CHANNEL EVALUATION AT DABUR

In the early 2000s, Dabur did an evaluation of their channel structure for their range of
consumer products. They created a task force and also empowered them to involve external
parties to collect data. After an extensive data collection exercise across several regions, an
analysis was conducted which raised several issues. A brief summary of the issues is presented
below:
The trade was generally loaded with 3-4 months stocks, which was not very healthy especially
in light of competitive practices. The trade prices were not stabilized and there was widespread
undercutting due to trade schemes.
Due to the absence of proper sales forecasting, many a time, distributors faced stock-outs,
which led to loss of sales. Despite being aware of the advantages of brand building activities,
the distributors remained turnover conscious and less inclined towards long-term brand
building.
Distributors were generally not able to service slow-moving products, hence new product
development and launches became a constraint. Sub-distribution and sub-dealers were not
appointed by the distributors. This resulted in poor distribution services to the interior areas.
The direct reach of the distributors was very low. Consequently, there was a high dependency
on wholesalers and a weak distribution of the slow-moving products.
Consumer promotions do not reach the end consumers. In many cases, the freebies were sold
separately and not passed on to the end consumers.
Dabur needed to find some solutions quickly.

a) Use the 3-E framework to evaluate Dabur’s channel structure

b) What according to you were the problems facing this channel structure?

c) What corrective actions would you institute?