DISTRIBUTIONDISTRIBUTION

DISTRIBUTIONDISTRIBUTION

Distribution has been defined as how to Distribution has been defined as how to get the product or service to the customer.get the product or service to the customer.

It is one of the four aspects of marketing.a It is one of the four aspects of marketing.a distributor is the middleman between the distributor is the middleman between the manufacturer and the retailer.after a manufacturer and the retailer.after a product is manufactured by a factory,it is product is manufactured by a factory,it is stored in the distributors’s warehouse.the stored in the distributors’s warehouse.the product is then sold to customer. product is then sold to customer.

DISTRIBUTION CHANNELDISTRIBUTION CHANNEL Frequently there may be a chain of intermediariesFrequently there may be a chain of intermediaries,each,each

passing the product down the chain to the next passing the product down the chain to the next organizationorganization before it finally reaches the consumer or before it finally reaches the consumer or end-user. This process is known as the 'distribution end-user. This process is known as the 'distribution chain' or the 'channel.' chain' or the 'channel.'

A number of alternate 'channels' of distribution may be A number of alternate 'channels' of distribution may be available:available:

--Selling direct Selling direct -Mail order (including Internet and telephone sales) -Mail order (including Internet and telephone sales) -Retailer-Retailer -Wholesaler -Wholesaler -Agent (who acts on behalf of the producer) -Agent (who acts on behalf of the producer)

CHANNEL MANAGEMENTCHANNEL MANAGEMENT

Suppliers’s job is to manage all the processes Suppliers’s job is to manage all the processes involved in the distribution chain,until the product involved in the distribution chain,until the product or service arrives with the end-user. This may or service arrives with the end-user. This may involve a number of decisions on the part of the involve a number of decisions on the part of the supplier:supplier:

-Channel membership -Channel membership -Channel motivation-Channel motivation

-Monitoring and managing channels-Monitoring and managing channels

CHANNEL MEMBERSHIPCHANNEL MEMBERSHIP Intensive distributionIntensive distribution - Where the majority of - Where the majority of

resellers stock the `product' (with convenience resellers stock the `product' (with convenience products, for example, and particularly the brand products, for example, and particularly the brand leaders in consumer goods markets) price competition leaders in consumer goods markets) price competition may be evident. may be evident.

Selective distributionSelective distribution - This is the normal pattern - This is the normal pattern (in both consumer and industrial markets) where (in both consumer and industrial markets) where `suitable' resellers stock the product. `suitable' resellers stock the product.

Exclusive distributionExclusive distribution - Only specially selected - Only specially selected resellers (typically only one per geographical area) are resellers (typically only one per geographical area) are allowed to sell the ‘product’.allowed to sell the ‘product’.

CHANNEL MOTIVATIONCHANNEL MOTIVATION

There are many devices for achieving There are many devices for achieving motivation. Perhaps the most usual is motivation. Perhaps the most usual is `bribery': the supplier offers a better `bribery': the supplier offers a better margin, to tempt the owners in the channel margin, to tempt the owners in the channel to push the product rather than its to push the product rather than its competitors; or a competition is offered to competitors; or a competition is offered to the distributors' sales personnel, so that the distributors' sales personnel, so that they are tempted to push the product.they are tempted to push the product.

Monitoring and managing channelsMonitoring and managing channels Activities of distribution chain are Activities of distribution chain are

monitored and managed as many monitored and managed as many organizations use a mix of different organizations use a mix of different channels; in particular,they may channels; in particular,they may complement a direct salesforce,with complement a direct salesforce,with agents, covering the smaller customers agents, covering the smaller customers and prospects.and prospects.

HLL distribution channelHLL distribution channel

HLLHLL India’s Largest Fastest Moving Consumer India’s Largest Fastest Moving Consumer

Goods.Goods.

Need Strong distribution channel to Need Strong distribution channel to support its Extensive Product Line of more support its Extensive Product Line of more than 20.than 20.

Sales Turnover of Rs.11,000 Crores. Sales Turnover of Rs.11,000 Crores.

Objective Objective The corporate objective of HLL is "to meet The corporate objective of HLL is "to meet

the everyday needs of people everywhere". the everyday needs of people everywhere". This is met through an extensive This is met through an extensive distribution system that covers the diverse distribution system that covers the diverse geographical boundaries of the country. geographical boundaries of the country.

Company, almost touching the lives of two Company, almost touching the lives of two out of three Indians with 35 power brands out of three Indians with 35 power brands and strong distribution channel. and strong distribution channel.

Distribution channelDistribution channel Recognized as HLL’s one of the key strength.Recognized as HLL’s one of the key strength. HLL enjoys a formidable distribution network HLL enjoys a formidable distribution network

covering over 3400 distributors and 16 million covering over 3400 distributors and 16 million outlets. outlets.

It Helps to maintain heavy volumes, and hence, fill the shelves It Helps to maintain heavy volumes, and hence, fill the shelves of most outlets. of most outlets.

Distribute products by network of about 7,500 Distribute products by network of about 7,500 redistribution stockiest (RS) covering about one redistribution stockiest (RS) covering about one million retail outlets.million retail outlets.

They Sell to shops in urban areas and to villages accessible They Sell to shops in urban areas and to villages accessible by road and with population of more than 2000.by road and with population of more than 2000.

