ROLE OF DISTRIBUTION CHANNEL IN FMCG

Distribution channel (also known as marketing channel)

Distribution (or plac ! nt" is on o# t$ #our asp cts o# !ar% tin&' A (istributor is t$ !i((l !an b t) n t$ !anu#actur r an( r tail r' A#t r a pro(uct is !anu#actur (* it !a+ b )ar $ous ( or s$ipp ( to t$ n ,t c$ lon in t$ suppl+ c$ain* t+picall+ it$ r a (istributor* r tail r or consu! r'

T$ ot$ r t$r

parts o# t$ !ar% tin& !i, ar pro(uct !ana& ! nt* pricin&* an( pro!otion'

Fr -u ntl+ t$ r !a+ b a c$ain o# int r! (iari s* ac$ passin& t$ pro(uct (o)n t$ c$ain to t$ n ,t or&ani.ation* b #or it #inall+ r ac$ s t$ consu! r or n(/us r' T$is proc ss is %no)n as t$ 0(istribution c$ain0 or t$ 0c$ann l'0 Eac$ o# t$ l ! nts in t$ s c$ains )ill $a1 t$ ir o)n sp ci#ic n (s* )$ic$ t$ pro(uc r !ust ta% into account* alon& )it$ t$os o# t$ all/i!portant n(/us r'

Channels
A number of alternate 'channels' of distribution may be available: S llin& (ir ct* suc$ as 1ia !ail or( r* Int rn t an( t l p$on sal s A& nt* )$o t+picall+ s lls (ir ct on b $al# o# t$ pro(uc r Distributor (also call ( )$ol sal r"* )$o s lls to r tail rs R tail r (also call ( ( al r or r s ll r"* )$o s lls to n( custo! rs A(1 rtis ! nt t+picall+ us ( #or consu!ption &oo(s Distribution c$ann ls !a+ not b r strict ( to p$+sical pro(ucts alon ' T$ + !a+ b 2ust as i!portant #or !o1in& a s r1ic #ro! pro(uc r to consu! r in c rtain s ctors* sinc bot$ (ir ct an( in(ir ct c$ann ls !a+ b us (' Hot ls* #or ,a!pl * !a+ s ll t$ ir s r1ic s (t+picall+ roo!s" (ir ctl+ or t$rou&$ tra1 l a& nts* tour op rators* airlin s* tourist boar(s* c ntrali. ( r s r1ation s+st !s* tc' T$ r $a1 also b n so! inno1ations in t$ (istribution o# s r1ic s' For ,a!pl * t$ r $as b n an incr as in #ranc$isin& an( in r ntal s r1ic s / t$ latt r o## rin& an+t$in& #ro! t l 1isions t$rou&$ tools' T$ r $as also b n so! 1i( nc o# s r1ic int &ration* )it$ s r1ic s lin%in& to& t$ r* particularl+ in t$ tra1 l an( touris! s ctors' For ,a!pl * lin%s no) ,ist b t) n airlin s* $ot ls an( car r ntal s r1ic s' In a((ition* t$ r $as b n a si&ni#icant incr as in r tail outl ts #or t$ s r1ic s ctor' Outl ts suc$ as stat a& nci s an( buil(in& soci t+ o##ic s ar cro)(in& out tra(itional &roc rs #ro! !a2or s$oppin& ar as'

Channel members
Distribution c$ann ls can t$us $a1 a nu!b r o# l 1 ls' 3otl r ( #in ( t$ si!pl st l 1 l* t$at o# (ir ct contact )it$ no int r! (iari s in1ol1 (* as t$ 0. ro/l 1 l0 c$ann l' T$ n ,t l 1 l* t$ 0on /l 1 l0 c$ann l* # atur s 2ust on int r! (iar+4 in consu! r &oo(s a r tail r* #or in(ustrial &oo(s a (istributor' In s!all !ar% ts (suc$ as s!all countri s" it is practical to r ac$ t$ )$ol !ar% t usin& 2ust on / an( . ro/l 1 l c$ann ls' In lar& !ar% ts (suc$ as lar& r countri s" a s con( l 1 l* a )$ol sal r #or ,a!pl * is no)

!ainl+ us ( to ,t n( (istribution to t$ lar& nu!b r o# s!all* n i&$bor$oo( r tail rs' In 5apan t$ c$ain o# (istribution is o#t n co!pl , an( #urt$ r l 1 ls ar us (* 1 n #or t$ si!pl st o# consu! r &oo(s' In Ban&la( s$ T l co! Op rators ar usin& (i## r nt C$ains o# Distribution* sp ciall+ 0s con( l 1 l0' In IT an( T l co! in(ustr+ l 1 ls ar na! ( 6ti rs6' A on ti r c$ann l ! ans t$at 1 n(ors IT pro(uct !anu#actur rs (or so#t)ar publis$ rs" )or% (ir ctl+ )it$ t$ ( al rs' A on ti r 7 t)o ti r c$ann l ! ans t$at 1 n(ors )or% (ir ctl+ )it$ ( al rs an( )it$ (istributors )$o s ll to ( al rs'But t$ !ost i!portant is t$ (istributor or )$ol sal r'

The internal market

Man+ o# t$ !ar% tin& principl s an( t c$ni-u s )$ic$ ar appli ( to t$ ,t rnal custo! rs o# an or&ani.ation can b 2ust as ## cti1 l+ appli ( to ac$ subsi(iar+0s* or ac$ ( part! nt0s* 0int rnal0 custo! rs' In so! parts o# c rtain or&ani.ations t$is !a+ in #act b #or!ali. (* as &oo(s ar trans# rr ( b t) n s parat parts o# t$ or&ani.ation at a 8trans# r pric 0' To all int nts an( purpos s* )it$ t$ possibl ,c ption o# t$ pricin& ! c$anis! its l#* t$is proc ss can an( s$oul( b 1i ) ( as a nor!al bu+ r/s ll r r lations$ip' T$ #act t$at t$is is a capti1 !ar% t* r sultin& in a 8!onopol+ pric 0* s$oul( not (iscoura& t$ participants #ro! !plo+in& !ar% tin& t c$ni-u s' L ss ob1ious* but 2ust as practical* is t$ us o# 8!ar% tin&0 b+ s r1ic an( a(!inistrati1 ( part! nts4 to opti!i. t$ ir contribution to t$ ir 8custo! rs0 (t$ r st o# t$ or&ani.ation in & n ral* an( t$os parts o# it )$ic$ ( al (ir ctl+ )it$ t$ ! in particular"' In all o# t$is* t$ l ssons o# t$ non/pro#it or&ani.ations* in ( alin& )it$ t$ ir cli nts* o## r a 1 r+ us #ul parall l'

Channel Decisions
C$ann l strat &+ 9ro(uct (or s r1ic "/ Cost/ Consu! r location

Channel management
T$ c$ann l ( cision is 1 r+ i!portant' In t$ or+ at l ast* t$ r is a #or! o# tra( /o##: t$ cost o# usin& int r! (iari s to ac$i 1 )i( r (istribution is suppos (l+ lo) r' In( (* !ost consu! r &oo(s !anu#actur rs coul( n 1 r 2usti#+ t$ cost o# s llin& (ir ct to t$ ir consu! rs* ,c pt b+ !ail or( r' In practic * i# t$ pro(uc r is lar& nou&$* t$ us o# int r! (iari s (particularl+ at t$ a& nt an( )$ol sal r l 1 l" can so! ti! s cost !or t$an &oin& (ir ct'

Man+ o# t$ t$ or tical ar&u! nts about c$ann ls t$ r #or r 1ol1 aroun( cost' On t$ ot$ r $an(* !ost o# t$ practical ( cisions ar conc rn ( )it$ control o# t$ consu! r' T$ s!all co!pan+ $as no alt rnati1 but to us int r! (iari s* o#t n s 1 ral la+ rs o# t$ !* but lar& co!pani s 0(o0 $a1 t$ c$oic ' Ho) 1 r* !an+ suppli rs s ! to assu! t$at onc t$ ir pro(uct $as b n sol( into t$ c$ann l* into t$ b &innin& o# t$ (istribution c$ain* t$ ir 2ob is #inis$ (' ; t t$at (istribution c$ain is ! r l+ assu!in& a part o# t$ suppli r0s r sponsibilit+4 an(* i# $ $as an+ aspirations to b !ar% t/ori nt (* $is 2ob s$oul( r all+ b ,t n( ( to !ana&in&* alb it 1 r+ in(ir ctl+* all t$ proc ss s in1ol1 ( in t$at c$ain* until t$ pro(uct or s r1ic arri1 s )it$ t$ n(/us r' T$is !a+ in1ol1 a nu!b r o# ( cisions on t$ part o# t$ suppli r: C$ann l ! !b rs$ip C$ann l !oti1ation Monitorin& an( !ana&in& c$ann ls

Channel membership
Int nsi1 (istribution / <$ r t$ !a2orit+ o# r s ll rs stoc% t$ 0pro(uct0 ()it$ con1 ni nc pro(ucts* #or ,a!pl * an( particularl+ t$ bran( l a( rs in consu! r &oo(s !ar% ts" pric co!p tition !a+ b 1i( nt' S l cti1 (istribution / T$is is t$ nor!al patt rn (in bot$ consu! r an( in(ustrial !ar% ts" )$ r 0suitabl 0 r s ll rs stoc% t$ pro(uct' E,clusi1 (istribution / Onl+ sp ciall+ s l ct ( r s ll rs or aut$ori. ( ( al rs (t+picall+ onl+ on p r & o&rap$ical ar a" ar allo) ( to s ll t$ 0pro(uct0' O#t n t$is #or! o# (istribution stipulat s t$ contract ( r s ll rs cannot o## r co!p tin& pro(ucts'

Channel motivation
It is (i##icult nou&$ to !oti1at (ir ct !plo+ s to pro1i( t$ n c ssar+ sal s an( s r1ic support' Moti1atin& t$ o)n rs an( !plo+ s o# t$ in( p n( nt or&ani.ations in a (istribution c$ain r -uir s 1 n &r at r ##ort' T$ r ar !an+ ( 1ic s #or ac$i 1in& suc$ !oti1ation' 9 r$aps t$ !ost usual is 8inc nti1 0: t$ suppli r o## rs a b tt r !ar&in* to t !pt t$ o)n rs in t$ c$ann l to pus$ t$ pro(uct rat$ r t$an its co!p titors4 or a co!p tition is o## r ( to t$ (istributors0 sal s p rsonn l* so t$at t$ + ar t !pt ( to pus$ t$ pro(uct' At t$ ot$ r n( o# t$ sp ctru! is t$ al!ost s+!biotic r lations$ip t$at t$ all too rar suppli r in t$ co!put r #i l( ( 1 lops )it$ its a& nts4 )$ r t$ a& nt0s p rsonn l* support as ) ll as sal s* ar train ( to al!ost t$ sa! stan(ar( as t$ suppli r0s o)n sta##'

onitoring and managing channels

In !uc$ t$ sa! )a+ t$at t$ or&ani.ation0s o)n sal s an( (istribution acti1iti s n ( to b !onitor ( an( !ana& (* so )ill t$os o# t$ (istribution c$ain' In practic * !an+ or&ani.ations us a !i, o# (i## r nt c$ann ls4 in particular* t$ + !a+ co!pl ! nt a (ir ct sal s#orc * callin& on t$ lar& r accounts* )it$ a& nts* co1 rin& t$ s!all r custo! rs an( prosp cts'

!ertical marketing
T$is r lati1 l+ r c nt ( 1 lop! nt int &rat s t$ c$ann l )it$ t$ ori&inal suppli r / pro(uc r* )$ol sal rs an( r tail rs )or%in& in on uni#i ( s+st !' T$is !a+ aris b caus on ! !b r o# t$ c$ain o)ns t$ ot$ r l ! nts (o#t n call ( 8corporat s+st !s int &ration0"4 a suppli r o)nin& its o)n r tail outl ts* t$is b in& 0#or)ar(0 int &ration' It is p r$aps !or li% l+ t$at a r tail r )ill o)n its o)n suppli rs* t$is b in& 0bac%)ar(0 int &ration' (For ,a!pl * MFI* t$ #urnitur r tail r* o)ns H+& na )$ic$ !a% s its %itc$ n an( b (roo! units'" T$ int &ration can also b b+ #ranc$is (suc$ as t$at o## r ( b+ McDonal(0s $a!bur& rs an( B n tton clot$ s" or si!pl co/op ration (in t$ )a+ t$at Mar%s = Sp nc r co/op rat s )it$ its suppli rs"' Alt rnati1 approac$ s ar 0contractual s+st !s0* o#t n l ( b+ a )$ol sal or r tail co/ op rati1 * an( 8a(!inist r ( !ar% tin& s+st !s0 )$ r on ((o!inant" ! !b r o# t$ (istribution c$ain us s its position to co/or(inat t$ ot$ r ! !b rs0 acti1iti s' T$is $as tra(itionall+ b n t$ #or! l ( b+ !anu#actur rs' T$ int ntion o# 1 rtical !ar% tin& is to &i1 all t$os in1ol1 ( (an( particularl+ t$ suppli r at on n(* an( t$ r tail r at t$ ot$ r" 0control0 o1 r t$ (istribution c$ain' T$is r !o1 s on s t o# 1ariabl s #ro! t$ !ar% tin& -uations' Ot$ r r s arc$ in(icat s t$at 1 rtical int &ration is a strat &+ )$ic$ is b st pursu ( at t$ !atur sta& o# t$ !ar% t (or pro(uct"' At arli r sta& s it can actuall+ r (uc pro#its' It is ar&uabl t$at it also (i1 rts att ntion #ro! t$ r al busin ss o# t$ or&ani.ation' Suppli rs rar l+ ,c l in r tail op rations an(* in t$ or+* r tail rs s$oul( #ocus on t$ ir sal s outl ts rat$ r t$an on !anu#acturin& #aciliti s ( Mar%s = Sp nc r* #or ,a!pl * 1 r+ ( lib rat l+ pro1i( s consi( rabl a!ounts o# t c$nical assistanc to its suppli rs* but (o s not o)n t$ !"'

"ori#ontal marketing
A rat$ r l ss #r -u nt ,a!pl o# n ) approac$ s to c$ann ls is )$ r t)o or !or non/ co!p tin& or&ani.ations a&r on a 2oint 1 ntur / a 2oint !ar% tin& op ration / b caus it is b +on( t$ capacit+ o# ac$ in(i1i(ual or&ani.ation alon ' In & n ral* t$is is l ss li% l+ to r 1ol1 aroun( !ar% tin& s+n r&+'

$ C%
&hat are $ast oving Consumer %oods ($ C%)' 9ro(ucts )$ic$ $a1 a -uic% turno1 r* an( r lati1 l+ lo) cost ar %no)n as Fast Mo1in& Consu! r Goo(s (FMCG"' FMCG pro(ucts ar t$os t$at & t r plac ( )it$in a + ar' E,a!pl s o# FMCG & n rall+ inclu( a )i( ran& o# #r -u ntl+ purc$as ( consu! r pro(ucts suc$ as toil tri s* soap* cos! tics* toot$ cl anin& pro(ucts* s$a1in& pro(ucts an( ( t r& nts* as ) ll as ot$ r non/(urabl s suc$ as &lass)ar * bulbs* batt ri s* pap r pro(ucts* an( plastic &oo(s' FMCG !a+ also inclu( p$ar!ac uticals* consu! r l ctronics* pac%a& ( #oo( pro(ucts* so#t (rin%s* tissu pap r* an(

c$ocolat bars' A subs t o# FMCGs ar Fast Mo1in& Consu! r El ctronics )$ic$ inclu( inno1ati1 l ctronic pro(ucts suc$ as !obil p$on s* M9> pla+ rs* (i&ital ca! ras* G9S S+st !s an( Laptops' T$ s ar r plac ( !or #r -u ntl+ t$an ot$ r l ctronic pro(ucts' <$it &oo(s in FMCG r # r to $ous $ol( l ctronic it !s suc$ as R #ri& rators* T'?s* Music S+st !s* tc' In @AAB* t$ Rs' CD*AAA/cror FMCG s &! nt )as on o# t$ #ast &ro)in& in(ustri s in In(ia' Accor(in& to t$ AC Ni ls n In(ia stu(+* t$ in(ustr+ &r ) B'>E in 1alu b t) n @AAC an( @AAB'

"()T*+, *$ $ C% (- (-D(A- C*-T./T

T$rou&$ t$ nin ti s* t$ FMCG !ar% ts &r ) at al!ost FBE p r annu! in 1alu ' Su(( nl+* in @AAA FMCG !ar% t &ro)t$ stall ( an( t$ n ( clin ( #or t$ n ,t #our + ars' T$ rapi( op nin& up o# t$ cono!+ r sult ( in !an+ n ) a1 nu s o# ,p n(itur #or t$ consu! rGs &ro)in& inco! ' A s$arp (rop in int r st rat s #ro! FDE to DE l ( to ,plosi1 ( !an( #or consu! r (urabl s li% )$it &oo(s* t)o )$ l rs an( auto!obil s' Mobil p$on o)n rs$ip an( usa& ,plo( ( (u to its a!a.in& li# st+l an( con1 ni nc b n #its as ) ll as lo) r pric s' Ent rtain! nt* l isur an( tra1 l s ctors also boo! (' T$ lur o# n ) a1 nu s o# ,p n(itur in pro(ucts an( s r1ic s l ( to consu! rs r strictin& t$ ir sp n(in& on FMCG' Consu! rsG (o)n&ra( ( to lo) r pric ( substitut s #ro! $i&$ r -ualit+ bran(s' As a r sult o# t$is s$i#t in sp n(in& patt rns* t$ FMCG !ar% t ( clin ( in 1alu in t$ last #our + ars cr atin& a !a2or c$all n& #or &ro)t$' T$ FMCG s ctor $as $a( a !uc$ b tt r ti! in r c nt !ont$s* )it$ !ar% t s$o)in& si&ns o# broa( r 1i1al' It accounts #or about H'CE o# total !ar% t capitalisation* an( is up* co!par ( to H'FE in D c !b rGAC' T$ situation continu s to b tou&$ in t$ $o! an( p rsonal car s &! nts' Risin& ra) !at rial costs in t$ p tro/bas ( int r! (iari s us ( in s$a!poos an( ( t r& nts $a1 r sult ( in cost pr ssur s an( a co!p titi1 !ar% t ! ans co!pani s $a1 not b n abl to pass on t$ s costs #ull+ to consu! rs t$rou&$ pric $i% s' T$ FMCG s ctor is )itn ssin& ( !an( &ro)t$ a&ain* (ri1 n b+ i!pro1in& r ac$* or&ani. ( r tail an( inno1ati1 c$ann ls* $i&$ r usa& I (ri1 n b+ a##or(abilit+ an( risin& inco! s (ri1in& aspiration l 1 ls' As a r sult* ) s an i!pro1 ! nt in sal s &ro)t$ #or t$ FMCG in(ustr+' Consumer Demographics 0 1uying 2atterns of (ndian Consumers FMCG is on s ctor )$ic$ cat rs to t$ (ail+ an( !or basic n (s o# consu! rs an( t$ r #or (onGt $a1 a c$anc to run out o# #ocus' Fro! oral car pro(ucts to pac% ( #oo( to ( t r& nts* soaps* !os-uito coils* tc* ar t$ 1arious cat &ori s o# pro(ucts t$at FMCG !ar% t !a% s a1ailabl to la%$s o# consu! rs across t$ countr+' Initiall+* In(ian bu+ rs ) r a bit cons r1ati1 partl+ (u to l ss r (isposabl inco! an( partl+ (u to # ) r co!p titi1 an( !or 1ari t+ o# pro(ucts' But sinc al!ost a ( ca( * bran(s li% 9 pso( nt* 9 psi* Co% * Mort in* 1arious ITC bran(s* Dabur pro(ucts* 9 = G pro(ucts* tc* $a1 !a( a st rn att !pts in pro1i(in& $i&$ r -ualit+ pro(ucts )it$ r lati1 l+ co!p titi1 pric s* !a%in& In(ian consu! r n2o+ bran(s )$ic$ ( li1 r $i&$ -ualit+ an( a($ r to &lobal stan(ar(s' T$ pl t$ora o# suc$ bran(s )as t$ro)n op n to In(ian consu! rs (urin& FJJAs )$ic$ )itn ss ( a ris an( &ro)t$ in t$ FMCG in(ustr+' But #ro! @AAA on)ar(s a t$ r $as b n a n &ati1 &ro)t$ o# t$is in(ustr+' T$ r asons ar !ani#ol(4 #irstl+* + st r+ arsG a! niti s start ( b co!in& n c ssiti s li% * !obil p$on s* cars* bran( ( clot$ s* acc ssori s* tc' S con(l+* t$ (isposabl inco! o# a1 ra& In(ian consu! r ros s$arpl+ )it$in t$ past B + ar an( #inall+* a1ailabilit+ o#

