbarga, Bagalkot, Bijapur. The small towns like Athani, Navalgund,
Naragund, Ranebennur, Gadag are also covered. Hangyo Ice Creams have already opened in
Solapur and Kolhapur, in southern Maharashtra.

Retailing Models:

Strong retailing network is the key to win any retail market. Hangyo Ice Creams has introduced a
unique retail format which has enabled the brand to remain consistently successful. This format
relies on a chain of franchisees called "Hangyo Parlours" and "Hangyo Shoppes" for the vending
of ice creams and milk products.

Hangyo Ice Creams Pvt. Ltd., presently has a network of over 6000 retailers in its operational
area. In larger cities, Hangyo Ice Creams also has valuable associations with bigger Retailing
giants like Big Bazaar, Metro, More and Reliance Fresh for display and sales of its varieties of
ice creams
Infrastructure:

Maiden Unit: The company's maiden full-fledged manufacturing plants are situated in Heroor
Village of Udupi District. This plant was established in 2003 with all indigenous content.

The plant has a production capacity of 10,000 liters of ice cream per day. All the ice cream
products of the company are manufactured in this plant in various presentation like Cones,
Candies, Sundaes and Ice Cream Cups.

The dairy unit of the plant has a capacity of 50,000 liters/day of processing and distribution of
milk and milk products.

New Plant: Given the overwhelming response from the channel partners and also the consumers,
Hangyo Ice Creams has embarked on a major expansion drive which will result in increased
capacity and bigger market share.

As a first step in this direction, a New Plant has been established by the company at Hosalli
Village, Kirwatti on National Highway 63 near Yellapur, Uttar Kannada District. The plant is
just 45 km from Hubli The new imported automatic plant has a production capacity of 16,000
liters/day of ice creams and can produce ice cream mix too. The company had also installed the
continuous freezers to match the processing and manufacturing process; compatible packing
capacity is also available to support the production process.

VISION:

A vision statement describes a desirable state that a company wishes to attain at some time in the
future. Vision statement of Hangyo Ice Creams Pvt. Ltd. is to be the major player in the state of
Karnataka with the product folio.

MISSION:

 To improve the quality and quantity of products.

 Services by promoting healthy practices with economical.
 Operation and to service the ultimate consumers.
 To their utmost satisfaction at affordable prices with an optimization of group's wealth.

OBJECTIVES:

 The objectives of the company are as under

 Maintain on-time delivery of products.
 Improve awareness of Food Safety Management System among all the employees.
 Empower the employees through training to delegate the work to meet the customer needs.
 Improve the quality and quantity of sales of Products.
 Creation of employment.
 Better utilization of skilled local manpower.
 Increase the demand for the product.

To ensure as well as enhance customer satisfaction

Quality Policy:

The quality policy of the Company is as under.

 Quality and Safety requirements in all stages of Procurement, Processing, Packing, storage
and supplying of Milk, Milk Products and Ice Cream for Customer Satisfaction.
 Evolving and Practicing Integrated and Interactive Total Quality Management.
 Quality Improvement as a continual process and improve the Quality Management System
continually to ensure and enhance customer satisfaction.

PRODUCT PROFILE:

 Dairy Division has a wide range of milk and milk products. Following are the details of the
products.
 Srikrishna Toned Milk: This milk is having 3% fat and 8.5% SNF content and packed in 500
ml and 1000 ml food-grade polythene pouches.
 Natural Rich Milk: This milk is having 4% fat and 8.5% SNF content and this is also packed
in 500 ml and 1000 ml food-grade polythene pouches.
 Srikrishna Curds: Curds are prepared from toned milk. These are packed in 200 ml and 500
ml food-grade polythene pouches.
 Srikrishna Pot Curd: This is prepared from Natural rich milk and packed in 250 ml earthen
pots to preserve the natural taste, texture, and flavor.
 Srikrishna Buttermilk: This is available in sachets of 200 ml and bulk, in two varieties,
Masala Buttermilk and Jeera Masala Buttermilk.
 Srikrishna Lassi: This is available in 200 ml sachets, in two varieties viz., plain and mango.

Types of machinery being used for milk operations are Storage Tanks, Cream Separator,
Pasteurizer, Homogenizer, Packing Machine, Boiler, etc. Other infrastructure facilities include
Refrigerated Cold Storage, Diesel Generators, etc.

