The purpose of this article is to understand the various models of distributing products in the FMCG industry.
The term FMCG stands for the “FAST MOVING CONSUMER GOODS” industry.
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1. Items of almost daily usage or frequent usage
2. Easy availability of products
3. Comparatively lower unit prices
4. Frequent purchases by consumers
5. A geographically wide-spread usage of the products
6. Mass usage of the products
In terms of easy availability, in India, FMCG products are available at almost every nook and corner (FMCG items available at small shops, mid-size shops, and at large-format stores and supermarkets).
Examples of FMCG products include chocolates, biscuits, soaps, cosmetics items, packaged milk products, bottled water, stationery items (pens, notebooks etc.)
Owing to the very nature of FMCG products, especially owing to their mass usage, the location where the FMCG products are produced may be geographically very distant from where these are purchased and consumed.
It is pertinent to mention that in FMCG industry, the availability of a brand at a particular retail location may be an important factor in influencing the actual sale of the brand. So, if a consumer asks for a brand X, if the brand X is not available with the retailer at that time, it is possible the customer may settle for brand Y which is available. Hence, for a brand to sell in the market, widespread availabiol9ity is a critical parameter.
In the FMCG industry, there are national level companies, region-level companies, state-level companies and companies which operate across only in specific districts (that is, area-level companies).
1.The product has to be easily available at all locations, where the target customers make their purchases
2.The cost of distribution has to be at lowest possible
3.The partners in the concerned distribution channel should get a reasonable return on their investment
4.Proper methods of inventory control must be used, to prevent excess inventory as well as to prevent stock-outs
1.In which geographic areas id there a demand for the company’s products
2.What is the extent of “pull”/ demand for the company’s products
3.What kind of geographic spread can the company afford, in terms of distribution
4.What kind of margins can it provide to partners of the distribution channel
How profitable is it for the partners in the distribution channel to stock and to distribute the company’s products
Depending on the various distribution models used by FMCG companies, the following types of partners are part of the distribution channel in the FMCG industry;
1.STOCKIST
2.DISTRIBUTOR
3.CARRYING & FORWARDING AGENT
4.DEDALER
5.SUB-DISTRIBUTOIR
6.SUB-DEALER
7.RETAILER
The RETAILER is typically the place from where the end-user / end-customer make the purchase.
Prof Pravin Narang
Assistant Professor
DR V N BRIMS, Thane
Also read : MONEY: A FACTOR OF MOTIVATION, NOT ALWAYS!
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