Creating a Distribution

advantage
Channel intermediaries
 Most distribution models in India involve many
intermediaries between companies and their
retail customers and have varying costs and
benefits.
 There can be different models like wholesalers
model, distributor model, there can be dealers
who act as both wholesalers and retailers and
are served by the manufacturer. Others involve
stockists and substockists.
 All these intermediaries can add
complexities when they wear two hats at
once, as they often do. A distributor selling
to retailers in one territory, for example,
might have a retail presence of its own in
the same or a different territory.
Unorganized Markets
In several sectors of the consumer industry,
business is largely unorganized and consists of
small local companies.
These producers thrive on product complexity
and manufacturing investment are low and
taxes are high.
They often deal in cash and use recycled or
substandard components.
They offer retailers very high margins but have
little control over pricing or channel practices.
 Presence of small producers create an
competitive environment characterized by low
prices an strong channel partner- a significant
challenge for organized player

 Choosing the right distribution model or

combination of models and managing the
channels carefully are therefore key to
succeeding in India business complex
environment
FINDING THE RIGHT MIX
 Distribution models in India vary by the number
of players in the channel, the intermediaries
used, and the number of channel partners.
Every model requires manufacturers to make a
trade off between their degree of control and
their reach.
 The goal is to find balance mix of approaches
that confers an unique advantages depending
upon the sophistication of the market
GUIDELINES FOR FINDING RIGHT
DISTRIBUTION CHANNEL
 Distribution channel must be aligned with
business model of the company and with
consumer needs. One model is rarely
sufficient for all segments of a market.
 Company should choose mix of channels
to reach their disperse customer base.
HAVE MULTIPLE CHANEL PARTNERS

 Company needs to use thousand of distributors

and to reach fragmented population in India.
Advantages of many distributor is that company
retains some power over and independence
from them. Company must insure that each
distributor is large enough to provide benefits for
all the others in the channel. The right number
and layering of channel partners will depend on
the business, its target segments, and the types
of partners available.
Invest in developing the channel and
Sales team
 Investment in channel partners is crucial for
competitive advantage.
 Successful companies pay as much attention to
retaining a distributor with the right resources,
capabilities and right attitude as they do to
retaining a senior employee.
 Companies need to provide channel partners
with training ,selling support and coaching
programmes.
 Sales force effectiveness is important.
 The level of experience and capabilities of
each team need to be aligned with its
customer requirements.
Always measure performance

 Measures of channel partners

performance should include their
economic health, payment terms and
inventory costs.
 It is important for companies to track their
reach across cities and their share of sales
across retailers to measure the strength of
the channel.
Marketing channel

 Direct channel
 Indirect channel
Vertical Marketing System

 Corporate(Ownership)
 Contractual (Franchise: manufacturer sponsored retailer
franchise system , manufacturer sponsored wholesaler
franchise system and service firm sponsored retailer
franchise system).
 Administered (Power)

Horizontal Marketing system

 2 or more companies at one level