The daily distribution of milk and milk products is about 25,000 liters. Hangyo Ice Creams Pvt.
Ltd., has two divisions, viz., Dairy Division and Ice Cream Division.
1.3 The various departments are as follows:

1. Purchase Department

2. Production Department

3. Stores Department

4. Quality Control

5. Maintenance Department

6. Marketing Department

7. Personnel Department

8. Dispatch

9. Accounts Department

Purchasing :

Suppliers are analyzed based on quality, capability to deliver, experience and reputation. Most of
the purchases are made locally. Other purchases are made from places like Mumbai as per the
needs and quality.

The various raw materials include:

Sugar Black Current Fruit

Glucose Angeer

Milk Powder Supota

Butter Banana

Milk Cream Strawberry Fruit

Mango Pulp Litchis Fruit

Stabilizer Food Color

Other seasonal Fruits

The purchases are generally made from wholesalers based on the demand. Seasonal fruits are
purchased when available, processed and stored. The local sources are preferred mainly to
minimize inventory control. The food color used is also organic and that is the reason why the
slogan of the organization goes this way "SPREADING HAPPINESS NATURALLY".

Purchasing Activity:

Terms and Conditions of Purchase:

1. The period of supply of raw materials need to be specified.

2. Load of raw materials to be supplied has to be specified.

3. Whether the transport facility will be provided by the factory or the supplier has to make
arrangements.

All the user departments will send the list of regular items required by them to stores. If the stock
availability is found to be insufficient stores department in consultation with production manager
shall place purchase orders.

Production

The different steps followed before the process of production starts

1. Receiving the Milk Cream:-The manufacturing process of Hangyo starts when milk cream is
received from Srikrishna Dairy Private Limited. The quality of milk measured using the
following factors.

a) Taste has to be pleasant

b) Flavor has to be good

c) Fat content should be 9.5%

d) Presence of SNF content

2. Sample Testing: -

The first and foremost test is milk testing. Milk used for milk cream will be tested in the
laboratory situated in the plant.

The various tests are:

a) Fat Test

b) Protein Test

c) Total Solids Test

d) Activity Testing

e) Color Testing

f) Flavor Testing

g) Nuts and Fruits Testing

h) Weight Testing

i) Melting resistance Test

j) Taste Testing

k) Bacteria Test

The Process:

Ice cream production is mainly dependent on the quality of Ice creams. As Hangyo is situated
near Srikrishna dairy there is no problem in the availability of milk cream which is a very
important component in Ice cream production. The milk cream used in Hangyo Ice Cream is
pure and fresh. Hangyo contains permitted colors, added flavors of milk and milk fat. At each
step, the production manager will test the product.

Selecting and mixing of ingredients: 20

Ingredients like milk cream, other milk products, and non-dairy products like sugar, glucose,
stabilizer, and emulsifiers are mixed in a tank at a certain temperature.

Batch Pasteurizer:-

Heating:-

In the Batch Pasteurizer first milk will be heated that is indirect heating by water through jacked
tank without direct heating.

Addition of other raw materials:

At 500 c other raw materials like skimmed milk powder etc. are added.

Pasteurization and holding for 30 minutes:-

It is a process whereby the mixture is heated up to 720 c temperature and held for half an hour
till the machine cools off. By doing so the milk cream can be preserved for a longer time and
prevents the growth of bacteria like mesophilic and Thermo uric bacteria in milk cream.

Homogenization:-

It is the process of applying pressure on the product. In the first stage, 2500 PSI pressure and the
second stage 5000 PSI pressure is applied. This pressure mixes the SNF and fat content.

Cooling:-

Cooling is done at 450 c

Chilling:

The chilling process is similar to the homogenization. After this, it passes through a chilling
machine. If the mixture is chilled properly then it can be preserved for a longer time. It is chilled
to 400 c.
Arrange – addition of colors, flavors, fruits, and nuts:

There is a fixed composition according to which colors, flavors, fruits, and nuts are added. The
color should be attractive. If it is more than the composition then it will taste odd. So color
testing is important, only after the test the color needs to be added.

There are different flavors like vanilla, chocolate, butterscotch, mango, coffee, honey due melon,
apple, black current, rose, gulkand, strawberry, pineapple, apricot, guava, orange and
watermelon.