1arious #inancial ai( s !a( 1 r+ r asonabl an( ,p nsi1 purc$as * as+ t$ r b+ &i1in& t$ In(ian consu! rs an unli!it ( ,posur to ,p ri nc t$ sa! ' But sinc D c !b rGAC* t$ sal s o# 1arious bran(s b lon&in& to % + pla+ rs an( t$ o1 rall FMCG in(ustr+ p r#or!anc $a1 pic% ( up an( t$ int ns sal s pro!otional ##orts* cut t$roat co!p titi1 strat &i s* stron& r (istributional ##orts $a1 $ lp ( 1arious bran(s p n trat ( p r into t$ !ar% ts an( incr as ( sal s' To(a+* rural In(ian consu! rs !ar% t $as b+ #ar b co! t$ $i&$ st r 1 nu & n rator #or !an+ o# t$ FMCG pro(uct co!pani s an( a1ailabilit+ o# a )i( 1ari t+ o# ran& $as allo) ( to(a+Gs In(ian consu! r to anal+. an( 2u(& ac$ pro(uct accurat l+ an( !a% an i( al purc$as ( cision' echanics of Distribution Channels of )ector T$ suppl+ c$ain o# pro(ucts in t$ FMCG !ar% t in In(ia is on o# t$ lon& st suppl+ c$ains an in(ustr+ coul( r all+ $a1 ' T$ r ar as !an+ as B l 1 ls o# int r! (iari s in1ol1 ( in t$ ntir suppl+ c$ain t$rou&$ )$ic$ a pro(uct pass s b #or r ac$in& t$ n( consu! r' <$at $as b n obs r1 ( is t$at 1 n t$ou&$ t$ s FMCG co!pani s ar bi& !ultinationals an( In(ian but #ac a !a2or c$all n& o# !a%in& t$ ir pro(ucts a1ailabl in t$ !ar% t in t$ ri&$t -uantiti s an( in t$ ri&$t ti! ' T$is is si!pl+ b caus t$ s co!pani s (onGt r all+ $a1 a )i( n t)or% o# sal s a& nts an( ot$ r #orc )$ic$ is r -uir ( an( is i( al #or cat rin& t$ ir pro(ucts to t$ !ar% ts' T$is asp ct is ta% n o1 r b+ (istributors* )$ol sal rs an( r tail r )$os !ar&ins on t$ s pro(ucts actuall+ (oubl t$ pric o# t$ s pro(ucts )$ n a #inal consu! r bu+s it' T$ !ar&ins % pt b+ t$ s int r! (iari s ran& #ro! @E to BE' T$ pro(ucts in t$is in(ustr+ ar transport ( #ro! !anu#acturin& units 1ia c = # a& nci s or )ar $ous to (istributors )$o #urt$ r s ll t$ sa! to )$ol sal rs or stoc%i st )$o #inall+ s ll it to t$ r tail rs in t$ !ar% t' T$ s pro(ucts ar transport ( it$ r 1ia roa()a+s or rail)a+s )it$in t$ (o! stic !ar% ts an( nor!all+ (onGt ta% !or t$an a ) % to r ac$ t$ r tail rs' FMCG pro(ucts ar nor!all+ a $i&$ 1olu! ball &a! an( pro(ucts $a1 to ss ntiall+ b a1ailabl in t$ !ar% t at all &i1 n points o# ti! an( at all &i1 n points o# purc$as an( t$ r #or t$ (istribution acti1iti s ar $i&$l+ 1olatil an( (+na!ic' T$ suppl+ o# pro(ucts ta% s plac 1irtuall+ on a (ail+ basis in #i, ( -uotas or ot$ r)is * to r tail rs as p r t$ ir r -uisitions an( t$ anticipation o# ( !an( an( t$ p r#or!anc o# pro(ucts in t$ r c nt past' All suc$ crit ria ar ta% n into consi( ration b #or t$ -uantu! o# pro(ucts b in& (ispatc$ ( to t$ n ,t l 1 l o# int r! (iar+' Sinc itGs a 1olu! &a! * !anu#actur rs !a% all possibl ##orts to boost sal s an( pro!ot t$ ir (istributors to arn !or an( !or or( rs #ro! t$ r tail rs an( )$ol sal rs' A clos c$ c% is !aintain ( on t$ #lo) o# t$ pro(ucts on a (ail+* ) %l+* #ortni&$tl+ an( !ont$l+ basis to ( t r!in t$ tr n( in t$ busin ss an( #lo) o# pro(ucts an( consu!ption' T$is acti1it+ also $ lps to #in( out (ra)bac%s o# t$ (istribution s+st !* i# an+* an( r cti#+ t$ ! )it$in ti! '

3ist of $ C% Companies in (ndia A

ADF Foo(s Lt( A&ro Dutc$ In(s' Lt( A&ro T c$ Foo(s Lt( A2anta So+a Lt( A!ar R ! (i s Lt( Ani% In(ustri s Lt( ANS Lt( Arcuttipor T a Co!pan+ Lt( Assa! Co!pan+ In(ia Lt(' A?T Natural 9ro(ucts Lt(

1
Ba2a2 Hin(ust$an Lt(' Balra!pur C$ini Mills Lt(' Ba!bino A&ro In(s' Lt( BCL In(ustri s = In#rastructur s LtD B +u O1 rs as Lt( Bio <$it &ol( Far!s Lt( Britannia Britannia In(ustri s Lt(

C
Ca!son Bio T c$nolo&i s Lt( CCL 9ro(ucts (In(ia" Lt(' C$a!an Lal S tia E,ports Lt( C$or(ia Foo( 9ro(ucts Lt( Col&at /9al!oli1 (In(ia" Lt(

D
Dabur In(ia Lt( Dars$an Oils Lt( DCM S$rira! In(s' Lt( DFM Foo(s Lt( D$a!pur Su&ar Mills Lt(' D$a!pur Sp cialt+ Su&ars Lt( DH9 In(ia Lt(' D$uns ri T a = In(s' Lt( Diana T a Co!pan+ Lt( Doll , In(ustri s Lt(

.
EID/9arr+ (In(ia" Lt(' E!a!i Lt( E!p Distill ri s Lt( E!p Su&ars = C$ !icals Lt(' En r&+ 9ro(ucts (In(ia" Lt('

$
Fl , Foo(s Lt( Fr s$trop Fruits Lt(

%
Ga+atri Su&ars Lt( Gla,oS!it$3lin Consu! r H alt$car Lt( GMR In(ustri s Lt( Go(#r + 9$illips In(ia Li!it ( Go(r 2 Consu! r 9ro(ucts Li!it ( Go%ul R #oils an( Sol1 nt Lt( Goo(ric% Group Lt( GRM O1 rs as Lt( Gu2arat A!bu2a E,ports Lt( Gu2arat A-ua In(s' Lt(

"
Harrisons Mala+ala! Lt( Hatsun A&ro 9ro(ucts Lt( H n% l In(ia Lt( H rita& Foo(s (In(ia" Lt( Hilloc% A&ro Foo(s (In(ia" Lt( Hi!al+a Int rnational Lt( Hin( In(ustri s Lt( Hin(ustan Unil 1 r Li!it (

(
IB In#ot c$ Ent rpris s Lt( In(a& R staurants an( L isur Lt( In(ian E,tractions Lt( In(ian Sucros Lt( In(o Biot c$ Foo(s Lt( ITC Li!it (

4
5a+ S$r T a = In(s' Lt( 5a+ant A&ro/Or&anics Lt( 5 +por Su&ar Co!pan+ Lt(' 53 Su&ar Lt( 5oon%toll T a = In(ustri s Lt( 5?L A&ro In(ustri s Lt(

5
3as$ipur Su&ar Mills Lt(' 3o$inoor Foo(s Lt( 3ot$ari 9ro(ucts Lt(

3RBL Lt( 3SE Lt(

3
Lon&1i ) T a Co!pan+ Lt( Lon&1i ) T a Co!pan+ Lt( Lott In(ia Corpn' Lt(' Lotus C$ocolat Co!pan+ Lt(

Ma($ur In(ustri s Lt( Ma($usu(an In(ustri s Lt( Ma$aan Foo(s Lt( Marico Lt( Ma)ana Su&ars Lt(' KM r& (L Mi$i2a! ?anaspati Lt( Mo( rn Dairi s Lt( Mo$an M a%in Lt( Mon s$i A&ro In(ustri s Lt( Mount E1 r st Min ral <at r Lt( Mull r = 9$ipps (In(ia" Lt(' Murli In(ustri s Li!it (

Narain&ar$ Su&ar Mills Lt( Natra2 9rot ins Lt( NE9C A&ro Foo(s Lt( N stl In(ia Lt( Ni22 r A&ro Foo(s Lt( Nir!a Lt(

2
9icca(il+ A&ro In(s' Lt( 9ion r A&ro E,tracts Lt( 9onni Su&ars (Ero( " Lt( 9oona Dal = Oil In(s' Lt( 9ri! In(ustri s Lt( 9roct r = Ga!bl H+&i n an( H alt$ Car Li!it ( 9ru( ntial Su&ar Corpn' Lt(

+
Ra(ico 3$aitan Li!it ( Ra2s$r Su&ars = C$ !icals Lt( Raso+a 9rot ins Lt(' Rattan ?anaspati Lt(

R i A&ro Lt( Ri1 r(al Foo(s Lt( RT E,ports Lt( RTCL Lt( Ruc$i So+a In(s' Lt(

)
Saboo So(iu! C$loro Lt( Sa!pr Nutritions Lt( San)aria A&ro Oils Lt( SBEC Su&ar Lt( Si!ran Far!s Lt( Sir S$a(i Lal Ent rpris s Lt( Sita S$r Foo( 9ro(ucts Lt( S3M E&& 9ro(ucts E,port (In(ia" Lt( Sp ctru! Foo(s Lt( Srini1asa Hatc$ ri s Lt( Sunil A&ro Foo(s Lt( Sup r Ba% rs (In(ia" Lt(

T
T=I Global Lt( Tarai Foo(s Lt( Tast+ Bit Eatabl s Lt( Tata Co## Lt( Tata T a Li!it ( T !ptation Foo(s Lt( T rai T a Co!pan+ Lt( T .por T a Co!pan+ Lt( Tri1 ni En&in rin& = In(s' Lt( T+roon T a Co!pan+ Lt(

6
U&ar Su&ar <or%s Lt( U!an& Dairi s Lt( Uni-u Or&anics Lt( Unit ( Br ) ri s Li!it ( Unit ( Spirits Li!it ( Upp r Gan& s Su&ar = In(s' Lt(

!
?a(ilal Ent rpris s Lt( ? n%+0S (In(ia" Lt( ?i2a+ Sol1 , Lt( ?i!al Oil = Foo(s Lt(

?ol&a Air T c$nics Lt('

&
< i%#i l( 9ro(ucts Co!pan+ In(ia 9ri1at Li!it ( < ll)in In(ustr+ Lt('

7
Mico! El ctronic S curit+ S+st !s Lt(' M+(us < lln ss Lt(

T$ co!pani s ! ntion ( in .8hibit (* ar t$ l a( rs in t$ ir r sp cti1 s ctors' T$ p rsonal car cat &or+ $as t$ lar& st nu!b r o# bran(s* i' '* @F* inclusi1 o# Lu,* Li# buo+* Fair an( Lo1 l+* ?ic%s* an( 9on(s' T$ r ar FF HLL bran(s in t$ @F* a&&r &atin& Rs' >*NJJ cror or BCE o# t$ p rsonal car cat &or+' Ci&ar tt s account #or FNE o# t$ top FAA FMCG sal s* an( 2ust b lo) t$ p rsonal car cat &or+' ITC alon accounts #or HAE 1olu! !ar% t s$ar an( NAE b+ 1alu o# all #ilt r ci&ar tt s in In(ia' T$ #oo(s cat &or+ in FMCG is &ainin& popularit+ )it$ a s)in& o# launc$ s b+ HLL* ITC* Go(r 2* an( ot$ rs' T$is cat &or+ $as FD !a2or bran(s* a&&r &atin& Rs' C*H>N cror ' N stl an( A!ul slu& it out in t$ po)( rs s &! nt' T$ #oo( cat &or+ $as also s n inno1ations li% so#ti s in ic cr a!s* c$apattis b+ HLL* r a(+ to at ric b+ HLL an( pi..as b+ bot$ GCMMF an( Go(r 2 9illsbur+' T$is cat &or+ s !s to $a1 #ast r ( 1 lop! nt t$an t$ sta&natin& p rsonal car cat &or+' A!ul* In(ia0s lar& st #oo(s co!pan+* $as a &oo( pr s nc in t$ #oo( cat &or+ )it$ its ic /cr a!s* cur(* !il%* butt r* c$ s * an( so on' Britannia also ran%s in t$ top FAA FMCG bran(s* (o!inat s t$ biscuits cat &or+ an( $as launc$ ( a s ri s o# pro(ucts at 1arious pric s' In t$ $ous $ol( car cat &or+ (li% !os-uito r p ll nts"* Go(r 2 an( R c%itt ar t)o pla+ rs' Goo(%ni&$t #ro! Go(r 2* is )ort$ abo1 Rs @FN cror * #ollo) ( b+ R c%itt0s Mort in at Rs FCJ cror ' In t$ s$a!poo cat &or+* HLL0s Clinic an( Sunsil% !a% it to t$ top FAA* alt$ou&$ 9=G0s H a( an( S$oul( rs an( 9ant n ar also tr+in& $ar( to b position ( on top' Clinic is n arl+ (oubl t$ si. o# Sunsil%' Dabur is a!on& t$ top #i1 FMCG co!pani s in In(ia an( is a $ rbal sp cialist' <it$ a turno1 r o# Rs' FJ billion (appro,' USO C@A !illion" in @AAB/@AAH* Dabur $as bran(s li% Dabur A!la* Dabur C$+a)anpras$* ?ati%a* Ha2!ola an( R al' Asian 9aints is n2o+in& a #or!i(abl pr s nc in t$ In(ian sub/contin nt* Sout$ ast Asia* Far East* Mi((l East* Sout$ 9aci#ic* Caribb an* A#rica an( Europ ' Asian 9aints is In(ia0s lar& st paint co!pan+* )it$ a turno1 r o# Rs'@@'H billion (aroun( USD BF> !illion"' Forb s Global !a&a.in * USA* ran% ( Asian 9aints a!on& t$ @AA B st S!all Co!pani s in t$ <orl( Ca(bur+ In(ia is t$ !ar% t l a( r in t$ c$ocolat con# ction r+ !ar% t )it$ a NAE !ar% t s$ar an( is ran% ( nu!b r t)o in t$ total #oo( (rin%s !ar% t' Its popular bran(s inclu( Ca(bur+0s Dair+ Mil%* B Star* Eclairs* an( G !s' T$ Rs'FB'H billion (USD >DA Million" Marico is a l a(in& In(ian &roup in consu! r pro(ucts an( s r1ic s in t$ Global B aut+ an( < lln ss spac '

*utlook
T$ In(ian !ar% t is so 1ast t$at an+t$in& an( 1 r+t$in& can b !ar% t ( $ r ' T$is is )$at &i1 s t$ FMCG s ctor an i!! ns &ro)t$ prosp cts' !or an( !or co!pani s ar nt rin& t$is ! r&in& s ctor )it$ b tt r pro(ucts' soon r or lat r can(+ !ar% t )ill also b associat ( )it$ FMCG s ctor as M risant* t$ OCAA/!illion US/bas ( tabl s) t n r !a% r* plans to nt r t$ su&ar/#r con# ction r+ !ar% t in In(ia' T$ r is a $u& &ro)t$ pot ntial #or all t$ FMCG co!pani s as t$ p r capita consu!ption o# al!ost all pro(ucts in t$ countr+ is a!on&st t$ lo) st in t$ )orl(' A&ain t$ ( !an( or prosp ct coul( b incr as ( #urt$ r i# t$ s co!pani s can c$an& t$ consu! r0s !in(s t an( o## r n ) & n ration pro(ucts' Earli r* In(ian consu! rs ) r usin& non/bran( ( appar l* but to(a+* clot$ s o# (i## r nt bran(s ar a1ailabl an( t$ sa! consu! rs ar )illin& to pa+ !or #or bran( ( -ualit+ clot$ s' It0s t$ -ualit+* pro!otion an( inno1ation o# pro(ucts* )$ic$ can (ri1 !an+ s ctors'

"*& D()T+(16T(*- C"A--.3 23A,(-% A +*3. (- $ C% ).CT*+'

