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    The Secret Jewels of FMCG Retail distribution & Channel sales
    The Secret Jewels of FMCG Retail distribution & Channel sales
    The Secret Jewels of FMCG Retail distribution & Channel sales
    Ebook151 pages1 hour

    The Secret Jewels of FMCG Retail distribution & Channel sales

    By Munaf Khatib

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    About this ebook

    When it comes to channel distribution there is always a thought
    that how come multinational distribution companies manage to
    be on top or how or what formula they retain the top market
    position. To Cover up such question the book can be helpful to
    understand the sales and distribution system which they follow
    diligently.
    Covering all the major aspects of distribution in house and out
    house such as modern trade, wholesaler, reseller, customer
    service and habits of staff which can be covered and corrected to
    attain and maintain success throughout.

    LanguageEnglish
    PublisherOne Point Six Technologies Pvt Ltd
    Release dateJul 13, 2020
    ISBN9789389759679
    The Secret Jewels of FMCG Retail distribution & Channel sales
    Author

    Munaf Khatib

    I was always passionate to understand and know how the leading companies of the world operate by providing the product from one end of the world to every end, of FMCG and other related products. And how few companies remain on top even though there are thousands of competitors all around the market.This means there is a system behind it and unless and until we do not learn it we cannot understand it.But there is no book in the market which easily explains the minutes of the system and process of the successor. On the other hand, different companies have a different system, strategy, and planning of doing sale even though the basic concept remains the same in retail distribution and channel sales.Then again if we try to understand the companies operating in the field of distribution few are successful and rest are failures, therefore a thought came to my mind that unless and until you are not a part of their system you cannot understand it clearly, this inspired me to enter into the system of Top, Medium and Failure companies of retail distribution where I understood by practically working and learning the minutes of success and failure.The research continued for years to grab the solution and reason behind success and failure by clubbing it from different levels and putting in a single place in the form of a ready book on retail sales and channel distribution.

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      Book preview

      The Secret Jewels of FMCG Retail distribution & Channel sales - Munaf Khatib

      CHAPTER NO 1

      What Is Channel Distribution in FMCG?

      Channel Distribution: The name reflects the method of channelized form of distribution, through a chain of business or intermediaries through which goods or services pass until they reach the end consumer, by systematic ways and means along with the basic network of distribution.

      When a manufacturer produces a FMCG product, it has to be sold either by itself, directly to the customer or consumer through various channels, which includes the distributor, dealer, wholesaler, retailer. This is not so easy for the manufacturer, as he has the major responsibility of production, so he would not want to bifurcate his concentration on the variant part of selling. So he either opts for a separate sales division that has the role and responsibility of selling the product, which can be their own decision depending on the situation of the company and the surrounding market conditions. Thus, a model of selling to the end consumer is created or adopted as below:

      ✿ Manufacturer mode of selling

      1. Direct to end user.

      2. Selling through a dealer network.

      2.1 Conventional Distribution Method.

      2.2 Direct Distribution Method.

      2.3 Indirect Distribution Method.

      3. Selling through a value added reseller.

      1. Direct to end user: When a company targets to sell the product direct to the end user in FMCG, he has to create his own sales team, who directly contacts the nearby customer or end user to sell the product of the company.

      Example: A small water bottling plant that produces jars for consumer use does not rely on a middleman, whereas, he directly contacts the customer in nearby areas, such as offices, flats, houses, and shops for their personal use. He has a delivery system, where he delivers the goods directly to the consumer and in turn, he either receives repeat business through calls or visits.

      On the other hand, he might target the customer through a website, mobile apps, flyers or a marketing campaign. In this case, he has two different options of selling the product directly to the consumer. Though, this is considered to be of low scalability and poor growth and expansion. Yet, people prefer to continue with such models, as they have a small unit of production and satisfactory sales for their regular earning.

      2. Sales through a Dealer Network: Selling through a dealer network means either calling the dealer to your doorstep or using the company executive or contact of the market, this is the conventional distribution method. Whereas, the other method would be the company’s own direct distribution network, in which the company directly reaches the end user, without using any intermediaries. Or indirect distribution network, here a single or a chain of dealers are appointed as intermediaries to cover the respective regions.