Depending on the order the production manager will decide which flavor is to be produced.
Flavor testing is also done. Fruits and nuts are also tested before using. Each and everything used
in the production process will be tested.

Freezing and Packing:

Freezing is a process where cream turns into ice. There is a freezing point that is the temperature
at which the liquid freezes. To preserve the food products in the frozen state the process of
freezing is of utmost importance.

After freezing it is packed. Packing is done according to SWAM Act i.e. Standard Weights and
Measures Act. Packing material is bought from faraway places. The Hangyo packages are
attractive. The price and weight of the product, packing date etc is mentioned on the pack.

Hardening:-

Hardening is done to make the product hard or unyielding. If hardening is not done in a proper
way it will melt before it reaches the customers.

Storage:-

After hardening the products go to the storage room. The product is stored in a cold room at a
temperature of -300 c. The products are stored for future use. In the rainy season, there will be no
production of ice cream if there is any order the items from the store will be sent.
Quality Control Department:-

Chemicals and macro biological test is done and if the product is not up to the mark it is either
reprocessed or destroyed.

They have their parameters to determine the quality. This separate department has got chemists
and technicians. The Fat content, protein, and acidity are tested.

Maintenance :

Production largely depends on the maintenance of the plant. The plant is generally kept under the
control of the works manager.

Maintenance of the machine means efforts directed towards upkeep and repair of the machines.
The maintenance department is responsible for the smooth and efficient working of the industry
and helps in improving the productivity. There are 2 types of maintenance.

1) Preventive Maintenance

2) Breakdown Maintenance

At Hangyo they follow all these types of maintenance. The maintenance of major equipment
such as plant types of machinery, cold storage, deep freezers, diesel generators are carried out
through an annual maintenance contract.

1) Preventive Maintenance

The preventive maintenance schedules are drawn by the general manager and are implemented
by the supervisor for production equipment and utilities as per preventive schedule. Preventive
maintenance shall be carried out as and when the equipment is free. Any defect is brought to the
notice of the general manager, who takes necessary corrective actions.
2) Breakdown Maintenance

Whenever there is a breakdown the concerned supervisor will raise the maintenance report which
would have the name of the machine, nature of breakdown, breakdown time, etc. then the
maintenance report is handed over to the general manager.

General Manager Calls the operator and then the job is allotted to him. While attending to
breakdown, reference to troubleshooting procedure given in the concerned machine equipment
manual is made.

Whenever a breakdown of the machine occurs alternative arrangements are made by the plant
manager in consultation with the general manager to see that the production process is not
affected by the breakdown.

This department has a total of 10 members

Their main functions are to check the condition of machines and cleaning the dust. Every week
they check the oil belt tension and once in three months the oil is changed.

Important among the above-mentioned activities are:

Pricing of products:

Prices of the products are fixed as below.

Maximum retail price

Dealer margin 25%

Distributors margin 12%

GST 18 %
Selling and Distribution Expenses

Transportation cost

Salary (marketing)

Distribution Traveling Allowance and Dearness allowance.

Newspaper Ads

Sales promotion and point of purchase

Product complaints and damages

Marketing Traveling Allowance and Dearness allowance

Launching Expenses.

1.4 AWARDS
CHAPTER -2

2.1 INTRODUCTION TO WORK WORK PROFILE

I choose to take my project in distribution channels because channels of distribution have a vital
role to play, especially in the distribution of consumer goods. The most innovative product
offered at an attractive price would be of no use unless there is an efficient distribution system.
The consumer will not search for the product; it has to be made available at a convenient place
from where he can obtain it easily. The distribution channel provides three types of utilities –
time, place and ownership. Time utility means the products should be made available when
consumers want them. Place utility is provided by making the product available at a location
where a consumer wants it. Ownership utility is created when the physical possession and title to
the product are transferred to the consumer. Market channels play a far more important role than
the mere transporting of goods from producers to consumers. The economic function of the
various institutions that make up a channel are cost reduction, financing, co-operation in setting
prices, communication link between the buyer and the user, promotional assistance, and
reduction in the number of transactions.

