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P R E S E N TATI O N O N P L A C I N G - I

Submitted By:
Abhishek Mukherjee
Arnab Kundu
Rajarshi Saha
Shauvik Ghosh
Sumit Agarw al
10/21/16

(12PGP056)
(12PGP065)
(12PGP088)
(12PGP095)
(12PGP099)
IIM Raipur PGP 2012-14

Distribution/ Placing in an important tool of


Marketing Mix which aims at delivering
various products to different types of buyers
WHEN & WHERE they want those and at a
reasonable price.

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Distribution &
Distribution Channel
P
R
O
D
U
C
E
R

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DISTRIBUTION

DISTRIBUTION
CHANNEL

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C
O
N
S
U
M
E
R

Functions of Distribution
Channel
Physical Distribution
Ordering
Transfer of Goods/ Services
Information sharing
Payments
Financing
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Distribution Channel
Relationships
Co-operation

Conflict/ Disagreement

Power (Legitimate/
Coercive)

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Team Work

Distribution Channels
M
A
N
UF
A
CT
U
R
E
R

GENT
ETAILER

C
O
N
S
U
M
E
R

ETAILER
HOLESALER

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DISTRIBUTION
MANAGEMENT

Distributionis one of the four elements of


themarketing mix.
Distribution is the process of making a product or
service available for use or consumption by a
consumer or business user, using direct means, or
using indirect means with intermediaries.
Distribution provides place, time, and possession
utility to the consumer.
Example:
Consumer wants to buy a soap.
Made available at a retail store close to residence
Place.
Made available at 9 PM on Sunday when the consumer
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wants it Time.

DEFINITIONS
The process of getting theproductsfrom
themanufacturerorsupplierto theuser.
Distribution is the process of making a product
or service available for use or consumption by
a consumer or business user, using direct
means,
or
using
indirect
means
with
intermediaries.

Themanagementofresourcesand
processes
used to deliver aproductfrom aproduction
location to thepoint-of-sale,
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includingstorageatwarehousinglocationsor

Continued
Distribution
management
also
includes
determination
ofoptimalquantitiesof
a
product
for
delivery
to
particularwarehousesor
points-of-sale
in
order toachievethe most efficient delivery
tocustomers.
Thesaleof
a
largeamountofstockby
asingleentityover aperiodof time rather
than all at once, toavoidadversely affecting
itsmarket price.
Distribution management
an overarching
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DISTRIBUTION CHANNEL
DEFINED
Sets of interdependent organizations involved in the
process of making a product or service available for
use or consumption.
WHY?
Producers cannot reach all their consumers.
Multiply reach and provide efficiency to the
marketing process.
Facilitate smooth flow and create time, place and
possession utilities.
Provide contact, experience, specialization and
scales of operation.
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DISTRIBUTION/ CHANNELSAND
CHANNEL MEMBERS

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TYPES OF CHANNELS
Sales channel motivates buyers,
shares information, between company
and its consumers, negotiates fair
bargains for consumers and finances
the transaction.
Delivery channel meant only for
physical part of the distribution.
Service channel performs after sales
service.
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LISTING OF CHANNEL
MEMBERS
Company own sales team.
C&F Agents and C&S Agents.
Distributors, dealers, stockiest,
added re-sellers.
Agents and brokers
Franchisees
Electronic Channels
Wholesalers
Retailers
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value-

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TYPE OF INTERMEDIARIES
AGENTS
Is an independent individual or company
Main function is to act as the primary selling
arm of the producer
Represent the producer to users
Take possession of products but do not
actually own them
Agents usually make profits from commissions
or fees paid for the services they provide to
the producer and users
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C&FA /C&SA
C&FA carrying and forwarding agent.
C&SA carrying and selling agent.
Both are on contract with a company.
Both are transporters who work between the
company and its distributors.
Collect products from company, store in
central location, break bulk and dispatch to
distributors.
C&SA also sells the goods on behalf of the
company but remits proceeds after sales.
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DISTRIBUTORS
Are similar to wholesalers.
Could be exclusive for a company.
Wholesalers carry a variety of competing
products whereas distributors only carry
complementary product lines
Usually maintain close relationships with their
suppliers and customers
Take title to products and store them until they
are sold.
Are on commissions, margins, or mark-up.
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WHOLESALERS
Wholesalers are independently owned firm.
Take title to the merchandise they handle, the
wholesalers own the products they sell.
Purchase product in bulk and store it until they
can resell it.
Generally sell the products they have
purchased to other intermediaries, usually
retailers, for a profit.
Operate on high volumes and low margins.

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RETAILERS
Takes title to, or purchases, products from
other market intermediaries
Can be independently owned and operated,
like small mom and pop stores, or they
can be part of a large chain, like Walmart
The final contact with consumer.
Located closest to consumers.
Provide personalized services to their
customers.
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Level 0

Level 1

Level 2

Level 3

Level 0

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Level 1

Level 2

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Level 3

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Level 00
Level

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Level 11
Level

Level 22
Level

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Level 33
Level

23

Level 00
Level

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Level 11
Level

Level 22
Level

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Level 33
Level

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FAC T O R S I N F L U E N C I N G C H O I C E
OF DISTRIBUTION CHANNELS

Product Considerations:
Unit Value.
Perish Ability.
Bulk and Weight.
Standardization.
Technical Nature.
Product Line.
Age of the Product
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Market Considerations:
Consumer or Industrial Market.
Number and Location of Buyers.
Size and Frequency of Order.
Customers Buying Habits.