      The overall concept of creating a dealer network is to sell a product through a geographical network of dealers, who are selling to the end user in their respective areas. The dealer is responsible for selling and servicing the product to the essential customer, the end consumer.

      In any of the above networks, a company, throughout the geographical region has to maintain and run the programs, train the sales force, support it with marketing campaigns so that the value to the end products and services are enhanced.

      2.1. Conventional Distribution System: The conventional distribution in FMCG comprises of the producer, wholesaler and retailer. In this type of model, the producer invites the wholesaler, whereas, the wholesaler covers the retailer, while, the retailer also approaches the producer directly.

      In this type of distribution system, there is a low bonding of relationship with the wholesaler. Since there is no geographical distribution of the area, so if the producer is not satisfied with the incoming sales through the wholesaler, he targets any place, even the retailer, bypassing his listed wholesaler’s area. In addition, as the rates of the wholesaler varies with the producer, the producer gets an opportunity to liquidate directly to the retailer on margin basis, leading to break the relationship with the listed wholesaler. Under such conditions, the wholesaler retaliates by dropping the produce and the producer.

      ❖ Merits of Conventional Distribution:

      A simplified process of selling

      Shortest channel to reach the end user

      Sales programming and marketing expenses are reduced

      Direct co-ordination with the customers

      Low expense channel, hence the margin remains high

      ❖ Demerits of Conventional Distribution:

      Loyalty of the dealer is always at risk

      Fluctuating sales figure or no steady growth

      Chances of expansion are less

      Cannot create a brand in any situation

      Margin instability as there is no fixed price

      Unstable geographical expansion

      Instability of production or product line

      Difficult in forecasting sales

      Continuity in hunting or targeting of new dealers

      2.2. Direct Distribution Model: Direct distribution model is prepared or opted by the company who does not feel or is not ready to take a risk, depending on indirect distribution to cater to the market, as there are multiple risk factors and instability in growth and expansion. As the saying goes; no one can take care of your product as you do, or understand the strength and weakness of the product or control the product, until it reaches the end user. In this condition, a program and system is maintained and monitored by updating the feedback it reaches, at every level, while uplifting it at every point and taking care of the product until it becomes a brand.

      Direct distribution tends to be expensive to establish and complicated to control and maintain, as it demands substantial capital investment in a warehouse, logistics, transportation vehicles and driving staff, as managing the complete process through a single network chain becomes complicated to control. After its components are in place, however, a direct channel is likely to be more economical and efficient and gives better connections to the consumer base than the indirect channel.

      ❖ Merits of Direct Distribution:

      Dealer loyalty at the peak

      Customer satisfaction rate is always high

      Each product is uplifted through a similar program

      Price stability and price control remains

      Chances of systematic expansion are very high

      Uniformity and equality throughout the market for every product

      Internal coordination and feedback of the market is monitored

      Creating a brand becomes easy

      Stability of production as per market requirement

      Sales forecasting made easy

      Display and merchandising of the product is done properly followed by the company’s planogram

      Dependency on the indirect dealer is removed

      The assets and assets management becomes easy

      ❖ Demerits of Direct Distribution:

      A complicated process of selling

      Expense of assets and manpower increases

      Difficult to process, if the geographical area is wide spread

      Expense on HR and administration department increases

      Increased expense on training and motivation of all the staff

      The basic network of management on which a master direct distribution channel works is as follows:

      2.2.1. Sales and Marketing: Whatever the product produced and supplied to the channel distributor, the sales and marketing team is the one who is solely responsible for selling the product, placement, liquidation and the caretaker of the respective product into the market.

      The prime responsibility of the sales and marketing team includes combination of the four Ps, along with a proper understanding of the market, competitor awareness, monitoring of the complete sales system and the necessities to be covered for the smooth operation and long standing sales growth.

      The following are the ways of working of the sales and marketing team for success and growth of sales of every product in a continuous manner throughout the market.

      2.2.1. a. Product Knowledge: Product knowledge of the respective product helps in understanding the pros and cons of the same. As we are entering into the market, customers are always updated about a similar product. Before they start questioning you about the product, you should be able to convince them about the product in the form of quality, quantity, price and packaging.

      In every product there are negative and positive sides. Hence, to sell a product you need to win the mind of the customer. All the positive aspects about the product should be reflected in a very short span of time, as the customer is always busy, so he will not

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