2.2 WORK PROFILE:

 Understanding the overall Bangalore ice cream market and competition of the ice cream
industry in Bangalore, understanding the key competitor with their share of the market
through analyzing secondary data.
 Visiting super stockist to understand how much business they are doing, what is the storage
capacity and their level of satisfaction towards Hangyo brand and its operations. Also
understanding the problem they are facing at the distribution level.
 Interviewing the distributors to understand why they join Hangyo brand, what kind of
initiative they are taking to increase the Hangyo market share,
 understanding what kind of support given by the company to the distributors and also what
kind of problem faced by them from the company side as well as from the retailer side.
 Understanding the Hangyo promotions and other support for the distributor for increasing the
sales market share and compare it with the competition.
 Understanding the storage capacity of each distributor. and they are doing delivery to retailer
 Understanding the retailer segments like Modern Trade, Food Stores, General stores etc and
their rules of engagement with Hangyo.
 Visiting retailers point to understand their perception towards Hangyo brand and what
difficulties they are facing while selling Hangyo products to the consumer.
 Identify the problem faced by retailers from company and distributor point.
 Understanding what is the credit policy of intermediaries (distributors and retailer) is there
any problem in payment system
 identify the promotion initiative taken from company to create brand awareness and attract
customer toward hangyo ice cream

2.3 LEARNING AND TAKEAWAY

 what is the share of each ice cream in Bangalore and what is the positioning of each company
and how every company making difference with competitor .how the message is delivered to
target customer through various communication channels
 Through analyzing the sales data I understand which products are highest selling and which
are the lowest selling product and also understand how sales figures will fluctuate throughout
the year
 what kind of problem distributors are facing from company side as well as from the retailer
side and what is the solution for that
 what is the company replacement policy, on what basis company decide the product
replacement to the distribution
 how the company is doing the promotion of brand in low cost
 what is the share of freezer is taken by hangyo ice cream in each retailer point and what
perception retailer having about hangyo ice cream compare to other ice cream brands
 what kind of problem arise in the distribution process and what is the best solution for
resolving that issue
CHAPTER -3

3.1 REVIEW OF LITERATURE

Dr. A.K Singh

Rural markets offer a great scope for FMCG Companies to market their products because of the
recent increase in rural incomes. The tough competition in the FMCG sector makes it important
to constantly revise the schemes as per the market conditions. Understanding the taste and
preference of the consumers provide useful insight into the market conditions and helps
companies devise their schemes accordingly. Proper distribution coverage is a powerful tool to
stimulate the demand which not only helps in retaining the present customers but can also attract
additional customers by offering better services. The right distribution objective is to get the
right goods to the right places at the right time for the least cost. The paper opted for an
exploratory study using the interview technique to solicit information from the distributors,
wholesalers, and retailers. The data were complemented by other information from Consumer
Behavior and Rural Marketing literature also. The distribution mechanisms and channel behavior
dimension of the rural market of Bhopal and Hoshangabad is analyzed. The channel behavior has
a critical influence on channel decisions and identifying how the distribution channel performs
would help us to understand how successfulness the company is. The paper includes implications
for understanding distribution management and channel behavior which are critical to Study the
Problems faced by the FMCG Distribution Channels in Rural Area of Bhopal &Hoshangabad
Districts of M.P.

DR. HAMID SAREMI

One of the main issues that marketing managers are faced with it is decisions about the
distribution of goods. Decisions about the structure of the distribution channel are important in at
least two dimensions. First, the decision has a direct effect on other marketing strategic planning
decisions (including pricing policy, advertising, packaging, etc). Second, decisions regarding
distribution channels require long-term commitment. It takes several years to be deployed to a
desired distribution system and can't be changed easily. Distribution means delivering the
product to the consumer at the right time and place. In marketing Association of America's
definition distribution channel is the structure of the organizational units within the company and
outside the company, brokers, wholesalers, and retailers that market goods or services.
Distribution channels always include the manufacturer and the final consumer, the main duty of
the distribution system is that place goods to potential customers in the right time and place.
Today managers becoming more important due to the distribution issue, according to the
distribution, physical distribution, and management of it and the cost and interaction between
analysis, planning, and control of service levels are physical tasks of distribution management.
Companies achieve competitive advantages using distributed systems.