A4*+

T$ #ast !o1in& consu! r &oo(s (FMCG" in(ustr+ is pos ( to &ro) (ra!aticall+' To l 1 ra& opportuniti s* FMCG !anu#actur rs an( r tail rs )ill $a1 to ( 1 lop an( i!pl ! nt ( lib rat strat &i s #or &ainin& !ar% t acc ss' T$is pap r pro1i( s an in/( pt$ loo% at t$ strat &ic rol o# (istribution c$ann ls in t$ FMCG in(ustr+' Sp ci#icall+* it sur1 +s t$ stat o# curr nt (istribution c$ann ls in In(ia an( i( nti#i s #our arc$ t+p s t$at FMCG #ir!s can us as a startin& point to ( 1 lop t$ ir (istribution strat &+' <it$ a population in ,c ss o# F billion an( curr nt annual GD9 &ro)t$ o# JE (?i tor an( T$o!pson @AAN"* In(ia is a !a2or pla+ r in t$ )orl( cono!+' Not surprisin&l+* b+ @ABA t$ countr+ is pro2 ct ( to b co! t$ t$ir( lar& st cono!+ a#t r C$ina an( t$ Unit ( Stat s (Ha)%s)ort$ @AAH"' In(ia0s cono!ic pro) ss is b in& (ri1 n b+ t$ purc$asin& po) r o# a bur& onin& !i((l class as ) alt$ st a(il+ tric%l s (o)n to t$ botto! o# t$ cono!ic p+ra!i(' Gi1 n t$is bris% &ro)t$* (o! stic in(ustri s ar in a rac a&ainst ti! to ra!p up capacit+* incr as pro(uction* an( ac$i 1 !ar% t acc ss 1ia c$ann ls o# (istribution' On s ctor t$at is ,p ct ( to b ar t$ brunt o# t$is ( !an( is t$ #ast !o1in& consu! r &oo(s (FMCG" in(ustr+ )it$ r tail sal s ,p ct ( to top OCA billion b+ @AFB (In(ia Bran( E-uit+ Foun(ation @AAD"' FMCG0s nco!pass a )i( ran& o# pro(ucts suc$ as toil tri s* soap* cos! tics* toot$past * s$a1in& cr a!* an( ( t r& nts (Coult$art @AAH"' Multinationals )it$ a si&ni#icant FMCG pr s nc in In(ia ar Unil 1 r* 9roct r an( Ga!bl * N stl * an( Ca(bur+' D spit its pot ntial* t$ FMCG in(ustr+ #ac s s 1 ral si&ni#icant !ar% tin& constraints' First* !anu#actur rs an( r tail rs $a1 to &rappl )it$ #ra&! nt ( !ar% ts an( a pl t$ora o# c$ann l #or!s in a constant stat o# #lu,' In particular* nu! rous str t/si( 1 n(ors* $a)% rs* an( rou&$l+ F@ !illion unr &ulat ( n i&$bor$oo( !o!/ an(/pop or %irana stor s cr at stron& institutional #orc s t$at cannot b i&nor (' S con(* #r -u nt r &ulator+ c$an& s a## ct c$ann l structur an( ,ac rbat a(aptation c$all n& s' For ,a!pl * in @AAH t$ &o1 rn! nt allo) ( (ir ct #or i&n ntr+ b+ sin&l bran( r tail rs (La%s$!an @AAN"' Cons -u ntl+* #ir!s sca!p r ( #or upscal r tail spac in a $+p rco!p titi1 r al stat !ar% t )$il (o! stic !anu#actur rs #ac ( a !ultitu( o# c$all n& s in t$ ar as o# n ) pro(uct intro(uction* lin str tc$in&* an( bran(in&' Gi1 n t$ i!portanc o# (istribution c$ann ls to t$ In(ian cono!+* on )oul( ,p ct a consi( rabl bo(+ o# r l 1ant aca( !ic r s arc$ to b r a(il+ a1ailabl ' Ho) 1 r* a car #ul appraisal o# ,tant r s arc$ b li s t$is ,p ctation' <$il In(ia $as &arn r ( !uc$ att ntion* t$ #ocus $as pri!aril+ b n on & n ral topics p rtainin& to t$ socio/ cono!ic* political* an( busin ss n1iron! nts (Basu @AAD4 3$anna @AAD4 ?i tor an( T$o!pson

@AAN"' In r c nt + ars* t$ !p$asis $as s$i#t ( to inclu( r s arc$ on ot$ r topics li% ntr+ !o( s (5o$nson an( T llis @AAD"* an( outsourcin& (Mars$all @AA@"' Ho) 1 r* t$ r r !ains a paucit+ o# s+st !atic )or% on t$ i!pact o# (istribution on t$ In(ian cono!+ in & n ral an( t$ FMCG in(ustr+ in particular' T$is stu(+ att !pts to bri(& t$ &ap in our un( rstan(in& o# FMCG (istribution c$ann ls in In(ia'

A-A3,)() 0 .!A36AT(*- *$ D()T+(16T(*C"A--.3) (- $ C% ).CT*+:

T$ suppl+ c$ain o# pro(ucts in t$ FMCG !ar% t in In(ia is on o# t$ lon& st suppl+ c$ains an in(ustr+ coul( r all+ $a1 ' T$ r ar as !an+ as B l 1 ls o# int r! (iari s in1ol1 ( in t$ ntir suppl+ c$ain t$rou&$ )$ic$ a pro(uct pass s b #or r ac$in& t$ n( consu! r' <$at $as b n obs r1 ( is t$at 1 n t$ou&$ t$ s FMCG co!pani s ar bi& !ultinationals an( In(ian but #ac a !a2or c$all n& o# !a%in& t$ ir pro(ucts a1ailabl in t$ !ar% t in t$ ri&$t -uantiti s an( in t$ ri&$t ti! ' T$is is si!pl+ b caus t$ s co!pani s (onGt r all+ $a1 a )i( n t)or% o# sal s a& nts an( ot$ r #orc )$ic$ is r -uir ( an( is i( al #or cat rin& t$ ir pro(ucts to t$ !ar% ts' T$is asp ct is ta% n o1 r b+ (istributors* )$ol sal rs an( r tail r )$os !ar&ins on t$ s pro(ucts actuall+ (oubl t$ pric o# t$ s pro(ucts )$ n a #inal consu! r bu+s it' T$ pro(ucts in t$is in(ustr+ ar transport ( #ro! !anu#acturin& units 1ia c=# a& nci s or )ar $ous to (istributors )$o #urt$ r s ll t$ sa! to )$ol sal rs or stoc%i st )$o #inall+ s ll it to t$ r tail rs in t$ !ar% t' T$ s pro(ucts ar transport ( it$ r 1ia roa()a+s or rail)a+s )it$in t$ (o! stic !ar% ts an( nor!all+ (onGt ta% !or t$an a ) % to r ac$ t$ r tail rs' FMCG pro(ucts ar nor!all+ a $i&$ 1olu! an( pro(ucts $a1 to ss ntiall+ b a1ailabl in t$ !ar% t at all &i1 n points o# ti! an( at all &i1 n points o# purc$as an( t$ r #or t$ (istribution acti1iti s ar $i&$l+ 1olatil an( (+na!ic' T$ suppl+ o# pro(ucts ta% s plac 1irtuall+ on a (ail+ basis in #i, ( -uotas or ot$ r)is * to r tail rs as p r t$ ir r -uisitions an( t$ ,p ctation o# ( !an( an( t$ p r#or!anc o# pro(ucts in t$ r c nt past' All suc$ crit ria ar ta% n into consi( ration b #or t$ -uantu! o# pro(ucts b in& (ispatc$ ( to t$ n ,t l 1 l o# int r! (iar+' Sinc itGs a 1olu! &a! * !anu#actur rs !a% all possibl ##orts to boost sal s an( pro!ot t$ ir (istributors to arn !or an( !or or( rs #ro! t$ r tail rs an( )$ol sal rs' T$is acti1it+ also $ lps in #in(in& out (ra)bac%s o# t$ (istribution s+st !' R (isco1 rin& o# (istribution ! ans r /( si&nin& o# (istribution proc ss in a b tt r )a+' As t$ !ar% t &ro)s n ( #or ##ici nc+ an( 1iabilit+ incr as s' Gi1 n an ,istin& (istribution proc ss o# a pro(uct* t$ n ( to r (isco1 r it in /tailin& )a+ )oul( l a( to !an N ( o# /tailin& P <$at )oul( $app n to curr nt (istribution proc ss 'B n #it a!on& ,istin& (istribution or /tailin& T$ n ( #or /tailin& is to pro1i( b tt r ntrQ to custo! r alon& )it$ t$ instant or( r plac ! nt an( con1 ni nc #or t$ sa! ' Tra(itional (istribution proc ss can 1 n ,ist a#t r r (isco1 rin&' as an alt rnati1 bot$ t$ (istribution !o( l )oul( ,ist in t$ pro(uct !ar% t a((in& to $i&$ r sal b+ co!pan+'

Traditional Distribution
Tra(itional (istribution proc ss nor!all+ consists o# !anu#actur r* )$ol sal r* an( r tail r R ac$in& to)ar(s #inal consu! rs' Suc$ t+p o# (istribution )as ss ntial (u to lac% o# T c$nolo&+ * b tt r conn cti1it+ an( )i( r ac$' <it$ t$ incr asin& consu! r bas t$ n ( #or / tailin& starts & n ratin& !or inco! to t$ or&ani.ation'

Manu#actur r

<$ol sal r

R tail

Consu! rs

T$ r ar c rtain a(1anta& s in Tra(itional (istribution

R (uction in s tup cost as co!pan+ can us t$ r tail rs to s ll t$ pro(uct' Un( rstan(in& custo! r ( !an( an( b $a1ior in a b tt r )a+ )it$ t$ $ lp o# r tail r' Eas+ acc ss to rural ar as )it$ t$ $ lp o# s!all r tail rs locat ( t$ r ' Consu! rs $a1 as+ a1ailabilit+ o# pro(uct )it$ t$ $ lp o# r tail rs'

.9Tailing
E/tailin& ! ans s llin& o# &oo(s an( s r1ic t$rou&$ onlin proc ss )it$ t$ us o# int rn t' ItGs an a(1anc ( 1 rsion o# (istribution' E/tailin& basicall+ ( als )it$ r tailin& t$at ta% s plac on int rn t E&4 D ll' It succ ( ( succ ss #ull+ in on lin (istribution c$ann l' odel of .9Tailing: Manu#actur r Int rn t Consu! r

T$ r ar !an+ a(1anta& s in E/ tailin&' An /tailin& (o s not $a1 to )ait #or custo! rs b caus it 1irtuall+ op rat s &loball+'
Co!pani s $a1 cost l a( rs$ip )it$ t$ li!ination o# !i((l ! n'

9ro(ucts can b or( r ( all/roun( t$ cloc%' C$anc s o# pro(uct s$orta& ar !ini!i. ('

In t$ curr nt sc nario )$ r t$ !ar% t is &ro)in& an( )orl( is s$rin%in& (u to b tt r conn cti1it+* n ( o# /tailin& is $i&$l+ loo% ( upon' T$ r is $u& pot ntial in t$ )orl( !ar% t as t$ sp n(in& o# consu! r is incr asin& <HAT IS A DISTRIBUTION CHANNELR T$ rout b+ )$ic$ a pro(uct or s r1ic is !o1 ( #ro! a pro(uc r or suppli r to custo! rs' A (istribution c$ann l usuall+ consists o# a c$ain o# int r! (iari s* inclu(in& )$ol sal rs* r tail rs* an( (istributors* t$at is ( si&n ( to transport &oo(s #ro! t$ point o# pro(uction to t$ point o# consu!ption in t$ !ost ##ici nt )a+' Complicated )uccess $actors for distribution: T$ (istribution strat &+ also n (s t$ support an( ncoura& ! nt o# top !ana& ! nt to succ ( So! o# t$ CSFs coul( b : Cl ar* transpar nt an( una!bi&uous polic+ an( proc (ur s$oul(

r -uir o# S rious co!!it! nt o# t$ c$ann l partn rs

Fairn ss in ( alin&s Cl arl+ ( #in ( custo! r s r1ic polic+ Hi&$ l 1 l o# int &rit+ E-uitabl (istribution at ti! s o# s$orta& Ti! l+ co!p nsation c$ann l partn rs

Channel functions:

In#or!ation &at$ rin& Consu! r !oti1ation Bar&ainin& )it$ suppli rs 9lacin& or( rs Financin& In1 ntor+ !ana& ! nt Ris% b arin& A#t r sal s support Financial support

Distribution Channels
Distribution c$ann ls s$oul( ta% car o# t$ #ollo)in& 'discrepancies:

Spatial T !poral Discr panc+ Br a%in& bul% Assort! nt

)patial
In t$is c$ann l s+st ! $ lps r (uc t$ (istanc b t) n t$ pro(uc r an( t$ consu! r o# $is pro(ucts' Consu! rs ar spott ( Ha1 to b r ac$ ( cost ## cti1 l+' E,a!pl : co!pani s pro(uc pro(ucts in on location 1 n #or &lobal n (s' MICO !a% s #u l in2 ction -uip! nt* spar% plu&s tc in (i## r nt plants but its ( al r )ill s ll t$ ntir pro(ucts'

Temporal Discrepancy
T$ c$ann l s+st ! $ lps in sp (in& up in ! tin& t$ r -uir ! nt o# t$ consu! rs Ti! )$ n t$ pro(uct is !a( an( )$ n it is consu! ( it is (i## r nt' .8ample: Maruti plant in Gor&on / cars an( spar s ar a1ailabl )$ n t$ consu! r )ants

1reaking 1ulk
T$ c$ann l s+st ! r (uc s lar& -uantiti s into consu! r acc ptabl lot si. s 9ro(uction $as to b in lar& -uantiti s to b n #it #ro! cono!i s o# scal Consu!ption is n c ssaril+ in s!all lot si. s ' E&4 In(ia is ulti!at ,a!pl in br a%in& bul% +ou can bu+ on ci&ar tt * on Annacian'

-eed for Assortment

T$ c$ann l s+st ! $ lps a&&r &at a ran& o# pro(ucts #or t$ b n #it o# t$ consu! r / t coul( b !a( b+ on co!pan+ or s 1 ral o# t$ !' For t$ sa! pro(uct* it coul( b a 1ari t+ o# bran(s an( pac%a& si. s'

Channel $lows :
$orward flow / co!pan+ to its custo! rs / &oo(s an( s r1ic s * pro(ucts* 1ackward flow / custo! rs to t$ co!pan+ I pa+! nt #or t$ &oo(s' R turn ( &oo(s' $lows both ways / in#or!ation

Channel 3evels:
7ero level / I# t$ pro(uct or s r1ic is pro1i( ( to t$ n( us r (ir ctl+ b+ t$ co!pan+' Us ( !ostl+ b+ co!pani s ( li1 rin& s r1ic li% $ alt$* (ucation* ban%in& (also %no)n as s r1ic c$ann ls" *ne level / consists o# on int r! (iar+' Two level / consists o# t)o int r! (iari s an( is t$ !ost co!!on #or FMCG pro(ucts'

arketing channel system:

;: !ertical <: "ori#ontal =: ulti channel

;: !ertical

arketing system:

?arious parti s li% pro(uc rs* )$ol sal rs an( r tail rs act as uni#i ( s+st ! to a1oi( con#licts' I!pro1 s op ratin& ##ici nc+ an( !ar% tin& ## cti1 n ss'

>t+p s Corporat

 A(!inistrat ( Contractual

;: "ori#ontal:
T)o or !or unr lat ( co!pani s 2oin to& t$ r to pool r sourc s an( ,ploit an ! r&in& !ar% t opportunit+ E&: R tail out l ts in p trol bun%s Co## (a+ outl ts in airports

ulti channel Distribution:

6sed in situations where Sa! pro(uct but (i## r nt !ar% t s &! nts Si. o# bu+ rs 1ari s G o&rap$ic conc ntration o# pot ntial consu! rs 1ari s R ac$ is (i##icult .8pectations from channel: ?ari t+ an( assort! nt at on location Bul% br a%in& Clos to custo! r location Sp ( o# D li1 r+ A((itional s r1ic s

Distribution organi#ation $unctions:

9ri!ar+ ai!: ( t r!in )$o )ill (o )$at Ma2or D cision points' E,t nt o# co!pan+ support an( outsourcin& to b ( ci( ( Bu(& t #or t$ cost o# t$ (istribution ##ort

S l ct suitabl c$ann l partn rs / C=FAs* an( (istributors S ttin& cl ar ob>ectives #or t$ partn rs A&r on l 1 l o# #inancial co!!it! nts b+ t$ c$ann l partn rs'

T,2.) *$ (-T.+ .D(A+(.)

T$ r is a 1ari t+ o# int r! (iari s t$at !a+ & t in1ol1 ( b #or a pro(uct & ts #ro! t$ ori&inal pro(uc r to t$ #inal us r* t$ + ar +etailers: R tail rs op rat outl ts t$at tra( (ir ctl+ )it$ $ous $ol( custo! rs' R tail rs can b classi#i ( in s 1 ral )a+s: T+p o# &oo(s b in& sol(( '&' clot$ s* &roc r+* #urnitur " T+p o# s r1ic ( '&' s l#/s r1ic * count r/s r1ic " Si. ( '&' corn r s$op4 sup rstor " O)n rs$ip ( '&' pri1at l+/o)n ( in( p n( nt4 public/-uot ( r tail &roup Location ( '&' rural* cit+/c ntr * out/o#/to)n" Bran( ( '&' nation)i( r tail bran(s4 local on /s$op na! " &holesalers <$ol sal rs stoc% a ran& o# pro(ucts #ro! s 1 ral pro(uc rs' T$ rol o# t$ )$ol sal r is to s ll onto r tail rs' <$ol sal rs usuall+ sp ciali. in particular pro(ucts' Distributors and dealers Distributors or ( al rs $a1 a si!ilar rol to )$ol sal rs I t$at o# ta%in& pro(ucts #ro! pro(uc rs an( s llin& t$ ! on' Ho) 1 r* t$ + o#t n s ll onto t$ n( custo! r rat$ r t$an a r tail r' T$ + also usuall+ $a1 a !uc$ narro) r pro(uct ran& ' Distributors an( ( al rs ar o#t n in1ol1 ( in pro1i(in& a#t r/sal s s r1ic '

$ranchises

Franc$is s ar in( p n( nt busin ss s t$at op rat ,c$an& #or a lic ns # an( a s$ar o# sal s'

a bran( ( pro(uct (usuall+ a s r1ic " in

Agents A& nts s ll t$ pro(ucts an( s r1ic s o# pro(uc rs in r turn #or a co!!ission

+ole of (ntermediaries in Distribution channel:

S S

Gr at r ##ici nc+ in !a%in& &oo(s a1ailabl to tar& t !ar% ts' Int r! (iari s pro1i( Contacts E,p ri nc Sp ciali.ation Scal o# op ration Matc$ suppl+ an( ( !an('

$unctions of (ntermediaries
In#or!ation 9ro!otion Contact Matc$in& N &otiation 9$+sical Distribution Financin& Ris% ta%in&

Channel 3evels

 Manu#actur r <$ol sal r R tail r Consu! r

Channels of Distribution
A bri # ,planation o# (i## r nt c$ann ls o# (istribution is &i1 n b lo):

;:

anufacturer ? Customer:

T$is is also %no)n as (ir ct s llin& b caus no !i((l ! n ar in1ol1 (' A pro(uc r !a+ s ll (ir ctl+ t$rou&$ $is o)n r tail stor s* #or ,a!pl * Bata' T$is is t$ si!pl st an( t$ s$ort st c$ann l' It is #ast an( cono!ical' S!all pro(uc rs an( pro(uc rs o# p ris$abl co!!o(iti s also s ll (ir ctl+ to t$ local consu! rs' Bi& #ir!s a(opt (ir ct s llin& in or( r to cut (istribution cost an( b caus @NC t$ + $a1 su##ici nt #aciliti s to s ll (ir ctl+ to t$ consu! rs' T$ pro(uc r or t$ ntr pr n ur $i!s l# p r#or!s all t$ !ar% tin& acti1iti s' <: anufacturer ? +etailer ? Customer: T$is is on sta& (istribution c$ann l $a1in& on !i((l !an* i' '* r tail r' In t$is c$ann l* t$ pro(uc r s lls to bi& r tail rs li% ( part! ntal stor s an( c$ain stor s )$o in turn s ll to custo! r' T$is c$ann l is 1 r+ popular in t$ (istribution o# consu! r (urabl s suc$ as r #ri& rators* T ? s ts* )as$in& !ac$in s* t+p )rit rs* tc' T$is c$ann l o# (istribution is 1 r+ popular t$ s (a+s b caus o# ! r& nc o# ( part! ntal stor s* sup r !ar% ts an( ot$ r bi& r tail stor s' T$ r tail rs purc$as in lar& -uantiti s #ro! t$ pro(uc r an( p r#or! c rtain !ar% tin& acti1iti s in or( r to s ll t$ pro(uct to t$ ulti!at consu! rs'

=:

anufacturer ? &holesaler ? +etailer ? Customer:

T$is is t$ tra(itional c$ann l o# (istribution' T$ r ar t)o !i((l ! n in t$is c$ann l o# (istribution* na! l+* )$ol sal r an( r tail r' T$is c$ann l is !ost suitabl #or t$ pro(ucts )it$ )i( l+ scatt r ( !ar% t' It is us ( in t$ (istribution o# consu! r pro(ucts li% &roc ri s* (ru&s* cos! tics* tc' It is -uit suitabl #or s!all scal pro(uc rs )$os pro(uct lin is narro) an( )$o r -uir t$ ,p rt s r1ic s an( pro!otional support o# )$ol sal rs'

Channel Design Decision

Analy#ing consumer service needs'

)etting channel ob>ectives and constraints

(dentify

a>or alternatives

.8clusive (ntensive )elective distribution distribution distribution .valuating ma>or alternatives

(ntensive distribution

Distribution t$rou&$ 1 r+ r asonabl outl t a1ailabl / FMCG Strat &+ is to !a% sur t$at t$ pro(uct is a1ailabl in as !an+ outl ts as possibl * 9r # rr ( #or consu! r* p$ar!ac utical pro(ucts an( auto!obil spar s

)elective distribution
Multipl * but not all outl ts in t$ !ar% t a # ) s l ct outl ts )ill b p r!itt ( to % p t$ 9ro(ucts Outl ts s l ct ( in lin )it$ t$ i!a& t$ co!pan+ <ants to pro2 ct 9r # rr ( #or $i&$ 1alu pro(ucts Tanis$- 2 ) lr+ 3 ps (istribution costs lo) r '

.8clusive Distribution
Hi&$l+ s l cti1 c$oic o# outl ts / !a+ b 1 n on outl t in an ntir !ar% t / car ( al rs Coul( inclu( outl ts s t up b+ co!pani s / Titan* Bata 9ro(uc r )ants a clos )atc$ an( control on t$ (istribution o# $is pro(ucts'

Channel

anagement Decision

S l ctin&

Moti1atin&

E1aluatin&

(ndia@s top ;A $ C% companies:

$*33*&(-% A+. T". T*2 ;A $ C% C* A2A-(.) (- (-D(A: .8hibit (T". T*2 ;A C* 2A-(.) (- $ C% ).CT*+ S' NO' Co!pani s F' Hin(ustan Unil 1 r Lt(' @' ITC (In(ian Tobacco Co!pan+" >' N stlQ In(ia C' GCMMF (AMUL" B' Dabur In(ia H' Asian 9aints (In(ia" N' Ca(bur+ In(ia D' Britannia In(ustri s J' 9roct r = Ga!bl H+&i n an( H alt$ Car FA' Marico In(ustri s )ource: -aukrihub:com

$6+T".+ &. &(33 )T6D, +*3. *$ D()T+(16T(*C"A--.3 (- $ C% !(A A-A3,)(-% +*3. D()T+(16T(*- C"A--.3 (- (-D(A@) T*2 *)T $ C% C* 2A-, &"(C" () "(-D6)TA- 6-((3.!.+ 3( (T.D("63):

"industan 6nilever 3imited

(-T+*D6CT(*Hin(ustan Unil 1 r Li!it ( (THULG"* #or! rl+ Hin(ustan L 1 r Li!it ( (it )as r na! ( in lat 5un @AAN as HUL"* is In(ia0s lar& st Fast Mo1in& Consu! r Goo(s co!pan+* touc$in& t$ li1 s o# t)o out o# t$r In(ians )it$ o1 r @A (istinct cat &ori s in Ho! = 9 rsonal Car 9ro(ucts an( Foo(s = B 1 ra& s' T$ s pro(ucts n(o) t$ co!pan+ )it$ a scal o# co!bin ( 1ol u! s o# about C !illion tonn s an( sal s o# n arl+ Rs' F>NFD cror s' HUL is also on o# t$ countr+ 0s lar& st ,port rs4 it $as b n r co&nis ( as a Gol( n Sup r Star Tra(in& Hous b+ t$ Go1 rn! nt o# In(ia' T$ !ission t$at inspir s HUL0s o1 r FB*AAA !plo+ s* inclu(in& o1 r F*>AA!ana& rs* is to 6a(( 1italit+ to li# '6 HUL ! ts 1 r+(a+ n (s #or nutrition* $+&i n * an( p rsonal car )it$ bran(s t$at $ lp p opl # l &oo(* loo% &oo( an( & t !or out o# li# ' It

is a !ission HUL s$ar s )it$ its par nt co!pan+* Unil 1 r* )$ic$ $ol(s B@'FAE o# t$ -uit+' T$ r st o# t$ s$ar $ol(in& is (istribut ( a!on& >HA*HNB in(i1i(ual s$ar $ol( rs an( #inancial inst itutions' HUL0s bran(s li% Li# buo+* Lu,* Sur# E,c l* Rin* <$ l* Fair = Lo1 l+* 9on(0s* Sunsil%* Clinic* 9 pso( nt* Clos up* La%! * Broo% Bon(* 3issan* 3norr Annapurna* 3)alit+ <all0s I ar $ous $ol( na! s across t$ countr+ an( span !an+ cat &ori s soaps* ( t r& nts* p rsonal pro(ucts* t a* co## * bran( ( stapl s* ic cr a! an( culinar+ pro(ucts' T$ s pro(ucts ar !anu#actur ( o1 r CA #actori s across In(ia' T$ op rations in1ol1 o1 r @*AAA suppli rs an( associat s' HUL0s (istribution n t)or% co!pris s about C*AAA r (istribution stoc%ists* co1 rin& H'> !illion r tail outl ts r ac$in& t$ ntir urban population* an( about @BA !illion rural consu! rs' < $a1 anal+. ( t$ (istribution n t)or% o# HUL #ro! t$ #ollo)in& asp cts: F' E1olution o# HULGs (istribution n t)or% @' Transportation = Lo&istics >' C$ann l D si&n C' Initiati1 s ta% n #or c$ann l ! !b r !ana& ! nt' B' Fi l( #orc !ana& ! nt H' Anal+tical Fra! )or% N' Financial Anal+sis

Distribution -etwork of "63 .volution over Time

T$ HULGs (istribution n t)or% $as 1ol1 ( )it$ ti! ' T$ #irst p$as o# t$ HUL (istribution n t)or% $a( )$ol sal rs placin& bul% or( rs (ir ctl+ )it$ t$ co!pan+' Lar& r tail rs also plac ( (ir ct or( rs* )$ic$ co!pris ( al!ost >A p r c nt o# t$ total or( rs coll ct (' T$ co!pan+ sal s!an &roup ( all t$ s or( rs an( plac ( an in( nt )it$ t$ H a( O##ic ' Goo(s ) r s nt to t$ s !ar% ts* )it$ t$ co!pan+ sal s!an as t$ consi&n ' T$ sal s!an t$ n coll ct ( an( (istribut ( t$ pro(ucts to t$ r sp cti1 )$ol sal rs* a&ainst cas$ pa+! nt* an( t$ !on + )as r !itt ( to t$ co!pan+' T$ #ocus o# t$ s con( p$as * )$ic$ spann ( t$ ( ca( s o# t$ CAs* )as to pro1i( ( sir ( pro(ucts an( -ualit+ s r1ic to t$ co!pan+0s custo! rs' In or( r to ac$i 1 t$is* on )$ol sal r in ac$ !ar% t )as appoint ( as a 6R &ist r ( <$ol sal r*6 a stoc% point #or t$ co!pan+0s pro(ucts in t$at !ar% t' T$ co!pan+ sal s!an still co1 r ( t$ !ar% t* can1assin& #or or( rs #ro! t$ r st o# t$ tra( ' H t$ n (istribut ( stoc%s #ro! t$ R &ist r ( <$ol sal r t$rou&$ (istribution units !aintain ( b+ t$ co!pan+' T$ R &ist r ( <$ol sal r s+st !* t$ r #or * incr as ( t$ (istribution r ac$ o# t$ co!pan+ to a lar& r nu!b r o# custo! rs' T$ $i&$li&$t o# t$ t$ir( p$as )as t$ conc pt o# 6R (istribution Stoc%ist6 (RS" )$o r plac ( t$ R<s' T$ RS )as r -uir ( to pro1i( t$ (istribution units to t$ co!pan+ sal s!an' T$ s con( c$aract ristic o# t$is p rio( )as t$ stablis$! nt o# t$ 6Co!pan+ D pots6 s+st !' T$is s+st ! $ lp ( in transs$ip! nt* bul% br a%in&* an( as a stoc%point to !ini!is stoc% outs at t$ RS l 1 l' In t$ r c nt past* a si&ni#icant c$an& $as b n t$ r plac ! nt o# t$ Co!pan+ D pot b+ a s+st ! o# t$ir( part+ Carr+in& an( For)ar(in& A& nts (C=FAs"' T$ C=Fas act as bu## r stoc%points to nsur t$at stoc%outs (i( not ta% plac ' T$ C=FA s+st ! $as also r sult ( in cost sa1in&s in t r!s o# (ir ct transportation an( r (uc ( ti! la& in ( li1 r+' T$ !ost i!portant b n #it $as b n i!pro1 ( custo! r s r1ic to t$ RS' T$ rol p r#or! ( b+ t$ R (istribution Stoc%ists inclu( s: Financin& stoc%s* pro1i(in& )ar $ousin& #aciliti s* pro1i(in& !anpo) r* pro1i(in& s r1ic to r tail rs* i!pl ! ntin& pro!otional acti1iti s* ,t n(in& in(ir ct co1 ra& * r portin& sal s an( stoc% (ata* ( !an( si!ulation an( scr nin& #or transit (a!a& s'

Detail Overview
T$ (istribution n t)or% o# HUL is on o# t$ % + str n&t$s t$at $ lp it to suppl+ !ost pro(ucts to al!ost an+ plac in t$ countr+ #ro! Srina&ar to 3an+a%u!ari' T$is inclu( s* !aintainin& #a1orabl tra( r lations* pro1i(in& inno1ati1 inc nti1 s to r tail rs an( or&ani.in& ( !an( & n ration acti1iti s a!on& a $ost o# ot$ r t$in&s' Eac$ busin ss o# HUL port#olio $as custo!i. ( t$ n t)or% to ! t its ob2 cti1 s' T$ !ost ob1ious #unction o# pro1i(in& t$ lo&istics support is to & t t$ co!pan+Gs pro(uct to t$ n( custo! r'

Distribution System of HUL

HULGs pro(ucts* ar (istribut ( t$rou&$ a n t)or% o# C*AAA r (istribution stoc%ists* co1 rin& H'> !illion r tail outl ts r ac$in& t$ ntir urban population* an( about @BA !illion rural consu! rs' T$ r ar >B C=FAs in t$ countr+ )$o # ( t$ s r (istribution stoc%ists r &ularl+' T$ & n ral tra( co!pris s &roc r+ stor s* c$ !ists* )$ol sal * %ios%s an( & n ral stor s' Hin(ustan Unil 1 r pro1i( s tailor !a( s r1ic s to ac$ o# its c$ann l partn rs' It $as ( 1 lop ( custo! r !ana& ! nt an( suppl+ c$ain capabiliti s #or partn rin& ! r&in& s l#s r1ic stor s an( sup r!ar% ts' Aroun( @*AAA suppli rs an( associat s s r1 HULGs CA !anu#acturin& plants )$ic$ ar ( c ntrali. ( across @ !illion s-uar !il s o# t rrito r+'

HUL R (istribution stoc%ists C=F A& nts

<$ol sal rs Rural r tail rs Consu! rs Urban r tail rs

(Fi&' F I Sc$ !atic o# HULGs Distribution N t)or%" Distribution at the !illages: T$ co!pan+ $as brou&$t all !ar% ts )it$ populations o# b lo) BA*AAA un( r on rural sal s or&anisation'T$ t a! co!pris s an ,clusi1 sal s #orc an( ,clusi1 r (istribution stoc%ists'T$ t a! #ocus s on buil(in& sup rior a1ailabilit+ o# pro(ucts' In rural In(ia* t$ n t)or% (ir ctl+ co1 r s about BA*AAA 1illa& s* r ac$in& @BA !illion consu! rs* t$rou&$ HAAA substoc%ists'

9HASE F

9HASE >

?an bas ( #i, ( rout co1 ra& @BE Rural pop

S$a%ti Entr pr nurs BAE Rural population (tar& t"

Bas ( Distributor

SS

9HASE @ SS/Star s ll r Distributor bas ( in t$ 1illa& Hub= spo% n Mo( l >NE Rural population '

(Fi&' @ I Rural Distribution Mo( l o# HUL"

HUL approac$ ( t$ rural !ar% t )it$ t)o crit ria t$ acc ssibilit+ an( 1iabilit+' To s r1ic t$is s &! nt* HUL appoint ( a R (istribution stoc%ist )$o )as r sponsibl #or all outl ts an( all busin ss )it$in $is particular to)n' In t$ @BE o# t$ acc ssibl !ar% ts )it$ lo) busin ss pot ntial* HUL assi&n ( a sub stoc%ist )$o )as r sponsibl to acc ss all t$ 1illa& s at l ast onc in a #o rtni&$t an( s n( stoc%s to t$os !ar% ts' T$is substoc%ist (istribut s t$ co!pan+0s pro(ucts to o utl ts in a(2ac nt s!all r 1illa& s usin& transportation suitabl to int rconn ctin& roa(s* li% c+cl s* scoot rs or t$ a& ol( bulloc% cart' T$us* Hin(ustan Unil 1 r is tr+in& to circu!1 nt t$ barri r o # !otorabl roa(s' T$ co!pan+ si!ultan ousl+ us s t$ )$ol sal c$ann l* suitabl+ inc nti1isin& t$ ! to (istribut co!pan+ pro(ucts' T$ !ost co!!on #or! o# tra(in& r !ains t$ & rassroots bu+an(s ll !o( ' T$is nabl s HUL to in#lu nc t$ r tail rs stoc%s an( -uantiti s so l( t$rou&$ cr (it ,t nsion an( tra( (iscounts' HUL launc$ ( t$is In(ir ct Co1 ra& (IDC" in FJHAs'Un( r t$ In(ir ct Co1 ra& (IDC" ! t$o(* co!pan+ 1ans ) r r plac ( b+ 1ans b lon&in& to R (istribution Stoc%ists* )$ic$ s r1ic ( a s l ct &roup o# n i&$bourin& !ar% ts' Distribution at t$ Urban c ntr s: Distribution o# &oo(s #ro! t$ !anu#acturin& sit to

C = F a& nts ta% plac t$rou&$ it$ r t$ truc%s or rail roa(s ( p n(in& on t$ ti! #actor #or ( li1 r+ an( cost o# transportation' G n rall+ t$ !anu#acturin& sit is locat ( suc$ t$at it co1 rs a bi&& r & o&rap$ical s &! nt o# In(ia' Fro! t$ C = F a& nts* t$ &oo(s ar transport ( to RSGs b+ ! ans o# truc%s an( t$ pro(ucts #inall+ !a% t$ Tlast !il G bas ( on t$ local popular an( c$ ap !o( o# transport'

16)(-.))

