Effectiveness and efficiency of distribution channels in fmcg

Siya Carla The fast-moving consumer goods markets and industry are directly responsible for almost half of all consumer spending in the world. Since this industry is extremely saturated with fierce competition, it's quite hard to find a good formula for improving sales efficiency. Still, it isn't impossible to do it.

Effectiveness and efficiency of distribution channels in fmcg

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Effectiveness of distribution channels The effectiveness of different types of distribution channel Direct marketing is where the goods are sold directly from the product direct to the customer. A producer does not have to share its profit with intermediaries and so it is a low cost channel.

The producer controls the whole marketing process and as a result can protect and maintain its brand image. Customers are increasingly using direct sales though the internet and can purchase from the comfort of their own home However, it can be expensive to set up these channels and all the cost of distribution such as storage and damage rest on the producer.

In addition, a recent trend is for customers to search online for products and then purchase them physically from outlets after making comparisons on price. Wholesaler A wholesaler is normally an intermediary between the producer and the retailer; although some wholesalers have their own outlets.

Wholesalers are prepared to buy in considerable bulk from a producer. They break bulk by distributing smaller quantities to individual retailers. Wholesalers, like major retailers, may have international networks and distribute worldwide.

Effectiveness and efficiency of distribution channels in fmcg

Examples of multinational wholesalers are Makro and Costco. The advantage for a producer of using a wholesaler is that the wholesaler will: However, in return for the costs and risks they bear, wholesalers will expect a significant discount from the producer to allow a mark-up when they sell the products on to retailers.

Producers cannot be sure that the wholesalers will maintain the brand image. They are experts in certain markets and bring buyers and seller together in return for a commission on the value of the sales. They very rarely take possession of any physical items; they just a facilitate negotiations and the selling process.

Agents and brokers are particularly useful when a firm is selling into a market or geographic region, of which they have little knowledge and experience. Brokers and agents will know the local market and, if it is in an overseas location, will help with the language and the legal requirements. They may also negotiate joint ventures with local firms.

Agents and brokers are probably best known in the buying and selling of land and travel services, but virtually all markets require employ such intermediaries. Retailers A retailer is an intermediary, which buys products either from manufacturers or from wholesalers and resells them to consumers.

They come in all shapes and sizes from the corner shop to the hypermarket. The advantage of manufacturers using retailers is that they: Clearly the disadvantage for the producer is that the retailer will demand a share of the profits and they will also decide how, and where, to display the product.

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With considerable competition for shelf space in multiple retailers, this placement of a product is a key element of the purchasing decision.

Retailers themselves may choose to use the services of distribution specialists.

Marks and Spencer, for example, do not distribute their own products to individual stores. This is done for them by a subsidiary of British Oxygen. Channels of distribution There is considerable debate about how long distribution channels should be.

Some years ago the basic rule of thumb was that industrial goods had shorter routes than consumer products, but this is now changing.

Many of the traditional routes have seen casualties as wholesalers and specialists have gone out of business. Modern technology allows goods to be tracked along their distribution route and the next buyer in the chain can remain fully informed of just where the products are.

Most producers will use a range of channels to distribute their products; this approach is known as a multichannel distribution. Copyright - Triple A Learning.Selection and Motivation of Distribution Channel in Fmcg Company - Free download as Word Doc .doc), PDF File .pdf), Text File .txt) or read online for free.

Development and set-up of ° plans, with the final aim of optimize the efficiency and effectiveness of the available resources and to increase the perceived value of the Brand for the final customer in the point of sale, in order to develop the engagement and the loyalty of the customer himself.

The competition in the FMCG industry today adds various components to consolidate their position in the market, create new sales channels and growth opportunities, while increasing the efficiency . 1)Managed several diverse businesses and consulted for several Companies including market entries into Africa 2)Successfully completed major Sales Service Model Optimisation project in for world leading multi national Company, delivering US$15 mn in improved sales force effectiveness and urbanagricultureinitiative.com: Maximising Sales Force .

Distribution channels are evaluated using three major criteria: effectiveness, efficiency, and adaptability. There is little research in the Indian context on the factors that affect channel effectiveness and efficiency. View Geoffrey kaveke’s profile on LinkedIn, the world's largest professional community.

• Recruitment and developing new distribution channels; ensuring distribution efficiency on existing channels visit frequency and outlet visit plan in order to maximize route urbanagricultureinitiative.com: Sales|Distribution|Channel .

Effectiveness of distribution channels