DOMINIC ZIMON

The main aim of this publication is to analyze the influence of standardized quality management
systems for the betterment of distribution channels in the FMCG market. The research covered
20 deliberately chosen distribution channels of a large manufacturing company carrying out the
activity in the food industry in the FMCG market in SouthEastern Poland. For the research
process, channels are divided into two groups. In the first group were classified channels in
which all (or almost all) cells have implemented quality management systems (ISO 9001, ISO
9004 or ISO 22000). In the second group were classified channels in which intermediaries had
no standardized quality management systems. The research conducted process helped to answer
the research questions and the following conclusions: distribution channels with implemented
quality management systems in most cases have received better grades than other distribution
channels. In particular, their advantage is evident in aspects such as customer service, timeliness,
and accuracy.

Dr. P Selvaraj

The Fast Moving Consumer Goods (FMCG) sector is a cornerstone of the Indian economy. This
sector touches every aspect of human life. The FMCG producers now realize that there is a lot of
opportunity for them to enter the rural market. The sector is excited about the rural population
whose incomes are rising and the lifestyles are changing. There are as many middle-income
households in the rural areas as there are in the urban. Thus the rural marketing has been growing
steadily over the years and is now bigger than the urban market for FMCGs. Globally, the
FMCG sector has been successful in selling products to the lower and middle-income groups and
the same is true in India. Over 70% of sales are made to middle-class households today and over
50% of the middle class is in rural India. The sector is excited about a burgeoning rural
population whose incomes are rising and which is willing to spend on goods designed to improve
lifestyle. Also with a near saturation and cut-throat competition in urban India, many producers
of FMCGs are driven to chalk out bold new strategies for targeting the rural consumers in a big
way. But the rural penetration rates are low. This presents a tremendous opportunity for makers
of branded products who can convert consumers to buy branded products. Many companies
including MNCs and regional players started developing marketing strategies to lure the
untapped market. While developing the strategies, the marketers need to treat the rural consumer
differently from their counterparts in urban because they are economically, socially and psycho-
graphically different from each other. This paper covers the attractions for the FMCG marketers
to go to rural, the challenges, the difference between the rural and the urban market and the
suitable marketing strategy with the suitable example of companies and their experience in going
rural.

Githa S Hegde

The paper aims to identify channel design for effective bi-directional relations between the
company executives who are the representative of the manufacturers and the channel partners in
the FMCG sector, with special reference to the Indian scenario. The study focuses on the major
criteria that the channel managers and the distributors consider important for selecting and
designing the number and type of channel structures.

Zeng Xian-dong

The problem of marketing channels would seriously affect the production and operation of
enterprises, and the feature of FMCG industries makes this industry channel more complicated.
How to establish a good terminal channel management mechanism for effective distribution is a
significant problem that affects the survival of the enterprise. American Wrigley Candy
Company has very good sales performance and excellent goods condition in some cities of
Jiangsu. Its success comes from the deep comprehension of terminal channel management, and
good job of terminal market segmentation and intensive cultivation, that is,if enterprises want to
succeed now, they must pay attention to market overall layout and improve in details.

Avinash Milley

An effective distribution channel can be a source of strategic advantage for companies. However,
little research exists about the distribution channel structure in India, which is largely traditional
and unique. The first part of this round table article provides an overview of distribution
channels, particularly their constituents and structure, with a special focus on distribution
channels in India. The second part of the article reports on a panel discussion with eminent
academics and industry experts on the challenges that companies in India face in designing,
constructing, and managing distribution channels on the ground.

Midhat Saleem

The study is attempted to examine the competence of distribution in the progress of the FMCG
industry. Through this study, trying to realize the level of progress increment by distribution
channels. The outcomes attracted the study is absolutely in light of a study directed among the
retailers. With a direct-distribution framework, the marketer achieves the proposed last client of
their item by circulating the item straightforwardly to the distribution channels are characterized
and arranged. Their improvement is clarified and new potential outcomes of their advancement
in contemporary conditions are demonstrated. In this sense, a variety of distribution channels
exists, and also the contemporary understanding of overseeing supply chains and value creation
systems. The information was gathered from 35 retailers, who practice consistently. The
information required for the study has been gathered from the retailers through the questionnaire.
Analysis and interpretation has been done by using statistical tools. The outcomes from the study
demonstrate that the dominant part of the respondents are satisfied with the facilities offered by
the distributors. The intense rivalry in the FMCG part makes it imperative to always modify the
plans according to the economic situations.
Ioana Barin