*D.3 *$ "63:

U Dir ct !ar% tin& ! ans s llin& pro(ucts b+ ( alin& (ir ctl+ )it$ consu! rs rat$ r t$an t$rou&$ int r! (iari s' Tra(itional ! t$o(s inclu( !ail or( r* (ir ct/!ail s llin&* col( callin&* t l p$on s llin&* an( (oor/to/(oor callin&' Mor r c ntl+ t l !ar% tin&* (ir ct ra(io s llin&* !a&a.in an( T? a(1 rtisin&* an( on/lin co!put r s$oppin& $a1 b n ( 1 lop (' T$ !ain a(1anta& s o# s llin& (ir ct ar t$at t$ r is no n ( to s$ar pro#it !ar&ins an( t$ pro(uc r $as co!pl t control o1 r t$ sal s proc ss' 9ro(ucts ar not sol( n arb+ t$os o# co!p titors it$ r' T$ r !a+ also b sp ci#ic !ar% t #actors t$at ncoura& (ir ct s llin&: T$ r !a+ b a n ( #or an ,p rt sal s #orc * to ( !onstrat pro(ucts* pro1i( ( tail ( pr / sal in#or!ation an( a#t r/sal s s r1ic R tail rs* (istributors* ( al rs an( ot$ r int r! (iari s !a+ b un)illin& to s ll t$ pro(uct E,istin& (istribution c$ann ls !a+ b o)n ( b+* or lin% ( to* co!p tin& pro(uc rs (!a%in& it $ar( to obtain (istribution b+ an+ ot$ r ! ans t$an (ir ct" Ho) 1 r* t$ r ar si&ni#icant costs associat ( )it$ s llin& (ir ct )$ic$ !a+ b $i&$ r t$an t$ costs associat ( )it$ usin& an int r! (iar+ to & n rat t$ sa! l 1 l o# sal s' T$ r ar s 1 ral pot ntial a(1anta& s o# usin& an int r! (iar+' Mor ##ici nt (istribution lo&istics

O1 rall costs ( 1 n ta%in& into account t$ int r! (iari sG !ar&in or co!!ission" !a+ b lo) r Consu! rs !a+ ,p ct c$oic (i' ' t$ pro(ucts an( bran(s o# !an+ pro(uc rs" at t$ point o# sal 9ro(uc rs !a+ not $a1 su##ici nt r sourc s or ,p rtis to s ll (ir ct'

(n indirect distribution
It is t$ s+st ! t$ !ar% t r r ac$ s t$ int n( ( #inal us r )it$ t$ $ lp o# ot$ rs' T$ s r s ll rs & n rall+ ta% o)n rs$ip o# t$ pro(uct* t$ou&$ in so! cas s t$ + !a+ s ll pro(ucts on a consi&n! nt basis (i' '* onl+ pa+ t$ suppl+in& co!pan+ i# t$ pro(uct is sol("' Un( r t$is s+st ! int r! (iari s !a+ b ,p ct ( to assu! !an+ r sponsibiliti s to $ lp s ll t$ pro(uct'

(ndirect methods include: )ingle92arty )elling )ystem / Un( r t$is s+st ! t$ !ar% t r n&a& s anot$ r part+ )$o t$ n
s lls an( (istribut s (ir ctl+ to t$ #inal custo! r' T$is is !ost li% l+ to occur )$ n t$ pro(uct is sol( t$rou&$ lar& stor /bas ( r tail c$ains or t$rou&$ onlin r tail rs* in )$ic$ cas it is o#t n r # rr ( to as a tra( s llin& s+st !'

ultiple92arty )elling )ystem

T$is in(ir ct (istribution s+st ! $as t$ pro(uct passin& t$rou&$ t)o or !or (istributors b #or r ac$in& t$ #inal custo! r' T$ !ost li% l+ sc nario is )$ n a )$ol sal r purc$as s #ro! t$ !anu#actur r an( s lls t$ pro(uct to r tail r

-ew distribution channels 2ro>ect )hakti T$is !o( l cr at s a s+!biotic partn rs$ip b t) n HUL an( its consu! rs' Start ( in t$ lat @AAA* 9ro2 ct S$a%ti $a( nabl ( Hin(ustan L 1 r to acc ss DA*AAA o# In(ia0s H>D*AAA 1illa& s 'HUL0s partn rs$ip )it$ S l# H lp Groups(SHGs" o# rural )o! n* is b co!in& an ,t n( ( ar! o# t$ co!pan+0s op ration in rural $int rlan(s' 9ro2 ct S$a%ti $as alr a(+ b n ,t n( ( to about F@ stat s An($ra 9ra( s$* 3arnata%a* Gu2arat* Ma($+a 9ra( s$* Ta!il Na(u* C$attis&ar$* Uttar 9ra( s$* Orissa* 9un2ab* Ra2ast$an* Ma$aras$tra an( < st B n&al' T$ r sp cti1 stat &o1 rn! nts an( s 1 ral NGOs ar acti1 l+ in1ol1 ( in t$ initiati1 ' T$ SHGs $a1 c$os n to partn r )it$ HUL as a busin ss 1 ntur * ar! ( )it$ trainin& #ro! HUL an( support #ro! &o1 rn! nt a& nci s conc rn ( an( NGOs' Ar! ( )it$ !icrocr (it* )o! n #ro! SHGs b co! (ir ctto $o! (istributors in rural !ar% ts' T$ !o( l consists o# &roups o# (FB@A" 1illa& rs b lo) t$ po1 rt+ lin (Rs'NBA p r !ont$" ta%in& !icrocr (it #ro! ban%s* an( usin& t$at to bu+ our pro(ucts* )$ic$ t$ + )ill t$ n (ir ctl+ s ll to consu! rs' In & n ral* a ! !b r #ro! a SHG s l ct ( as a S$a%ti ntr pr n ur* co!!onl+ r # rr ( as 0S$a%ti A!!a0 r c i1 s stoc%s #ro! t$ HUL rural (istributor' A#t r b in& train ( b+ t$ co!pan+* t$ S$a%ti ntr pr n ur t$ n s lls t$os &oo(s (ir ctl+ to consu! rs an( r tail rs in t$ 1illa& ' Eac$ S$a%ti ntr pr n ur usuall+ s r1ic HFA 1illa& s in t$ population strata o# F*AAA @*AAA' T$ S$a%ti ntr pr n urs ar &i1 n HUL pro(ucts on a 8cas$ an( carr+ basis'0 T$ #ollo)in& t)o (ia&ra!s s$o) t$ 9ro2 ct S$a%ti !o( l as initiat ( b+ HUL'

2+*4.CT )T+.A 3(-. B )T+.A

3(-. D()T+(16T(*-:

To i!pro1 t$ ##ici nc+ o# a proc ss* busin ss or&ani.ation b+ si!pli#+in& or li!inatin& unn c ssar+ st ps* usin& !o( rni.in& t c$ni-u s* or ta%in& ot$ r approac$ s' To cat r to t$ n (s o# t$ inacc ssibl !ar% t )it$ $i&$ busin ss pot ntial HUL initiat ( a Str a!lin initiati1 in FJJN' 9ro2 ct Str a!lin is an inno1ati1 an( ## cti1 (istribution n t)or% #or rural ar as t$at #ocus s on ,t n(in& (istribution to 1illa& s )it$ l ss t$an @AAA p opl )it$ t$ $ lp o# rural substoc%ists7Star S ll rs )$o ar bas ( in t$ s 1 r+ 1illa& s' As a r sult* t$ (istribution n t)or% (ir ctl+ co1 rs as o# no) about CA p r c nt o# t$ rura lpopulation' Un( r 9ro2 ct Str a!lin * t$ &oo(s ar (istribut ( #ro! C = F A& nts to Rural Distributors (RD"* )$o $as FB@A rural substoc%ists attac$ ( to $i!' Eac$ o# t$ s substoc%ists 7 star s ll rs is locat ( in a rural !ar% t' T$ substoc%ists t$ n p r#or! t$ rol o# (ri1in& (istribution in n i&$borin& 1illa& s usin& uncon1 ntional ! ans o# transport suc$ as tractor an( bulloc% carts' 9ro2 ct Str a!lin b in& a cross #unctional initiati1 * t$ Star S ll r s lls 1 r+t$in& #ro! ( t r& nts to p rsonal pro(ucts' Hi&$ r -ualit+ s r1icin&* in t r!s o# #r -u nc+* cr (it an( #ulllin a1ailabilit+* is to b pro1i( ( to rural tra( as part o# t$ n )(istribution strat &+'

"industan 3ever -etwork ("3-)

It is t$ co!pan+0s ar! in t$ Dir ct S llin& c$ann l* on o# t$ #ast st &ro)in& in In(ia

to(a+' It alr a(+ $as about s 1 ral la%$ consultants all in( p n( nt ntr pr n urs* train ( an( &ui( ( b+ HLN0s ,p rt !ana& rs' HLN $as alr a(+ spr a( to o1 r FBAA to)ns an( citi s* co1 rin& DAE o# t$ urban population* bac% ( b+ C@ o##ic s an( @CA s r1ic c ntr s across t$ countr+' It pr s nts a ran& o# custo!is ( o## rin&s in Ho! = 9 rsonal Car an( Foo(s' T$ N ) Co!p nsation plan #or HLN partn rs pro1i( s n ) ,citin& )a+s o# arnin& substantial inco! in a((ition to o## rin& r )ar(s li% r 1 nu s$arin& t$rou&$ t$ inno1ati1 conc pt o# VpoolsW Mot$ r D pot an( 5ust in Ti! S+st ! In or( r to rationalis t$ lo&istics an( plannin& tas%* an st p $as b n t$ #or!ation o# t$ Mot$ r D pot an( 5 ust in Ti! S+st ! (MD5IT"' C rtain C=FAs ) r s l ct ( across t$ countr+ to act as !ot$ r ( pots' Eac$ o# t$ ! $as a !ini!u! nu!b r o# 5IT ( pots attac$ ( #or stoc% r -uir ! nts' All bran(s an( pac%s r -uir ( #or t$ s t o# !ar% ts )$ic$ t$ MD an( 5ITs s r1ic in a &i1 n ar a ar s nt to t$ !ot$ r ( pot b+ all !anu#acturin& units' T$ 5ITs (ra) t$ ir r -uir ! nts #ro! t$ MD on a ) %l+ or bi) %l+ basis' L 1 ra&in& In#or !ation t c$nolo&+ HUL custo! rs ar s r1ic ( on continuous r pl nis$! nt' T$is is possibl b ca us o# IT conn cti1it+ across t$ ,t n( ( suppl+ c$ain o# about @*AAA suppli rs* DA #actori s an( N*AAA stoc%ists' T$is sop$isticat ( n t)or% )it$ its 1oic an( (ata co!!unication #aciliti s $as lin% ( !or t$an @AA locations all o1 r t$ countr+* inclu(in& t$ $ a( o##ic * branc$ o ##ic s* #actori s* ( pots an( t$ % + r (istribution stoc%ists' T$ + $a1 also co!bin ( bac% n( proc ss s into a co!!on S$ar ( S r1ic in#rastructur * )$ic$ supports t$ units across t$ countr+' All t$ s initiati1 s to& t$ r $a1 n$anc ( op rational ##ici nci s* i!pro1 ( t$ s r1ic to t$ custo! rs an( $a1 brou&$t us clos r to t$ !ar% tplac ' RS N t Initiati1 : T$ RS N t initiati1 * launc$ ( in @AAF* ai!s at conn ctin& R (istribution Stoc%ists (RSs" t$rou&$ an int rn t bas ( s+st !' It no) co1 rs stoc%ists o# t$ Ho! = 9 rsonal Car busin ss an( Foo(s = B 1 ra& s in clos to F@AA to)ns an( citi s' To& t$ r t$ + account #or about DAE o# t$ co!pan+0s turno1 r' RS N t is on o# t$ lar& st B@B co!! rc initiati1 s 1 r un( rta% n in In(ia' It pro1i( s lin%a& s )it$ t$ RSsG o)n transaction s+st !s* nabl s !onitorin& o# stoc%s an( s con(ar+ sal s an( opti!is s RSGs or( rs an( in1 ntori s on a (ail+ basis t$rou&$ onlin int ra ction on or( rs* ( spatc$ s* in#or!ation s$arin& an( !onitorin&' T$ ITpo) r ( s+st ! $as b n i!pl ! nt ( to suppl+ stoc%s to r (istribution stoc%ists on a continuous r pl nis$! nt basis' To(a+* t$ sal s s+st ! & ts to %no) 1 r+ (a+ )$at HUL stoc%ists $a1 sol( to al!ost a !illion outl ts across t$ countr+' In#or!ation on s con(ar+ sal s is no) a1ail abl on RS N t 1 r+ (a+' RS N t is part o# 9ro2 ct L ap' 9ro2 ct L ap b &ins )it$ t$ suppli r runs t$rou&$ t$ #actori s an( ( pots an( r ac$ s up to t$ RSs' T$is nsur s HULGs &ro)t$ b+ nsurin& t$at t$ ri&$t pro(uct is a1ailabl at t$ ri&$t plac in t$ ri&$t -uantiti s an( at t$ ri&$t ti! in t$ !ost cost ## cti1 !ann r' L ap also ai!s at r (ucin& in1 ntori s an( i!pro1in& ##ici nci s ri&$t t$rou&$ t$ ,t n( ( suppl+ c$ain' RS N t $as co! as a #orc !ultipli r #or HUL <a+* t$ co!pan+0s actionplan to not onl+ !a,i!is t$ nu!b r o# outl ts r ac$ ( but also to ac$i 1 l a( rs$ip in 1 r+ outl t' RS N t $as nabl ( stoc%ists to plac or( rs on a Continuous R pl nis$! nt S+st !' T$is in turn $as uns$ac%l ( t$ #i l( #orc to sol l+ #ocus on s con(ar+ sal s #ro! t$ stoc%ists to r tail rs an( !ar% t acti1ation' It $as also nabl ( RSs to pro1i( i!pro1 ( s r1ic to r tail outl ts' Si!ultan ousl+* HUL is s r1icin& t$ rural !ar% t* % + urban outl ts* an( t$ !o( rn tra( as a sin&l conc rn' A( ,a iCollaboration suit In @AAA* HUL i( nti#i ( i!pro1 ( suppl+ c$ain !ana& ! nt as a critical busin ss priorit+ an( launc$ ( a co!pr $ nsi1 initiati1 * V9ro2 ct L ap*W tas% ( )it$ incr asin& suppli r7(istributor r sponsi1 n ss* r (ucin& in1 ntor+ bu## rs* an( opti!i.in& plannin& an(

sc$ (ulin&' HUL c$os t$ A( ,a iCollaboration suit #or #acilitatin& c ntrali. ( !onitorin& o# t$ SCM* li1 custo! r 7suppli r collaboration* an( int &ratin& ( !an( an( (istribution plannin& )it$ pro(uction sc$ (ulin&' <it$ t$ a&&r &at ( 1i ) o# (ata pro1i( ( b+ t$ iCollaboration suit * HUL )as abl to co!bin sa l s an( (istribution ##orts on t$ (i1 rs pro(uct lin s* )$ic$ r sult ( in si&ni#icant sa1in&s on t$ cost si( #or in1 ntori s an( (istribution' HUL up(at s in1 ntor+ positions* s$ip! nts an( custo! r or( rs on a (ail+ basis )it$ t$ s so#t)ar pac%a& s an( can & t a puls on t$ !ar% t r al ti! ' =: Channel Design Hin(ustan L 1 r Li!it ( (HUL" $as t)o t+p s o# c$ann l s llin& i' R &ular (tra(itional" r tail c$ann l* ii' Dir ct S llin& C$ann l in t$ na! o# Hin(ustan L 1 r N t)or% (HLN"' HUL $as a ) ll ntr nc$ ( $i&$ (istribution !o( l )$ic$ co!pris s o# C=FAs* R (istribution Stoc%ists* )$ol sal rs an( r tail rs (as s$o)n arli r"' Hin(ustan Unil 1 r0s (istribution n t)or% is r co&ni. ( as on o# its % + str n&t$s' Its #ocus s on 9ro(uct a1ailabilit+* Bran( co!!unication* an( $i&$ r l 1 ls o# bran( ,p ri nc ' HULGs Sal s Br a% up t$rou&$ (i## r nt c$ann ls: Sal s Br a%/up T$rou&$ Di## r nt C$ann ls NE HAE >>E Mo( rn R tail Urban G n ral Tra( Rural Ar as C$ann l Structur (Sp cial Focus is on 5a!s$ (pur" T+picall+* t$ &oo(s pro(uc ( in ac$ o# t$ H UL0s CA #actori s ar s nt to a ( pot )it$ t$ $ lp o# a carr+in& an( #or)ar(in& a& nt (C=FA"' T$ co!pan+ $as its ( pot in 1 r+ stat o# t$ countr+' T$ C=FA is a t$ir( part+ an( & ts s r1icin& # #or stoc% an( ( li1 r+ o# t$ pro(ucts' In ac$ to)n* t$ r is at l ast a r (istribution stoc%ist (RS" )$o ta% s t$ &oo(s #ro! t$ C=FA an( s lls t$ ! to r tail outl ts' In 5$ar%$an( t$ C=FA is in R anc$i an( 5a!s$ (pur is s r1ic ( b+ > R (istribution Stoc%ists at Sa%c$i (M7s O! 9ra%as$ A&ar)a l"* Bistupur an( 9arsu(i$' T$ HUL !ana& ! nt r ali. ( c rtain probl !s )it$ t$ ,istin& sal s !o( l' First* t$ !o( l )as

not 1iabl #or s!all to)ns )it$ s!all population an( s!all busin ss' HUL #oun( it ,p nsi1 to appoint on stoc%ist ,clusi1 l+ #or ac$ to)n' S con(l+* t$ r tail r 1olution in t$ countr+ $as c$an& ( t$ patt rn t$ custo! rs s$op' Lar& r tail s l# s r1ic s$ops ar b co!in& co!!onplac ' In r spons o# t$ s probl !s* HUL r ( si&n ( its sal s an( (istribution c$ann l an( t$ n ) s+st ! is %no)n as 0(ia!on( !o( l0 in t$ co!pan+' At t$ top n( o# t$ (ia!on(* t$ r ar t$ s l# s r1ic r tail stor s )$ic$ constitut FAE o# t$ total FMCG !ar% t' T$ !i((l * #att r part o# t$ (ia!on( r pr s nts t$ pro#itc nt r bas ( sal s t a!' In t$ botto! o# t$ p+ra!i( is t$ rural !ar% tin& an( (istribution )$ic$ accounts #or @AE o# t$ busin ss' As a r sult o# t$ n ) (istribution plan t$ co!pan+ $as plann ( to r (uc t$ nu!b r o# RS in s!all to)ns' +edistribution )tockists:

Total nu!b r o# RS in 5a!s$ (pur X > (at Sa%c$i* Bistupur* 9arsu(i$"' T$is is &oin& to b r (uc ( to onl+ on )it$ ## ct #ro! n ,t !ont$ o# t$is + ar' Sal s Mar&in: C'NHE )$ic$ inclu( s cas$ (iscount* ntal ,p ns s' Mo( s o# transport us (: Ric%s$a)* t !po' Inc nti1 sc$ ! s: B #or @AAA $oli(a+ pac%a& s an( tours but a#t r @AAA no non!on tar+ inc nti1 #or RS' So#t)ar s+st !s an( In#or!ation S+st !: UNIF; D'> (D 1 lop ( b+ IBM = CMC"' T$is so#t)ar n (s to b s+nc$roni. ( (ail+ an( t$ s+st ! up(at s an+ in#or!ation7 inc nti1 sc$ ! s 7 sal s #i&ur s tc to an( #ro! t$ co!!on s$ar ( plat#or!' Ar as o# Op rations: Mar% ( # or ac$ o# t$ RS' S llin& Op rations: RSs s lls t$ &oo(s to<$ol sal r (& ts F'B E !a,' (iscount #ro! RS" R tail rs (& ts F'AE !a,' (iscount #ro! RS" <$ol sal r: G ts cas$ (iscounts an( ot$ r sc$ ! s pro!ot ( b+ HUL (& ts points un( r ?i2 ta Sc$ ! "' +etailers: Total r tail r bas in 5a!s$ (pur: Appro,i!at l+ FANA' Sal s Mar&in: D p n(s on t$ pro(uct o Soap* ( t r& nts DE on MR9 o Cos! tics FAE on MR9 o Foo( it !s DE on MR9 (ncentive schemes: Co!pan+ pro&ra!s (Sc$ ! Discounts Y Cas$ Discounts" T9R sc$ ! s bas ( on Sal s (F E to C E" ?i2 ta sc$ ! is not #or r tail rs' $ield )ales $orce: To ! t t$ 1 rc$an&in& n (s o# t$ consu! r* HUL $as s t up a (istribution n t)or% t$at nsur s a1ailabilit+ o# all t$ ir pro(ucts* in all outl ts* at all ti! s' T$is inclu( s* !aintainin& #a1ourabl tra( r lations* pro1i(in& inno1ati1 inc nti1 s to r tail rs an( or&ani.in& ( !an( & n ration acti1iti s a!on& a $ost o# ot$ r t$in&s' T$ i!portant acti1iti s t$at HUL #i l( sal s #orc (o s ar (i" tar& t c$asin& an( (ii" r portin& on a (ail+ basis' Account in#or!ation is !aintain ( on pal!tops &i1 n b+ HUL' Durin& our r s arc$ an( in#or!al sur1 + o# HUL #i l( sal s #orc * ) ca! to %no) t$at #or t$ last t)o + ars* trainin& is not b in& &i1 n at all to t$ sal s #orc ' HUL $as li!it ( t$ n t)or% c$ann l s llin& to cat &ori s o# Ho! = 9 rsonal Car (H9C" an( Foo( pro(ucts )it$ ,clusi1 bran(s #or t$is c$ann l' T$at is* t$ s particular bran(s (pro(ucts" ar all ,clusi1 to HLN* sp ci#icall+ ( 1 lop ( #or t$ Dir ct S llin& c$ann l* an( not a1ailabl in t$ r tail c$ann l' T$ & n ral tra( co!pris s &roc r+ stor s* c$ !ists* )$ol sal r* %ios%s an(& n ral stor s' Hin(ustan Unil 1 r s r1ic s ac$ )it$ a tailor !a( !i, o# s r1ic s' C' (nitiatives taken to (mprove the Distribution -etwork HUL $as ta% n t$ #ollo)in& initiati1 s to i!pro1 its (istribution n t)or%: S ttin& up o# a #ull scal sal s or&anisation co!prisin& % + account !ana& ! nt an( acti1ation to i!pact* #ull+ n&a& an( s r1ic !o( rn r tail rs as t$ + ! r& ' S r1icin& C$ann l partn rs an( custo! rs )it$ contin uous (ail+ r pl nis$! nt' L 1 ra&in& scal an( buil(in& ,p rtis to s r1ic Mo( rn Tra( an( Ru ral Mar% ts' D la+ rin& o# sal s #orc to i!pro1 r spons ti! s an( s r1ic l 1 ls' R 1a!pin& o# its sal s or&anisation in t$ rural !ar% ts to #ull+ ! t t$ ! r&in& n (s an(

incr as ( purc$asin& po) r o# t$ rural population' HULGs (istribution n t)or% in rural In(ia alr a(+ (ir ctl+ co1 rs about BA*AAA 1illa& s* r ac$in& about @BA !illion consu! rs t$rou&$ about H*AAA sub stoc%ists' I!pl ! ntation o# suppl+ c$ain s+st ! t$at conn cts stoc%ists across t$ countr+* an( also inclu( s a bac% n( s+st ! conn ctin& suppli rs* all co!pan+ sit s an( str tc$in& ri&$t up to stoc%ists' IT tools $a1 b n ( plo+ ( #or conn cti1it+ across t$ ,t n( ( suppl+ c$ains' Bac% n( proc ss s $a1 b n co!bin ( into a co!!on S$ar ( S r1ic in#rastructur ' Launc$in& o# 9ro2 ct S$a%ti t$rou&$ )$ic$ t$ co!pan+ is abl to ,t n( its op rations in 1illa& s' HUL $as also inclu( ( s 1 ral NGOs an( stat &o1 rn! nts as t$ initiati1 $ lps rural )o! n to i!pro1 t$ ir #inancial position' Launc$in& o# HUL N t)or% to l 1 ra& t$ c$ann l o# (ir ct s llin& b+ pr s ntin& custo!is ( o## rin&s in FF $o! an( p rsonal car an( #oo( cat &ori s' Start ( in @AA>* it alr a(+ $as a bas o# >AA*AAA consultants across t$ countr+' Startin& o# #ranc$is ( La%! B aut+ Salons an( A+us$ T$ rap+ c ntr s to o## r stan(ar(is ( s r1ic s* in lin )it$ t$ strat &+ to l 1 ra& t$ -uit+ o# its bran(s t$rou&$ r l 1ant s r1ic s' Fin(in& out Inno1ati1 )a+s to r ac$ out to its consu! rs* particularl+ in rural ar as b+ l 1 ra&in& noncon1 ntional ! (ia li% )all paintin&s* cin !a 1ans* ) %l+ !ar% ts ($aats"* #airs an( # sti1als' Initiatin& t$ conc pt o# Sup r ?alu Stor s (S?S" in urban ar as to partn r tra(itional stor s to pro1i( a ran& o# s r1ic s ran&in& #ro! !ana&in& t$ ir in1 ntor+ to s ttin& up 9OS (point o# sal " bann rs' In a((ition to t$is* to boost up tra(itional r tail in t$ #ac incr asin& inroa(s !a( b+ lar& * !o( rn r tailin& c$ains li% Sp nc rGs* R lianc Fr s$ tc ()$ r HUL is s-u . ( $ar( r #or (iscounts"* HUL start ( r structurin& so! o# t$ s l ct ( S?Ss into t$ #or! o# s l#s r1ic r tail s$ops a la !o( rn r tails' T$is is to prot ct = !aintain t$ co!p titi1 a(1anta& t$at HUL $as o1 r its bi&& st co!p titors in t$ ot$ r !ar% ts ( '&'* 9=G"* )it$ its 1 r+ ( p (istribution r ac$ t$rou&$ tra(itional r tail' Launc$in& t$ Unicar sc$ ! )it$ up!ar% t p$ar!aci s an( r tail rs to sal its pr !iu! bran(s' Un( rta%in& s 1 ral initiati1 s #or tra(itional c$ann ls in or( r to i!pro1 its capabiliti s at t$ #ront n( b+ ( 1 lopin& s%ills #or stoc%ists0 sal s #orc ' Un( r 09ro2 ct Dronac$ar+a0* t$ FMCG !a2or continuousl+ i!part ( trainin& to o1 r FA*AAA stoc%ist sal s! n' Launc$in& o# s 1 ral pro!otional sc$ ! s #or ,istin& )$ol sal rs an( (istributors' For instanc * it $as start ( t$ T?i2 ta Ris$ta 5 t 3aG sc$ ! last + ar to pro1i( a plat#or! #or t$ )$ol sal r an( HUL to &ro) t$ busin ss b+ arnin& points an( r ( !in& t$ !'

C: $ield $orce anagement T$ )or%in& c+cl o# a t+pical HUL #i l( #orc ! !b r is #ro! @Fst o# 1 r+ !ont$ to t$ @At$ o# t $ n ,t !ont$' Durin& t$is p rio( $ is &i1 n 1arious tar& ts t$at $ lps to ac$i 1 co!pan+ ob2 cti1 s an( &i1 s $i! a c$anc to pro1 $is p r#or!anc r lati1 to ot$ r' To start )it$ t$ #i l( #orc ! !b r is &i1 n a particular ar a an( $is r sponsibilit+ is to cat r to all t$ r tail rs in t$at ar a' <$il ( ci(in& t$ ar a #or ac$ ! !b r o# t$ #i l( #orc * t$ co!pan+ !a% s sur t$at t$ op ratin& ar a o# ac$ #i l( ! !b r (o sn0t o1 rlap )it$ $is ot$ r coll a&u s' T$ r ar 1arious ! t$o(s us ( b+ t$ co!pan+ to iMon tar+' In HUL* t$ #i l( #orc is 1aluat ( usin& ZOC (Zualit+ o# Contribution"' It consists o# C co!pon nts F' S con(ar+ Sal (Ma, points X @'B" @' Eco (Ma, points X A'B"

>' Focus (Ma, points X A'B" C' FCS (Ma, 9oints X A'B" ECO SECONDAR; FCS FOCUS ZOC

S con(ar+ Sal Bas ( on t$ op ratin& ar a* ac$ ! !b r is &i1 n a sp ci#ic tar& t in t r!s o# 1alu ( '&'* Rs' FB lacs" #or t$ op ratin& !ont$ (@Fst I @At$ o# n ,t !ont$"' I# $ ac$i 1 s FAAE o# t$ tar& t $ & ts @'B points* i# $ ac$i 1 s JBE tar& t $ & ts F'B points' T$ s points ar us ( to a(( to t$ total ZOC scor as ) ll as lin% ( to !on tar+ inc nti1 ' ECO 7 <i(t$ pac% Tar& t I T$is is us ( #or t$ p n tration7r ac$ o# c rtain pro(ucts in t$ ,istin& !ar% t' T$ #ollo)in& is a t+pical ECO tar& t assi&n ( to a #i l( #orc a& nt: Lu, Int rnational I FAB outl ts , F S3U 9 ars Soap F>B outl ts , F S3U Rin FAC outl ts , FS3U Br . Soap FAA outl ts , F S3U T$ outl ts ! ntion ( ar )it$in t$ op ratin& ar a o# t$ p rson an( F S3U X Rs' @N7' Bas ( on t$is t$ Fi l( p rson calculat s nu!b r o# pac%s $ s$oul( s ll to t$ r tail rs' T$ conc rn ( a& nt r c i1 s t$is tar& t aroun( @Bt$ o# ac$ !ont$ an( $as to co!pl t t$is tar& t )it$in t$ Bt$ (a+ o# n ,t !ont$' Upon co!pl tion $ & ts a((itional A'B points a(( ( to $is ZOC scor alon& )it$ !on tar+ inc nti1 associat ( )it$ it' Ho) 1 r i# t$is is not ! t )it$in Bt$* $ loos s t$ opportunit+' Focus 7 D pt$ 9ac% tar& t I T$is is !ainl+ us ( to incr as t$ sal s 1olu! o# c rtain pro(ucts' A t+pical TFocusG tar& t is &i1 n b lo): Lu, Int rnational I Rs @A*HCA 7 [ Rs H7 p r unit Li# Buo+ Rs NA*@@A 7 [ Rs FA7 p r unit <$ l Rs JJ*AAA 7 [ Rs FA7 p r unit Br . Soap Rs @N*AAA 7 [ Rs FA 7 p r unit T$is tar& t n (s to b ac$i 1 ( )it$in @At$ o# n ,t !ont$' Upon ac$i 1in& t$ tar& t t$ #i l( p rson is a)ar( ( A'B points )$ic$ is t$ n a(( ( to $is o1 rall ZOC scor ' Fi l( Capabilit+ Scor (FCS" In t$is co!pon nt* t$ #i l( #orc p rsons ar r -uir ( to nsur t$at t$ sc$ (ul ( 1isit7outl t billin& is suc$ t$at at l ast FB it !s ar ( !an( ( p r or( r' I# t$is is ac$i 1 ( t$ r tail r & ts a (iscount o# FE on t$ bill ( a!ount an( on t$ ot$ r $an( t$ #i l( p rson & ts an a((itional scor o# A'B )$ic$ is a(( ( to $is ZOC scor ' Eac$ sc$ (ul ( 1isit p r outl t is on p r ) %' For ,a!pl i# t$ r ar FAA outl ts )it$in t$ op ratin& ar a o# a #i l( p rson t$ n t$ nu!b r o# 1isit p r ) % is FAA an( total nu!b r o# 1isit p r !ont$ X FAA,C X CAA' T$ sal s p rson is r -uir ( to ac$i 1 JAE succ ss rat to & t A'B points #or $is ZOC scor an( at l ast HBE #or a satis#actor+ p r#or!anc ' Non Mon tar+ M t$o(s T$ ot$ r purpos o# t$ ZOC sc or s is to $i&$li&$t t$ p r#or!anc o# t$ #i l( p rson a!on& $is p rs' Bas ( on t$ ZOC 1arious a)ar(s ar (istribut ( to t$ #i l( p rsons at t$ n( o# 1 r+ !ont$' T$ s a)ar(s ar also %no)n as TMOC StarG a)ar(s' MOC stan(s #or Mont$l+ op ratin& C+cl '

I# ZOC scor \ C'B I T$ p rson is li&ibl #or N star a)ar( I# ZOC scor \ C I T$ p rson is li&ibl #or B star a)ar( I# ZOC scor \ >'B I T$ p rson is li&ibl #or > star a)ar( In t$ 1 nt o# ,c ptional p r#or!anc * !ana& ! nt r pr s ntati1 s #ro! t$ r &ional o##ic co! to t$ .onal o##ic to (istribut t$ a)ar(s' T$ p$oto&rap$ o# t$ a)ar( )inn rs is (ispla+ ( in t$ o##ic as a sourc o# inspiration #or ot$ r sal s p rson' Tar& t S ttin& M c$anis! an( !onitorin& T$ r &ional o##ic !onitors t$ p r#or!anc o# 1arious .on s' A t$orou&$ anal+sis is (on at t$ n( o# ac$ !ont$ an( bas ( on t$at t$ ) a% pro(ucts ar i( nti#i ( or t$os #or )$ic$ t$ ( !an( $as ) a% n (' T$is is t$ basis o# s ttin& ECO an( FOCUS tar& ts #or t$ #i l( p rsons' Ea c$ #i l( p rson is &i1 n a pal!top )$ r in $ can # ( t$ ntri s on t$ spot )$ r t$ transaction is (on ' T$is sol1 s basicall+ t$ t)o purpos s a" T$ #i l( p rson is #r ( #ro! t$ t (ious tas% o# !aintainin& cu!b rso! r cor(s an( can t$ n conc ntrat on t$ 2ob (t$us IT is r placin& so! o# t$ #i l( #orc or ot$ r c$ann l ! !b rs"* b" T$ sol( it ! is i!! (iat l+ up(at ( in t$ co!pan+ in#or!ation s+st !' D: Analytical $ramework < tri ( to anal+. HULGs (istribution n t)or% in t$ li&$t o# @A !ost si&ni#icant 1ariabl s t$at a## ct t$ (istribution part o# c$ann l !ana& ! nt #or an+ or&ani.ation in t$ busin ss o# !ar% tin& = s llin& o# &oo(s' T$ 1ariabl s* t$ ir ,planations an( t$ ir i!pact on t$ HULGs (istribution n t)o r% ar &i1 n b lo) I ;: -umber of Consumers In r tail busin ss (o!inat ( b+ tra(itional stor s li% 3irana Stor s tc (In(ian r tail busin ss #alls in t$is cat &or+"* $i&$ r t$ no' o# consu! rs* $i&$ r )ill b t$ no' o# c$ann l int r! (iari s' T$ i!plication o# t$is is t$at t$ r )ill b !an+ la+ rs in t$ c$ann l in suc$ a situ ation an( !ana&in& suc$ a co!pl , (istribution n t)or% b+ % pin& tabs on 1 r+ pla+ r )ill b a $u& tas%' Mor o1 r* Transport = Lo&istics (VT=LW" support pro1i( ( b+ t$ or&ani.ation n (s to b ) ll or&ani. (' I!plication #or HUL HULGs % + str n&t$ li s in !ana&in& its (istribution n t)or% in In(ia' HUL is In(iaGs lar& st FMCG co!pan+ )it$ un!atc$ ( (istribution n t)or%* )$ic$ is built o1 r a c ntur+ #ocusin& on tra(itional r tail' HUL0s (istribution n t)or% co!pris s about C*AAA r (istribution stoc%ists* co1 rin& about H'> !illion r tail outl ts r ac$in& t$ ntir urban population* an( about @BA !illion rural consu! rs in In(ia' ItGs sai( t$at HUL is abl to touc$ t$ li1 s o# about @ out o# 1 r+ > In(ian consu! rs' T$is ac$i 1 ! nt is (u to t$ s$ r str n&t$ o# its (istribution n t)or% (pro(ucts s$oul( b &oo( as al)a+s* ot$ r)is t$ + )ill #in( no bu+ rs in t$ lon& run"' For a co!parison* 9=G* )orl(Gs lar& st FMCG !a2or* (o s not #in( its na! in t$ list o# top B FMCG !a2ors in In(ia as its str n&t$ li s in !ana&in& !o( rn r tail (bi&& st ,a!pl * <al Mart"* but not tra(itional r tail' @' G o&rap$ic Disp rsion o# Consu! rs A&ain* t$is is clos l+ r lat ( )it$ t$ pr 1ious 1ariabl * !or so in a lar& * & o&rap$icall+ (i1 rs countr+ li% in In(ia' <it$ t$ incr as in t$is (isp rsion l 1 l* !or int r! (iari s an( !or la+ rs ar r -uir ( in t$ (istribution n t)or% so as to ## cti1 l+ r ac$ t$ l n&t$ = br a(t$ o# t$ countr+' Ob1iousl+ t$ T=L !ana& ! nt #or suc$ an or&ani.ation )oul( b critical to acco!plis$ t$is' I!plication #or HUL

For a countr+ as & o&rap$icall+ (i1 rs as In(ia* panIn(ian pr s nc = !ar% t l a( rs$ip can onl+ b possibl )$ n pro(ucts r ac$ 1 n t$ r !ot st parts o# t$ countr+' HUL is 1 r+ succ ss#ul in ac$i 1in& an( !aintainin& t$is r ac$ (u to its (istribution n t)or%' =: $reEuency of 2urchase I# t$ #r -u nc+ o# purc$as is $i&$* t$ n transport int nsit+ in Vt$ last !il W (i' '* #ro! (istributor to r tail rs" incr as s !ani#ol(' For FMCG pro(ucts* as a t$u!b rul ) can ta% t$at t$ ! an ti! b t) n t)o purc$as s is ] JA (a+s' <it$ t$ intro(uction o# s!all r #or! #actor pac%a&in& #or FMCG &oo(s (R 'F 7 s$a!poo sac$ ts b in& a 1 r+ &oo( ,a!pl "* t$ transport int nsit+ incr as ( #urt$ r' (mplication #or HUL HUL $as about CAAA r (istribution stoc%ists* )$o suppl+ to appro,' H'> !illion outl ts across In(ia' Sinc !anu#acturin& is (on at CA plants aroun( t$ countr+* rationali.in& t$ lo&istics an( plannin& is a $u& tas%' An inno1ati1 st p in t$at r &ar( $as b n t$ #or!ation o# t$ Mot$ r D pot an( 5ust in Ti! S+st ! (MD5IT"' C rtain C=FAs ) r s l ct ( across t$ countr+ to act as !ot$ r ( pots' Eac$ o# t$ ! $as a !ini!u! nu!b r o# 5IT ( pots attac$ ( #or stoc% r -uir ! nts' All bran(s an( pac%s r -uir ( #or t$ s t o# !ar% ts )$ic$ t$ MD an( 5ITs s r1ic in a &i1 n ar a ar s nt to t$ !ot$ r ( pot b+ all !anu#acturin& units' T$ 5ITs (ra) t$ ir r -uir ! nts #ro! t$ MD on a ) %l+ or bi ) %l+ basis an( suppl+ to stoc%ists in t$at ar a* )$o* in turn* suppl+ to r tail rs' F: Tendency to 2ostpone 2urchase I# t$ t n( nc+ to postpon purc$as is l ss r* t$ n t$ pro(uct )ill b asi r to (istribut ' For ,a!pl * pro(ucts7s r1ic s li% Fir E,tin&uis$ rs* Li# Insuranc tc' ar suc$ t$at t$ou&$ t$ s ar n ( (* t$ o1 rall t n( nc+ #or t$ consu! rs is to postpon t$ purc$as s I t$ s pro(ucts7s r1ic s can b t r! ( as Vn c ssar+ 1ilW' For t$is %in( o# pro(ucts* r &ular r in#orc ! nt in t$ !in(s o# consu! rs b co! s n c ssar+* sal s #i l( #orc b co! s critical an( us o# V ,p rtW #i l( #orc is co!!onplac ' I!plication #or HUL Sinc FMCG pro(ucts ar us ( r &ularl+ an( t$ s pro(ucts ar not Vn c ssar+ 1ilsW* (istribution n t)or% o# HUL (o s not r -uir an+ ,p rt #i l( #orc to s ll its pro(ucts' Onl+ t$ r c nt (i1 rsi#ication o# HUL into Ho! <at r 9uri#ication busin ss (V9ur ItW bran(" n (s ( (icat ( #i l( sal s #orc ' C: 3evel of $amiliarityB5nowledge (of consumer) about the 2roduct I# t$ l 1 l o# #a!iliarit+ o# consu! r )it$ t$ pro(uct is $i&$ r* lo) r )ill b t$ i!portanc o# #i l( sal s #orc an( $i&$ r )ill b t$ i!portanc o# c$ann l' I!plication #or HUL Sinc FMCG &oo(s ar 1 r+ !uc$ #a!iliar to consu! rs* c$ann l an( its (i## r nt ! !b rs ar 1 r+ !uc$ i!portant to HUL an( #i l( sal s #orc Gs #unction is !ostl+ li!it ( to c$ann l !ana& ! nt an( nsurin& a1ailabilit+ o# pro(ucts' H: Degree of 1rand 3oyalty I# t$ consu! rs ar !or bran( lo+al* t$ n l ss Vpus$W )ill b r -uir ( #ro! t$ c$ann l ! !b rs to s ll t$ pro(ucts as t$ r )ill b su##ici nt VpullW or ( !an( #ro! t$ consu! rs' T$is i!pli s t$at #or pro(ucts )it$ lo+al custo! r bas * ##orts #ro! t$ c$ann l ! !b rs can b !uc$ l ss r #or #inal o##ta% to $app n )$ic$ in turn l a(s to l ss r !ar&ins to t$ c$ann l ! !b rs #or t$os pro(ucts' For #ast r !o1in& pro(ucts (!ostl+ (u to bran( pull"* r tail rs !a+ not b a1 rs to sli&$tl+ l ss r !ar&ins as rotation o# t$ pro(ucts is $i&$ an( t$us $is7$ r ROI is prot ct ('