HLL – Multichannel DSHLL – Multichannel DS

Producer

Consumer Segment2

Retailers Retailers

Distributors

Consumer Segment 1 Consumer Segment 3

Zero – Level ChannelOne Level Channel

Two Level Channel

Urban Distribution channelUrban Distribution channel One is by the One is by the Regular Retail Channel.Regular Retail Channel. The other is through The other is through Direct Selling ChannelDirect Selling Channel in in

the name of Hindustan Lever Network (HLN).the name of Hindustan Lever Network (HLN). It already has about 3.5 lakh consultants - all It already has about 3.5 lakh consultants - all

independent entrepreneurs, trained and guided by independent entrepreneurs, trained and guided by HLN's expert managers. HLN's expert managers.

Spread over 1500 towns and cities, covering 80% of Spread over 1500 towns and cities, covering 80% of the urban population.the urban population.

At the SupermarketsAt the Supermarkets.. Health & Beauty Services.Health & Beauty Services.

Rural Distribution ChannelRural Distribution ChannelIn India, with the total potential of 3,800 In India, with the total potential of 3,800

towns and 627,000 villages. towns and 627,000 villages. Hll distribution network reached 300,000 Hll distribution network reached 300,000

villages.villages.Dilemma was how to extend its network Dilemma was how to extend its network

to the remaining villages in inaccessible to the remaining villages in inaccessible rural areas.rural areas.

Penetrating new markets would be Penetrating new markets would be challenge.challenge.

Rural Distribution ModelRural Distribution Model

Only Motorable villages covered. 25% of rural population serviced.

Operation StreamlineOperation Streamline

One of the HLL’s growth initiatives to One of the HLL’s growth initiatives to penetrate rural markets that could not be penetrate rural markets that could not be reached by vehicle.reached by vehicle.

With the help of local stockiest called “Star With the help of local stockiest called “Star Sellers”, distribution network extended to Sellers”, distribution network extended to villages with fewer than 2,000 people.villages with fewer than 2,000 people.

In turn, Star Sellers sold the brands to In turn, Star Sellers sold the brands to retail outlets. retail outlets.

Rural Distribution Model- Rural Distribution Model- StreamlineStreamline

Motorability not a constrained. 37% of population serviced

Project ShaktiProject Shakti Started in 2001,it targets small villages with population of Started in 2001,it targets small villages with population of

less than 2000 people. less than 2000 people. It aimed to bring down distribution costs in rural market.It aimed to bring down distribution costs in rural market. Save Distribution margin by cutting one layer of Save Distribution margin by cutting one layer of

distribution- The local Distributors.distribution- The local Distributors. It seeks to empower underprivileged rural women by It seeks to empower underprivileged rural women by

providing income-generating opportunities. providing income-generating opportunities. These saleswomen sell HLL products directly to their These saleswomen sell HLL products directly to their

communities.communities. It already has about 25,000 women entrepreneurs. It already has about 25,000 women entrepreneurs. It has already been extended to about 80,000 villages in It has already been extended to about 80,000 villages in

15 states.15 states.

Project ShaktiProject Shakti

Woman entrepreneur selling HLL products entrepreneur selling HLL products

HLL - LogisticsHLL - LogisticsMarketing LogisticsMarketing Logistics – – It involves planning, It involves planning,

implementing and controlling the physical flow of implementing and controlling the physical flow of goods , services and related information from goods , services and related information from point of origin to point of consumption.point of origin to point of consumption.

Major Logistics Functions –Major Logistics Functions – WarehousingWarehousing TransportationTransportation Logistics Information ManagementLogistics Information Management

Contd.Contd. Warehousing – Warehousing –

250 suppliers 250 suppliers 135 owned factories135 owned factories 70 depots or warehouses70 depots or warehouses and over 7,500 stockiest. and over 7,500 stockiest.

Transport –TCI (Transport Corporation of India) provides Transport –TCI (Transport Corporation of India) provides transport facility. Goods are transported by trucks.transport facility. Goods are transported by trucks.

Logistics Information Management –IT system has been Logistics Information Management –IT system has been implemented to supply stocks to RD. Stockiest have implemented to supply stocks to RD. Stockiest have been connected with the company through an Internet-been connected with the company through an Internet-based network, called RSNet, for online interaction on based network, called RSNet, for online interaction on orders, dispatches, information sharing and monitoring. orders, dispatches, information sharing and monitoring.

STYLE SPASTYLE SPA Style Spa, one of the largest furniture chains in Style Spa, one of the largest furniture chains in

India, will go international.India, will go international. It is looking at the markets in the SAARC It is looking at the markets in the SAARC

countries, and plans to open two outlets in countries, and plans to open two outlets in Colombo next year Colombo next year

Style Spa has 85 stores of which 33 are Style Spa has 85 stores of which 33 are company operated and 22 exclusive franchises. company operated and 22 exclusive franchises. This year the company is expanding in the This year the company is expanding in the smaller cities and towns such as Lucknow, smaller cities and towns such as Lucknow, Udaipur, Aurangabad, Nashik, Ahmedabad, Udaipur, Aurangabad, Nashik, Ahmedabad, Hubli and Rajkot. Hubli and Rajkot.

The company plans to open 15 stores in the The company plans to open 15 stores in the current year, of which 12 will be company owned current year, of which 12 will be company owned and the other three company franchisee and the other three company franchisee operated. It has identified 10 locations where the operated. It has identified 10 locations where the stores will open for business by October. stores will open for business by October.

STYLE SPA has recently entered into a STYLE SPA has recently entered into a distribution tie-up with Welspun India and Portico distribution tie-up with Welspun India and Portico New York to market their home furnishing New York to market their home furnishing products through Gautier furniture showrooms in products through Gautier furniture showrooms in India. India.