Distribution includes all activities undertaken by the producer, alone or in cooperation, since the
end of the final finished products or services until they have consumers. The distribution consists
of the following major components: distribution channels or marketing channels, which together
form a distribution network; logistics or physical distribution. To effective achieve, distribution
of goods requires several activities and operational processes related to transit of goods from
producer to consumer, the best conditions, using existing distribution channels and logistics
system. One of the essential functions of a distribution is performing acts of sale, through which,
with the actual movement of goods, their change of ownership takes place, that the successful
transfer of ownership from producer to consumer. This is an itinerary in the economic cycle of
goods, called the distribution channel.

Mano Raj.

The Fast Moving Consumer Goods (FMCG) sector is a cornerstone of the Indian economy. This
sector touches every aspect of human life. The FMCG producers now realize that there is a lot of
opportunity for them to enter the rural market. The sector is excited about the rural population
whose incomes are rising and the lifestyles are changing. There are as many middle-income
households in the rural areas as there are in the urban. Thus the rural marketing has been growing
steadily over the years and is now bigger than the urban market for FMCGs. Globally, the
FMCG sector has been successful in selling products to the lower and middle-income groups and
the same is true in India. Over 70% of sales are made to middle-class households today and over
50% of the middle class is in rural India. The sector is excited about a burgeoning rural
population whose incomes are rising and which is willing to spend on goods designed to improve
lifestyle. Also with a near saturation and cutthroat ...

Trevor Stanley

ABI has a sophisticated and effective distribution fleet which delivers canned and bottled non-
alcoholic beverages to 12000 wholesale and retail outlets in the Durban Metropole and 46000
outlets nationally. Delivery is normally executed once per week, 48 hours after a separate order
is taken by an account manager. In the more rural or "emerging market" areas traditional retail
outlets such as supermarkets and superettes are scarce and reliance is made on spaza and house
shops. Cash flow and storage space is limited. The sales and distribution calls are expensive,
relative to the size order that the spaza would place. Spaza shop owners rely on distributors or
collect from wholesalers. These outlets often run out of stock. Sales revenue is thus not
maximized. Outlet development is marginal. The writer embarked on a research project to
develop a sustainable and cost-effective Sales and Distribution model to address these constraints
in the Emerging Market territories of ABI Durban. Traditional theory turns to channel
distribution as a means to effectively reaching an entire retail market. Levels are thus added to
the distribution channel. The research, however, showed that service levels are sometimes
compromised. The model that was developed returns ABI to DSD (direct service delivery) via
specially designed vehicles and combines the function of "reseller" and "delivery merchandiser"
on a dedicated route. Although a marginal increase in cost per case has been experienced,
deliveries are direct to store, at least twice per week. Sales growth in these routes has been more
than 85% while the total Umlazi area grows at 13%. Customer service levels, as surveyed, are
exceptional. Although the model was specifically designed by ABI Durban for use in Durban,
the concept has been adopted as a best practice and is being "rolled out" across the business. By
the end of 2005, 10% of ABC's fleet nationally will function as MOTD (Merchandiser Order
Taker Driver) routes. Additional vehicles have been ordered for delivery during the period July
2005 to September 2005 for this to be achieved. This model has assisted ABI in achieving its
goal of maximizing DSD and lifting service levels to its customers (retailers). Revenue has
increased significantly along with volume in these areas. Invariably MOTD acts as a significant
barrier to competitor entry in those geographic areas where it is utilized. The Merchandiser
Order Taker Driver (MOTD) model is successful and has the potential for wider use, even in
more developed markets.