R tail rGs ROI X Investment Rotation in M^ ar& For a FMCG pla+ r )it$ a non stablis$ ( bran(* !ar&ins to c$ann l ! !b rs an( point o# sal (9OS" a(1 rtisin& ar bot$ i!portant' I!plication #or HUL As HUL n2o+s l a( rs$ip position in ! an+ FMCG s &! nts li% Soaps* D t r& nts* 9 rsonal Car pro(ucts tc )it$ stron& bran(s )it$ co ntinuous VpullW* HUL $as l ss to )orr+ about !ar&ins to c$ann l ! !b rs or 9OS a(1 rtisin&' But t$is situation can c$an& consi( rabl+ in t$ #ac o# ris o# a si&ni#icant co!p titor $a1in& al!ost t $ sa! r ac$ as HUL $as ( '&'* ITC as itGs atin& into HULGs !ar% t s$ar continuousl+ sinc it nt r ( FMCG s &! nt"' G: 2urchased on (mpulse T$ i!puls purc$as pro(ucts li% c$ocolat s* to## s* colas* ic cr a!s tc' #ollo) Sa+Gs La) )$ic$ stat s t$at VSuppl+ Cr at s D !an(W* i!pl+in& a1ailabilit+ o# t$ s pro(ucts ar t$ !ost critical asp ct #or t$ s to b sol( an( consu! (' T$is str ss s on t$ #act t$at T=L #or t$ s pro(ucts b co! s 1 r+ i!portant' I!plication #or HUL HUL $as onl+ on pro(uct in t$is i!puls purc$as cat &or+ 3)alit+ <alls (ic cr a!"' HUL is _@ a#t r A!ul in t$is FMCG s &! nt' To incr as t$is bran(Gs sal = !ar% t s $ar * a1ailabilit+* 1isibilit+ an( consu! r !in( s$ar $as to b incr as ( an( i!pro1 ( as ) ll' H: 3evel of (nvolvement (3*() L 1 l o# in1ol1 ! nt (i' '* ti! = ##ort sp nt b+ t$ consu! r" & n rall+ ( p n(s on t$ pro(uct cost' I# LOI is $i&$ r* lo) r is t$ i!portanc o# a1ailabilit+ an( !or critical is t$ @@ suppl+ o# in#or!ation as consu! r ( cision proc ss ( p n(s !or on laborat in#or!ation s arc$' I!plication #or HUL As FMCG pro(ucts ar & n rall+ Lo) In1ol1 ! nt 9ro(ucts* HUL $as to bot$ r !or on nsurin& a1ailabilit+ o# t$ pro(ucts* rat$ r t$an suppl+ o# in#or!ation' I: 2urchased as a 1asket of %oods T$ pro(ucts )$ic$ ar & n rall+ bou&$t to& t$ r b+ consu! rs as a bas% t o# &oo(s ( '&'* Ric * Flour po)( r* Coo%in& oil tc at t$ b &innin& o# t$ !ont$" ar to b !a( a1ailabl to& t$ r #or #inal o##ta% ' I!plication #or HUL T$is asp ct partl+ appli s to HULGs pro(ucts as so! pro(uct s li% s$a!poos* soaps* ( t r& nts !a+ #all in a bas% t' E##ici nt (istribution n t)or% o# HUL nsur s a1ailabilit+ o# all suc$ pro(ucts at ac$ s llin& point (in(i1i(ual r tail r"' ;A: )peed 0 Comple8ity of Decision aking 2rocess I# t$ sp ( is lo)* t$ n t$ co!pl ,it+ o# t$ ( cision !a%in& proc ss is $i&$ r an( &r at r is t$ i!portanc o# #i l( sal s #orc an( t$ sal sp rsonsG s%ill* %no)l (& an( -ualit+' I!plication #or HUL For FMCG pro(ucts* co!pl ,it+ o# ( cision !a%in& proc ss is not t$ r an( so* sp ( o# ( cision !a%in& is $i&$' T$is ! ans t$at #or HUL* #i l( sal s #orc is o# li!it ( #unctional usa& ' FF' 9r s nt o# E,p rt In#lu nc r in t$ D cision Ma%in& 9roc ss Rol s o# sal s #i l( #orc 1ar+ ( p n(in& upon )$ t$ r ,p rt in#lu nc r ( '&'* (octors" is pr s nt in t$ proc ss or not' I# pr s nt* t$ n consu! r bu+in& b $a1ior !a+ b co! subcontract ( an( t$ ,p rt in#lu nc r b co! s anot$ r custo! r o# t$ n t)or%* apart #ro! t$ n( us r' In t$at situation t)o &roups o# sal s #orc ar n ( ( to cat r to bot$ t$ s &! nts' I!plication #or HUL

For FMCG &oo(s* rol o# ,p rt in#lu nc r is li!it (' But co!pani s tr+ to associat bran(s )it$ r &ulator+ bo(i s7aut$oriti s an( s$o) a(1 rtisin& )it$ ,p rts co!! ntin& upon sup rior 1irtu s o# a pro(uct in an att !pt to !a% t$ bu+in& b $a1iour s$i#t #ro! pic%in&71ari t+ s %in& to subcontract ( an( !a% consu! rs !or lo+al to t$ bran(' T$ s ar tru #or HUL also ( '&'* 9on(Gs Intitut "' ;<: .lement of Crisis 2urchase .8ists I# l ! nt o# crisis purc$as ,ists in t$ bu+in& ( cision o# a pro(uct (#or ,a!pl * bulbs = tub s"* t$ n its a1ailabilit+ b co! s critical' I!plication #or HUL Non o# t$ pro(ucts o# HUL #all un( r t$is cat &or+' N 1 rt$ l ss* a1ailabilit+ o# pro(ucts o# HUL is n c ssar+ #or ot$ r r asons' ;=: .lement of +isk Aversion .8ists I# t$ l 1 l o# in1ol1 ! nt o# t$ consu! r in bu+in& ( cision proc ss is $i&$ r* ris% ta%in&t n( nc + o# t$ consu! r )ill b lo) r or consu! r )ill b !or ris% a(1 rs ' In suc$ situation* c$ann l ! !b rs can Vuns llW a bran( b+ &i1in& ,plicit or i!plicit su&& stions' T$isi!pli s t$at in suc$ a ca s * s llin& ( p n(s on !an+ cas s $o) t$ co!pan+ is ta%in& car o#c$ann l ! !b rs (V% pin& t$ ! $app+W" suc$ t$at t$ + ar not lur ( b+ ot$ r co!p titors or(ir ct ( b+ &ri 1anc s so as to uns l l t$ bran(' T$is situation is pr 1al nt !ostl+ in Consu! rDurabl s (li% T?* R #ri& rators tc'"' In FMCG &oo(s* t$ situation (o s not ,ist p r s ' I!plication #or HUL HUL is not a## ct ( #or its FMCG pro(ucts b+ t$is 1ariabl ' For )at r puri#i r V9ur ItW* t$is can $a1 consi( rabl i!pact i# its sal starts to $app n t$rou&$ c$ann l ! !b rs rat$ r t$an b+ #i l( sal s #orc as is $app nin& no)' ;F: 2erishability of the 2roduct I# t$ pro(uct is p ris$abl ($a1in& s!all s$ l# li# 4 ,a!pl s I n )spap r* !il%* #ruits tc"* t$ n t$ (i! nsion o# Vsp (W in r ac$in& t$ n( consu! rs b co! s critical = T=L assu! s &r at si&ni#icanc #or t$ co!pan+' I!plication #or HUL T$ FMCG pro(ucts t$at HUL s lls ar not p ris$abl b+ natur * but $a1 li!it ( li# ' So t$is asp ct is not critical #or HUL' ;C: Time 1and Associated with the 2urchase of the 2roduct I# t$ r is s asonalit+7c+clicit+ #or t$ ( !an( or purc$as o# t$ pro(uct ( ,a!pl s I n )spap r* !il% ar !ost on ( !an( in t$ Fst t$r $ours o# t$ (a+4 coo%in& oil* ric tc &roc r+ it !s ar !ost on ( !an( in t$ Fst ) % o# t$ !ont$"* t$ n $i&$ T=L an( in#rastructural r -uir ! nts ar n ( ( #or t$ Vlast !il W #or t$ ti! ban( )$ n ( !an( is !a,i!u!' It is possibl to $a1 i(l capacit+ in t$ ar as ! ntion ( abo1 outsi( t$ p a% r -uir ( ti! ban(' I!plication #or HUL For so! o# t$ pro(ucts o# HUL* t$ abo1 stat ( 1ariabl is si&ni#icant' For ,a!pl * in Foo( s &! nt* Bran( ( Atta I TAnnapurnaG4 in s &! nts li% Laun(r+ D t r& nts* S$a!poo = Hair Oil tc' t$is l ! nt o# ( !an( ti! ban( ,ist to a c rtain ,t nt' T$is un( rscor s t$ i!portanc o# T=L #or HUL as t$ transport int nsit+ b t) n (istributors an( r tail rs incr as s in t$ Fst = Ct$ ) % o# a !ont$ #or t$ pro(ucts ! ntion ( abo1 ' T$is is o1 r an( abo1 t$ r &ular r pl nis$! nt o# sto% s at r tail rs (on b+ (istributors' F sti1als li% Holi tc' !a+ also incr as t$ ( !an( #or p rsonal car it !s li% soaps* s$a!poos tc #or a s$ort p rio( an( (istribution n t)or% s$oul( b & ar ( up not to !iss an+ suc$ opportunit+'

;D: $ungibility Fun&ibilit+ is t$ prop rt+ o# a &oo( or a co!!o(it+ )$os in(i1i(ual units ar capabl o# !utual substitution' E,a!pl s o# $i&$l+ #un&ibl co!!o(iti s ar cru( oil* )$ at* oran& 2uic * pr cious ! tals* an( curr nci s' Fun&ibilit+ $as not$in& to (o )it$ t$ abilit+ to ,c$an& on co!!o(it+ #or anot$ r (i## r nt co!!o(it+' It r # rs onl+ to t$ as o# substitution o# on unit o# a co!!o(it+ )it$ anot$ r unit o# t$ sa! co!!o(it+ #or all int nts an( purpos s' Fun&ibilit+ is (i## r nt #ro! li-ui(it+' A &oo( is li-ui( an( tra(abl i# it can b asil+ ,c$an& ( #or !on + or #or anot$ r (i## r nt &oo(' A &oo( is #un&ibl i# on unit o# t$ &oo( is substantiall+ -ui1al nt to anot$ r unit o# t$ sa! &oo( o# t$ sa! -ualit+ at t$ sa! ti! an( plac ' It is sai( t$at co!!o(iti s ar #un&ibl * &oo(s tan&ibl * s r1ic s intan&ibl * ,p ri nc s ! !orabl = trans#or!ations ar ## ctualF' As an ,a!pl * on Rs' FAA7 ban% not is int rc$an& abl )it$ anot$ r' Cas$ is #un&ibl ' A barr l o# < st T ,as Int r! (iat cru( oil is #un&ibl ((ir ct ,c$an& " )it$ anot$ r barr l o# t$ sa! cru( oil' Oil (o# t$ sa! t+p " is #un&ibl ' Fun&ibilit+ (o s not i!pl+ li-ui(it+* an( li-ui(it+ (o s not i!pl+ #un&ibilit+' 5 ) ls can b r a(il+ bou&$t an( sol( (t$ tra( is li-ui("* but in(i1i(ual (ia!on(s* b in& uni-u * ar not int rc$an& abl ((ia!on(s ar not #un&ibl "' In(ian rup ban% not s ar int rc$an& abl in Lon(on (t$ + ar #un&ibl t$ r "* but t$ + ar not asil+ tra( ( t$ r (t$ + ar not li-ui( in Lon(on"' In contrast to (ia!on(s* &ol( coins ar #un&ibl ' T$ + ar also li-ui(* sp ciall+ un( r a &ol( stan(ar(' T$ co!bination o# #un&ibilit+ an( li-ui(it+ is on o# t$ r asons )$+ &ol( $as succ ss#ull+ s r1 ( as !on + #or t$ousan(s o# + ars' Furt$ r* a #un&ibl t$in& can b co! non#un&ibl un( r so! circu!stanc s' For ,a!pl * an ol( coin or a curr nc+ not !a+ assu! a 1alu )$ic$ is )a+ abo1 its T#ac 1alu G (u to $istorical r asons or (u to so! ( # cts in it )$ic$ !a% s it uni-u #ro! ot$ rs #ro! a 1i )point )$ic$ s s it (i## r ntl+ t$an its int n( ( purpos ' T$ outco! o# pro(uct #un&ibilit+ is t$at t$ !or #un&ibl a pro(uct b co! s* $i&$ r is t$ c$anc t$at parts o# t$ (istribution c$ann l it can b r plac ( b+ IT' A &oo( ,a!pl o# t$is is ( !at riali.ation (D !at" rout #or s$ar tra(in& no) )$ r t$ r is no p$+sical ,ist nc o# s$ar s' I!plication #or HUL As bran( ( FMCG &oo(s ar not #un&ibl p r s (bran(in& is (on to V( co!!o(iti. W = (i## r ntiat t$ pro(uct"* t$ i!portanc o# c$ann l ! !b rs )ill continu ' ;G: Degree of Customi#ation 2ossible D &r o# custo!i.ation (ir ctl+ a## cts cono!i s o# scal 4 $i&$ r t$ custo!i.ation* l ss r t$ cono!i s o# scal ' Also* criticalit+ o# sal s #i l( #orc incr as s )it$ custo!i.ation l 1 ls o# t$ o## rin&' I!plication #or HUL For FMCG pro(ucts o# HUL* )$ic$ ar !ass pro(uc (* suc$ custo!i.ations ar not possibl an( $us )it$ $i&$ r cono!i s o# scal * lo) r criticalit+ o# #i l( #orc s #ro! t$ stan(point o# custo!i.ation o# pro(uct o## rin&s* costs ar l o) r in t$ s r sp cts )it$ HUL' ;H: -egative or 2ositive +einforcing 2roduct N &ati1 r in#orcin& pro(ucts ar t$os )$ic$ ar bou&$t to a1oi(7r (uc t$ probl ! ( ,' insuranc * )as$in& !ac$in * car batt r+ tc"' 9ositi1 r in#orcin& pro(ucts ar t$os )$ic$ &rati#+ t$ s ns s ( ,' I 9 r#u! s* C$ocolat s* ?acation tc"' S$oppin& ,p ri nc b co! s a critical asp ct #or positi1 r in#orcin& pro(ucts to r a##ir! t$ positi1 # lin&s' I!plication #or H UL VA, W = VR ,onaW ( o(orants ar (istinctl+ positi1 r in#orcin& pro(ucts #ro! HUL* ot$ rs li% Lu,* La%! tc' So t$ s ar s n in !ost s$oppin& !alls tc' )it$ $i&$ 1isibilit+ (ispla+s to r a##ir! t$ # lin&s' Consu! rs ar )illin& to pa+ $i&$ r #or t$ s bran(s'