Rashid, Paola

The purpose of this thesis is to add empirical findings of IMC strategies utilizing digital- and
traditional marketing communication channels to build and maintain brand equity in the FMCG
industry. More specifically awareness, associations/image, and sales that are said to be critically
affected by communication are the focus of the study.
Joe Nyaga

The general objective was to investigate factors affecting the distribution of fast-moving
consumer goods (FMCG) in Kenya, with particular emphasis on Eveready East Africa Limited.
The study specifically aimed to; determine the effect of competition; establish the effect of price;
analyze the effect of promotion and investigate the effectiveness of demand forecasting on the
distribution of Eveready East Africa Ltd products. The study adopted a descriptive research
design and the study population comprised 120 distributors and staff assigned in market
territories in Kenya. The study applied a stratified sampling technique to select a total of 120
respondents. Questionnaires were used as the main data collection instruments and a pilot study
was conducted to pretest questionnaires for validity and reliability. Descriptive statistics data
analysis method was applied. The study findings indicated that the major factors affecting
distribution of the company's fast-moving consumer goods are; high competition from cheap
imports, high prices of the company FMCG in comparison to the competitors FMCGs,
application of ineffective promotion campaigns and lack of effective demand forecasting
systems. The study recommendations were; introduction of less expensive and high quality
FMCGs in the market that is dominated by cheap and poor quality imports; application of
effective pricing strategies like competitor based pricing; offering of effective promotion
methods such as sales promotion and continuous advertising and application of effective demand
and forecasting systems such as distribution requirement system and material requirement
system.

Githa S Hegde

This study focuses on the distribution strategy for enhanced channel partner performance in
Insurance, Mobile telecom and Fast-moving consumer goods (FMCG) Sectors. The dimensions
considered in the study were Motivating channel members, positive attitude towards the channel,
providing the channel members with market knowledge, conducive credit facility, constant and
effective communication and being aggressive. Results indicated a lesser correlation between the
distributors and channel managers of the insurance sector, whereas the Mobile telecom's
distributors correlated with that of the channel manager's attitude. The attitude of High
performing distributors and channel managers of FMCG sector were similar, while it did not
correlate with that of the low performing distributors.

Mirza Hasan Hosseini

Due to the industry globalizing and getting more competitive, today, more than any time else, we
feel the necessity of an integrated and coordinated distribution system for all industries
especially fast-moving consumer goods manufactures. In other words, distribution is the main
element in presenting products by marketers that indicates buyers the significance of availability
and trustworthiness of presenter as shopping objectives. The current study is carried out to
investigate the role of effective factors in selecting distribution channels and their significance
improving the competitive advantage of fast-moving consumer goods producers. This research
from its practical goals, the descriptive research method and data collecting is a scrolling type.
The research statistical society includes exporters, senior managers and certified marketers in
Ranchers Dairy Industry Company; therefore we disregard sampling due to the limitation of the
statistical society in line with the increase in research validity. The findings suggest a positive
and meaningful effect of substructure features, marketing ability and communication and
transition ability in choosing distribution channel. Due to the results, the choice of distribution
channel impacts the competitive advantage of the company as well.

Deepa Ingavale

The rural markets have been increasing steadily since the 1980s and are now bigger than the
urban market for both FMCGs (53%) and durables (59%). The rural consumer market, which
grow 25% in 2008 when demand in urban areas slowed due to global recession, is expected to
reach $425 billion in 2010-11 with 720 – 790 million customers which will be double the 2004-
05 market size of $220 billion. All smart marketers, Indian as well as MNCs, are trying to enter
into rural markets. Companies such as Hindustan Lever, Godrej, Colgate Palmolive, Parle Foods,
Philips, Dabur India have made inroads into the countryside. Rural reach is on the rise and it is
fast becoming the most important route to growth. Accessing rural markets presents challenges
to the marketers as these markets are geographically spread out with a large number of retail
outlets. A study on the buying behavior of rural consumers indicates that the rural retailers
influence 35% of purchase decision. India offers a huge, sustainable and growing rural market
that can be tapped effectively through innovative distribution channels with retailing being the
most critical element of this strategy as it is the final touchpoint. The paper focuses on the rural
distribution strategy and emerging distribution channels for rural market with due emphasis on
rural retailing.