;I: !alueB!olume +atio (!alue Density) of the 2roduct T$is ratio is 1 r+ i!portant #or bot$ t$ co!pan+ an( t$ r tail r #or its t)o critical asp cts I T=L cost an( r tail r ROI7s-' c! (r tail rs ar actuall+ in r al stat busin ss in tru s ns "' Hi&$ r t$ ratio* b tt r it is #or bot$ co!pan+ an( t$ r tail r as $i&$ r ratio si&ni#i s l ss r T=L cost p r unit 1olu! transport ( #or t$ co!pan+ an( &r at r ROI p r unit o# s$ l# spac #or t$ r ta il r' i!plication #or HUL In & n ral #or FMCG &oo(s an( #or HUL as ) ll* 1alu ( nsit+ is r lati1 l+ lo) r' In a((ition to t$is #act* incr asin& tr n( to)ar(s usin& s!all r pac% si. s incr as s t$ pac %a&in& ( nsit+ (incr as ( pac%a&in& ( nsit+ incr as cost to so! ,t nt* but #a1ours ! c$ani. ( $ an(lin& &r atl+* r (ucin& $an(lin& costs"' Sinc 1alu ( nsit+ is l ss* transportation costs )ill b $i& $ r an( t$us it is o# cono!ic s ns to $a1 !anu#acturin& plants locat ( closur to !a2or !ar% ts' T$is is t$ r ason HUL $as 1arious !anu#acturin& plants (CA in totalit+" locat ( across In(ia' T$is i s a point r to t$ #act !ost o# t$ !a2or FMCG pla+ rs (inclu(in& HUL" us contract ( !anu#acturin& (isp rs ( across t$ & o&rap$ic spr a( so as to lo) r transportation cost co!pon nt' G: $inancial Analysis < $a1 ta% n (ata #ro! CMIE (atabas )$il anal+.in& t$ p r#or!anc o# !ar% tin& = sal s (inclu(in& (istribution" #unctions o# HUL an( co!parabl co!pani s' B+ Tco!parabl T* ) ! an t$os co!pani s )$os !ain cono!ic acti1it+* as ( #in ( in t$ CMIE (atabas * is t$ sa! as HULGs' For ,a!pl * !ain cono!ic acti1it+ o# HUL as ( #in ( in t$at (atabas is VCos! tics* t oil t pr parations* soap = )as$in& pr pW' Ob1iousl+* on !a2or FMCG co!pan+ in In(ia* ITC* (o s not co! un( r t$is pur1i ) as its !a2or cono!ic acti1it+ is Tobacco busin ss )$ic$ is n arl+ DB E o# its total r 1 nu ' But #or t$ sa% o# co!parison* ) $a1 inclu( ( ITC also as its non tobac co FMCG busin ss r 1 nu in F; TAD )as Rs' @BFF Cr'* n arl+ as $i&$ as Nir!a* t$ s con( lar& st pla+ r a#t r HUL in HULGs c$os n cat &or+' But t$ #i&ur s #or a(1 rtisin&* !ar% tin& = (istributio n ,p ns s o# ITC as p rc nta& s to its total sal s !a+ not b (ir ctl+ co!parabl to t$os #i&ur s o # HUL as pro(uct cat &ori s ar (i## r nt an( t$ i!pact o# abo1 ! ntion ( 1ariabl s on t$ st)o co!pan+Gs sal s = (istribution #unction is (issi!ilar' Ot$ r !a2or FMCG pla+ rs not inclu ( ( in t$ anal+sis ar N stl * A!ul* Britannia = Tata T a* )$ic$ ar !ostl+ into t$ Foo( = B 1 ra& s s &! nt )$ r HUL $as r lati1 l+ l ss r pr s nc (9roc ss ( Foo(s = Ic cr a! s &! nts to& t$ r constitut onl+ appro,i!at l+ BE o# HULGs total sal s"' In T a* HUL is pr s nt si&ni#icantl +* t$ou&$' In t$ #ollo)in& pa& s a(1 rtisin&* !ar% tin& = (istribution ,p ns s o# !a2or FMCG & oo(s (in HULGs cat &or+ !ostl+" ar b in& s$o)n' It is to b un( rstoo( $ r t$at !ar% tin& ,p ns s $ r inclu( co!!issions* r bat s* (iscounts* sal s pro!otional* ,p ns s on (ir ct s llin& a& nts = nt rtain! nt ,p ns s )$ r as (istribution ,p ns s inclu( out)ar( #r i&$t' E,$ibit F: Annual Sp n( in A(1 rtisin&* Mar% tin& = Distribution #unctions in F; TAD Annual ,p nc s < can s $ r t$at Nir!a* Go(r 2 = H n% l (ITC also" $a1 l ss a(1 rtisin& ,p ns s (as E to sal s" t$an HUL' I!portantl+* H n% l $as . ro a(1 rtisin& ,p ns s in @AAD* )$ic$ !a+ ,plain t$ #act t$at a)ar n ss l 1 l in consu! rs #or H n% l bran(s is lo)' HUL a(1 rtisin& is (on !ainl+ in cas o# soaps (#or ,a!pl I VDo1 W4 (on !ainl+ to r a##ir! t$at itGs not a soap`"* s$a!poos* ( o(orants (VA, W"* laun(r+ ( t r& nts (VSur# E,c lW* VRinW" tc' <it$ t$ intro(uction o# $o! )at r puri#i r (V9ur ItW"* cons( rabl a(1 rtisin& = pro!otional ,p ns s $a1 &on into it'O# lat * ) s 1 r+ littl o# Nir!a a(1 rtis ! nts' T$is is appar nt #ro! its a(1 rtisin& ,p ns as E to sal s* )$ic$ is 1 r+ lo) (onl+ F'BCE"' ITC is alto& t$ r a (i## r nt stor+' Ci&ar tt s = ot$ r tobacco r lat (

pro(ucts )$ic$ constitut appro,' DBE o# its sal s* all r lat to Vinto,icationW or $abitual consu!ption patt rns $a1in& int ns l+ bran( lo+al consu! rs an( t$us al!ost no a(1 rtisin& (surro&at a(1 rtisin& is (on " is n ( ( it$ r to r a##ir! t$ bran(s or intro(uc n ) consu! rs to t$ bran(s (t$ r is r &ulator+ an&l as ) ll"' Curr nt consu! rs o# t$ s tobacco pro(ucts ar t$ bi&& st a(1 rtisin& a& nts t$at ITC $as an( o# cours * t$ + (o it 1oluntaril+ an( )it$out %no)in& )$at t$ +Gr (oin&' But )$il !o1in& #ast r into nontobacco FMCG busin ss ri(in& $i&$ on its str n&t$ o# (istribution n t)or% !atc$in& or surpassin& in so! cas s t$at o# HUL* ITC $as start ( a&&r ssi1 a(1 rtisin& ca!pai&ns (VFia!a Di <illsW s$a!poo* V?i1 lW soap* VSun# astW biscuits* VBin&oW snac%s tc"* (ir ctl+ #ocusin& on !ar-u bran(s o# HUL snac%s an( c$ips #ro! 9 psi* Co % an( ot$ rs' A(1 rtisin& ,p ns s as p rc nta& to sal s is $i&$ st #or E!a!i* )$ic$ o)ns bran(s suc$ as Na1ratna $air oil = talc* Boroplus cr a! = talc* Hi!ani Fast R li #* Fair = Han(so! * Sona C$an(i C$a)anpras$* M nt$oplus tc* ac$ o# )$ic$ is a(1 rtis ( $ a1il+ in t$ !ass ! (ia ( '&'* T?" )it$ #a!ous = ,p nsi1 c l brit+ n(ors rs li% A!itab$ Bac$c$an* 3ar na 3apoor* Go1in(a tc' On t$ ot$ r $an(* ) s r &ular a(1 rtisin& str a!s #or Col&at toot$past s an( ot$ r oral car pro(ucts* in )$ic$ cat &or+ Col&at 9al!oli1 is t$ !ar% t l a( r' R c%ittB nc%is r a(1 rtis s consi( rabl+ #or its bran(s li% H rpic* Mort in* ?anis$* Cl arasil* D ttol* Str psils tc* )$ic$ is t$ r ason #or its $i&$ a(1 rtisin& cost as p rc nta& o# sal s' arketing .8penses As stat ( arli r also* !ar% tin& ,p ns s $ r inclu( t$ #ollo)in& I co!!issions r bat s (iscounts sal s pro!otional ,p ns s on (ir ct s llin& a& nts nt rtain! nt ,p ns s tc' E,$ibit >: Mar% tin& E,p ns s as p rc nta& o# Sal s arketing .8penses as J to )ales A'AC @'NF F'AF A'AA A'NA C'FA C'BJ C'HD N'>B J'BF FB'NF A'>@ A'AA @'AA C'AA H'AA D'AA FA'AA F@'AA FC'AA FH'AA FD'AA HUL Nir!a Dabur Col&at / 9al!oli1 R c%itt B nc%is r 9=G Ho! Go(r 2 E!a!i 9=G H+&i n =

H alt$ H r ) s t$at t$ !ar% tin& ,p ns s o# HUL ar a!on& t$ lo) st in t$ !ar% t (onl+ t$ s co n( lo) st a#t r Col&at I 9al!oli1 )$ic$ $as 1 r+ &oo( bran( pull #or its VCol&at W toot$past s"' T$is pro1 s t$at HUL is abl to !aintain consi( rabl bran( pull t$rou&$ a(1 rtisin&' ITC a&ain co! s a!on& t$ lo) st its tobacco pro(ucts r -uir 1 r+ littl Tpus$G an( $a1 1 r+ $i& $ rotations' Also* ITC !ostl+ ( als )it$ s!all r tail rs an( (istributors (Tpaanci&ar tt s$ops o) n rsG" )$o $a1 !ar&inal bar&ainin& po) r' Anot$ r r 1 lation is t$at H n% l* )$ic$ $as . ro a(1 rtisin& ,p n(itur * $as t$ $i&$ st !ar% tin & ,p ns s a!on& all ot$ rs' But t$is strat &+ to Tpus$G t$ pro(ucts t$rou&$ t$ c$ann l partn rs !a+ not b a &oo( on #or H n% l as it !i&$t b losin& out #or t$ lac% o# 1isibilit+ an( t$us consu! r !in( s$ar an( bran(s suc$ as Mar&o* Fa* N ! toot$past tc ar losin& out in t$ !ar% t' Furt$ r* it is also a point r to t$ #act t$at H n% lGs lar& st busin ss s$ar is in in(ustrial c$ !icals (a($ si1 s* s alants I '&'* popular bran( VLoctit W4 t$is s &! nt constitut ]CCE o# )orl()i( sal s o# H n% l" an( #or B@B* a(1 rtisin& p r s is not t$at !uc$ i!portant' For B@B * i!portant is (ir cts llin& approac$* )$ic$ & n rall+ r -uir s n &otiations* 1olu! (iscounts tc* )$ic$ ar r #l ct ( in $i&$ st !ar% tin& ,p ns s (as p rc nta& to sal s" co !par ( to ot$ rs' 9=G is in b t) n t$ ,tr ! s an( )it$ consi( rabl a(1 rtisin& ,p ns s also* it is unabl to cr at su##ici nt pull #or its pro(ucts in In(ia (as 1i( nc ( b+ t$ #act t$at !ar% tin& ,p ns s ar also r lati1 l+ $i&$ r" or itGs & ttin& stuc% #or t$ lac% o# su##ici nt (istribution !uscl a la HUL in tra(itional r tail in In(ia an( su## rs #ro! lac% o# r ac$ an( a1ailabilit+ at t$ n( consu! r l 1 l ' As ! ntion ( arli r* bot$ Col&at 9al!oli1 an( R c%ittB nc%is r bot$ n2o+s 1 r+ &oo( bran( lo+alti s an( !ar% t l a( rs$ip #or t$ ir % + bran(s li% Col&at toot$past s an( D ttol (_F in antis ptics"* H rpic* Mort in tc' T$is is corroborat ( b+ t$ #act t$at t$ s co!pa ni s $a1 so! o# t$ lo) st !ar% tin& ,p ns s (as p rc nta& to sal s" in t$ &roup* as s$o)n in t $ c$art' Distribution E,p ns s Distribution ,p ns s inclu( t$ out)ar( #r i&$t cost to t$ co!pa n+' E,$ibit C: Distribution E,p ns s as p rc nta& o# Sal s Distribution .8penses as J to )ales C'JA B'FH >'FC @'@F C'FJ H'B> >'BA @'B> H'NA >'DF C'@@ @'BB A'AA F'AA @'AA >'AA C'AA B'AA H'AA N'AA D'AA HUL Ni r!a Dabur Col &at / 9al!oli 1 R c%itt B nc%is r 9=G

Ho! Go(r 2 E!a!i 9=G H+&i n = H al t$ H n% l H n% l Mar% tin& ITC Distribution .8p asJ to )ales < $a1 s n t$at T=L pla+s a 1 r+ i!portant rol #or HUL = ot$ rs )$o $a1 pan In(ian pr s nc in FMCG busin ss' Col&at 9al!oli1 * E!a!i = ITC $as so! o# t$ lo) st (istribution ,p ns s (as E to sal s #i&ur s" = 9=G $as t$ $i&$ st' HUL is lo) r in t$is r sp ct t$an Nir!a = 9=G* but $i&$ r t$an H n% l' T$is can b ,plain ( so! )$at #ro! t$ i!pact o# t$ 1ariabl * Ti! Ban( o# purc$as * on t$ incr as ( transport int nsit+ #or HUL in t$ last !il #or so! o# t$ pro(ucts li% $ous $ol( p rsonal car * laun(r+ ( t r& nt* bran( ( atta tc in t$ #irst = last ) % o# t$ !ot$' ITC (tobacco"* H n% l (lar& l+ B@B" ar !ostl+ prot ct ( #ro! t$is i!plication o# t$ 1ariabl ' Anot$ r i!portant t$in& to r ! !b r t$at 1alu ( nsit+ o# FMCG &oo(s is r lati1 l+ lo) r* causin& s$ar o# transportation costs in t$ o1 rall cost structur to b r lati1 l+ $i&$ r' T$is i!pli s (isp rs ( !anu#acturin&* locatin& !anu#acturin& plants n ar r to !a2or !ar% ts' So on location !anu#acturin& to & t $i&$ r cono!i s o# scal an( on t$ ot$ r $an(* tr+in& to s r1 & o&rap$icall+ (i1 rs !ar% ts !a+ not b cono!icall+ attracti1 #or FMCG s ctor' Co!par ( to HULGs CA !anu#acturin& plants across In(ia* Nir!a* t$ @n( lar& st FMCG !a2or in soaps an( ( t r& nts cat &or+* $as H !anu#acturin& plants* all locat ( in an( aroun( Gu2arat' So* transportation cost o# Nir!a* i# it tri s to cat r to panIn(ian !ar% t )ill b $i&$ r' T$is is support ( b+ t$ #act t$at Nir!aGs $i&$ r (istribution cost p rc nta& t$an HUL' For 9=G* t$ sa! r asons si&ni#icantl+ a## ct its (istribution cost )$ic$ is $i&$ st #or t$ &r oup anal+. ('

(TC
ITC is on o# In(ia0s #or !ost pri1at s ctor co!pani s )it$ a !ar% t capitalisation o# n arl+ US O FJ billion an( a turno1 r o# o1 r US O B billionaITC $as a (i1 rsi#i ( pr s nc in Ci&ar tt s* Hot ls* 9ap rboar(s = Sp cialt+ 9ap rs* 9ac%a&in&* A&ri/Busin ss* 9ac%a& ( Foo(s = Con# ction r+* In#or!ation T c$nolo&+* Bran( ( Appar l* 9 rsonal Car * Station r+* Sa# t+ Matc$ s an( ot$ r FMCG pro(uctsaITC0s (i1 rsi#i ( status ori&inat s #ro! its corporat strat &+ ai! ( at cr atin& !ultipl (ri1 rs o# &ro)t$ anc$or ( on its ti! /t st ( cor co!p t nci s: un!atc$ ( (istribution r ac$* sup rior bran(/buil(in& capabiliti s* ## cti1 suppl+ c$ain !ana& ! nt'

The 2roduct9 i8
$ C% aCi&ar tt s aFoo(s aLi# st+l r tailin& a9 rsonal Car aStation r+ aSa# t+ Matc$ s aA&arbatti aHot ls aA&ri/busin ss a9ap rboar( an( 9ac%a&in& aIn#or!ation T c$nolo&+

The Composition
aManu#acturin& Unit aS parat #or ac$ pro(uct lin aContract Manu#acturin& aBac%)ar( Int &ration aE/C$aupal aStora& Hubs aStor s all t$ pro(ucts

Distributors
aE,clusi1 bas ( on population aN (s to stoc% all FMCG pro(ucts( E,c pt Station r+" a<$ol sal rs aR tail rs a9aan)alas

aD p st p n tration possibl

)uitability
a9 ris$abl aS$ort Span aCusto! rs pr # r #r s$ pro(ucts aLot Si. aS!all r Lot si. s aCon1 ni nc a<aitin& Ti! a9ro(uct Assort! nt

Channel *b>ectives
aConsu! r B $a1ior aZualit+ Conscious aCon1 ni nc &oo(s* N (s Int nsi1 (istribution aD !an(s 1ari t+ a? r+ l ss )aitin& ti! aCo!pan+ Ob2 cti1 s aR ac$ !ass s aRural p n tration aDi1 rsi#ication aCo!p titi1 a(1anta& aAlt rnati1 s aS ll r a(+ to at pro(ucts t$rou&$ s) t s$ops li% bi%an r)ala aS$o)roo!s #or Hi&$/En( pro(ucts aE/C$aupal

$eatures
aS l ction aDistributor is s l ct ( bas ( on aIn#rastructur s* D li1 r+ ?an* Co!put r* <ar $ous * Sal s Forc a9opulation bas ( (F Distributor p r @A/@B t$ousan(" aControl aUs s Co rci1 po) r aTo ( al in Ci&ar tt s* it is !ust to ( al in Ot$ r &oo(s aT r!s an( Con(itions a9ric * S llin& Con(ition* Go(o)n Con(ition tcb

$unctions
aManpo) r a9ro!otion aCr (it aIn#rastructur aStoc%in&

1enefits
rar l+ Cas$ &i#ts (lin% ( )it$ p r#or!anc "* Ot$ rs* Or( r Distributors/ < %l+* R tail rs/ T)ic a ) %* 9aan)alas/ (ail+*Onlin or( r is plac ( b+ (istributor*T$ p rio(ical or( r #ro! )$ol s ll r * r tail r* paan)alas is coll ct ( b+ sta## o# (istributor 9a+! nt'Mostl+ on Cas$/Basis4 so! ti! s post (at ( c$ -u s* ? r+ rar l+ Cr (it is allo) ( on ci&ar tt s' TransportationUs s ( li1 r+ 1an* Ric%s$a)* C+cl s* Autos'Hi&$ r !ar&ins* No Cr (it/ Onl+ Cas$ 9a+! nts* No Fr bi s* 9ai( ?acations Gi#ts tc''*? r+

A-A3,)()
ITC $as t$ !ost popular bran(s o# ci&ar tt s in In(ia' T$ sal ta% s plac #ro! t$ lar& st o# r tail rs li% Bi& Ba.aar* Sp nc rs to t$ s!all st o# paan)alas at 1 r+ noo% an( corn r in In(ia' T$us* ITC $as ( pl+ p n trat ( t$ In(ian ci&ar tt !ar% t' <it$ an alr a(+ stablis$ ( (istribution c$ann l #or ci&ar tt s* ITC is also s llin& sa# t+ !atc$ s* )$ic$ is co!pl ! ntar+ to bot$ t$ ci&ar tt s an( a&arbattis' T$ r tail rs an( paan)alas ar also r a(+ to stoc% ITCGs can(i s* potato c$ips an( #in& r snac%s b caus o# t$ $i&$ r !ar&in as co!par ( to Frito la+s* )$ic$ is its bi&& st ri1al in potato c$ips an( #in& r snac%s B+ nt rin& into t$ bran( ( In(ian biscuit in(ustr+ t$ r )as a busin ss s+n r&+' ITC )as alr a(+ 1alu /a((in& to )$ at )it$ its bran( ( atta pr s nc ' B+ nt rin& t$ biscuits s &! nt* it i!pro1 ( its botto!/lin #urt$ r' T$ co!pan+ us ( its ,istin& n t)or% o# con1 ni nc stor s // t$ co!pan+Gs na! #or t$ $ol /in/t$ /)all pan/b (i s$ops// #or Sun# ast' T$ co!pan+ sa+s t$ bran( is no) a1ailabl in n arl+ F'D !illion outl ts' Sun# ast captur ( aroun( NE in ! r > + ars sinc its launc$ in @AA