Kaushik Manda

India has been witnessing a sea change in terms of competition since the decade of the nineties.
Indian players, especially players of FMCG, Cement & Durable, are compelled to change their
functional operations under this high degree of competition. Therefore, functional operation like
distribution management is considered important in terms of effectiveness & efficiency. For
effective & efficient distribution, marketers have to take not only the care of logistics but also
they have to take care of the behavioral management of channel partners. Globally accepted
literature have already proposed strategies of power & influence in this regard. But some of the
empirical researches have raised questions on the applicability of those strategies about
developing nations. Considering this question valid and relevant we have identified our research
plan vis-à-vis Indian distribution. For this study we have selected three objectives: i)
Development of scale for identification of channel control strategies of marketer, ii)
Identification of strategies for controlling channel partner, and iii) Identify the importance of
each specified strategies. For the empirical purpose of the present research, we have executed a
survey in the southern part of West Bengal, a state of India, with randomly selected 166
respondents who are distribution channel partners in the profession. We have selected the
southern part of the state of West Bengal because this region is having a representative character
of India. For attainment of first objective stated above, we have developed a valid and reliable
construct by combining items from the globally recognized scales of power & influence
strategies. We have reached second & third objectives by using appropriate statistical tools used
for Exploratory & Confirmatory factor analysis. Finally, we can identify four important strategic-
facets namely i) Intelligence ii) Big Bossing iii) Contract Orientation iv) Expert for Indian
distributions. Result indicates deviation from the global research outcome. Thus, the present
research is very much contributory to academic & management world, especially about
developing nations.
Odupitan, Aminat

The Fast Moving Consumable Goods (FMCG) sector in Nigeria is one of the largest sectors in
the country and its contribution to the economy cannot be overlooked. This sector is highly
important in the food industries which makes this study to focus on its distribution channels. This
study also focuses on its challenges that are related to the distribution channels.

This study aimed to help foreign investors that are investing in the food sector as well as
students, and sales representatives of the companies to understand the distribution channel that is
used in the sector by FMCG Companies in Nigeria. Some theories of marketing distribution
channels are used and which are collected from different sources such as books, articles, and
journals.

Both qualitative and quantitative research approach was used to elicit the information required
for this study. A random sampling method was used to select the participants of this study. The
study population in this study were FMCG companies in Lagos industrial area and managers and
distribution staff of FMCG companies. Questionnaires and phone interviews were used to obtain
information from respondents. Reliability and validity tests were conducted to ascertain the
precision of the data tools used in this study.

The findings in this study revealed the types of distribution channels that are used by fast-
moving consumable goods companies and some of the problems encountered the problems
which include; defaults in payment, stolen goods, poor infrastructure, presence of counterfeit
goods in the market place, quality issues,

discriminatory trade offers, inadequate training of sales personnel, etc.

The analysis of findings in this study suggests that these distribution channels may affect the
profitability, sales turnover, market share, productivity and revenue generated by FMCG
companies. Furthermore, FMCG companies must be willing to monitor their territory
management, business status, financial capability, and infrastructure compliance to ensure the
efficacy of distribution strategies.
James A. Adeniran

It has been suggested that a firm should adopt only a few variety of routes to market to minimize
channel conflicts. But today's consumers which have developed varied and complex choices and
preferences for where and how they want to purchase products are continuously forcing FMCGs
firms to tailor their channel design and configuration towards the multiplicity of channels.
Therefore, this study examines the effect of distribution intensity on consumer perception of
marketing utility about channel multiplicity. A cross-sectional survey research design was
adopted for data collection with the aid of a structured and closed-ended questionnaire. The
questionnaire was administered to 384 consumers across all the local government areas in Lagos.
Data was analyzed using descriptive and inferential (simple and multiple linear regression
analysis) statistics. Findings reveal that distribution intensity has a significant positive effect on
marketing utility perception of consumers of FMCGs products in Lagos State, Nigeria. Also, a
significant positive relationship was established between distribution intensity and channel
multiplicity. Further results show that channel multiplicity has a significant positive effect on
marketing utility perception. In a final analysis, the study reveals that distribution intensity and
channel multiplicity have a combined effect on marketing utility perception. In concluding, the
study gave useful recommendations.

Rajesh K. Aithal

This chapter explores the distribution challenges in Indian rural market and evaluates the various
strategies to approach rural markets. Reaching out to rural markets has been acknowledged as the
biggest challenge. This chapter discusses various strategies used by firms to reach out to rural
India. A set of six strategies of distribution in rural India has been identified. Major fast-moving
consumer goods (FMCG) firms which have serious interests in rural markets have been using
these strategies. The pros and cons of each distribution strategy have been elaborated. The
critical discussion of these six distribution strategies and future recommendations is expected to
enhance the understanding of marketers so that they can plan better for reaching to rural India.