Company Considerations:
Market Standing.
Financial Resources.
Management.
Volume of Production.
Desire for Control of Channel.

Services Provided
by PGP
Manufacturer.
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Middlemen Considerations:
Availability.
Attitudes.
Services.
Sales Potential.
Costs.
Customs and Competition.
Legal Constraints.

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FAC T O R S I N F L U E N C I N G C H O I C E
OF CHANNEL MEMBERS

MARKET FACTORS.
PRODUCT FACTORS.
COMPETITIVE FACTORS.
ENVIRONMENT FACTORS.

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FAC T O R S I N F L U E N C I N G
CHOICE OF CHANNEL
MEMBERS

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PAT T E R N S O F D I S T R I B U T I O N

Determines
the
intensity
of
distribution.
Intensity decides the service level
provided.
Types of distribution intensity:
Intensive
Selective
Exclusive
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INTENSIVE DISTRIBUTION

Distribution
through
every
reasonable outlet available FMCG
Strategy is to make sure that the
product is available in as many
outlets as possible.
Preferred for consumer products,
pharmaceutical
products
and
automobile parts.
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Intensive Distribution

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SELECTIVE DISTRIBUTION

Multiple but not all outlets in the


market.
A few select outlets will be permitted
to sell the products.
Outlets selected in line with the
image the company wants to project.
Preferred for high value products
Jewellery (Tanishq)
Keeps distribution costs lower.
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Selective Distribution

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EXCLUSIVE DISTRIBUTION

Highly selective choice of outlets


may be even one outlet in an entire
market.
Involves severely limiting the number
of intermediaries.
Producer wants a close watch and
control on the distribution of its
products.
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Exclusive Distribution

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CHANNEL DESIGN

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P&G

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P &G Distribution Salient


Features
P&G is following intensive distribution strategy
in in India.
Over the past couple of years, P&G has doubled
its distribution network to 1.3 million outlets
along with a direct reach.
P&G is not only focusing on expanding its
distribution network in India and reaching
consumers via new distribution channels but it
also gains from launching smaller sized product
variants
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P &G Distribution Salient


Features
Supply chain initiatives taken by P&G are
Collaborative Planning Forecasting and Replenishment(CPFR)
Initiatives
Consumer Driven Supply Network (CDSN)Other Initiatives

P &Gs CDSN is a core corporate concept as well


as an operating strategy
P&G follows Administered VMS Channel

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EXAMPLE CASELETS

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D I S T R I BUT I O N
S T R ATE G Y O F A M U L
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Retailing
Amul Exclusive parlours have reached to total
tally of 6,315
Revenue from the retailing business has
witnessed an encouraging growth with an
annual turnover of `460 crores
Started allotting milk stalls at important
railway stations which is around 170 so far.
Have the India's largest chain of Ice cream
parlours with a total tally of 600.
introduced the casual dine-in format "Cafe
Amul"
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Distributio
n
Amul has more than 7,000 distributors servicing
more than a million retail outlets.
Rolled out Hub-n-Spoke model of distribution to
explore the huge potential markets of small
towns and rural areas
Have more than 150 super distributors covering
more than 2,500 small towns overcoming the
challenges posed by inadequate cold chain
facilities
They have about 8,500 channel partners.
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D I S T R I BUT I O N
S T R ATE G Y O F C I P L A

Ciplas distribution network in India comprises


a field force of around 5,100 employees and
42 exclusive and dedicated sales depots, as
well as approximately 2,300 stockists and
160,000 chemists
Long established relationship with doctors and
Hospitals has also been an effective tool of
distribution
Cipla follows two business models for its
distribution. Firstly it follows Super Core
Model, which involves searching for and
distribution of a small number of drugs from
chronic
therapy
area
that
achieve
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Secondly, Core Model is there which involves


placing of a large number of drugs from acute
therapy area being distributed and marketed
to big diversified markets. The plus point of
this model is its success isnt dependent on
sales of a small number of drugs
Cipla works closely with local distributors to
reach widely disparate health care facilities,
pharmacies and other distribution channels
(typical example can be production and
marketing partnership with Medpro in South
Africa and a minority stake in Quality
Chemicals Associates in Uganda)
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Cipla distribute it products in different market.


To illustrate, Cipla had a tie up with Clinton
Foundation to distribute its ARV in Africa. In
the US, Cipla distributes its products through
generic pharma companies such as Teva and
Eagle

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D I S T R I BUT I O N
S T R ATE G Y O F N O K I A

Nokia, which was established in 1865 in


Finland
has
14
manufacturing
plants
throughout the World and around 59,000
employees.
Nokia owns R&D Centers in Japan and China
Nokia has started its process in India in 1995
and have offices in major cities like New Delhi,
Mumbai, Chennai, Kolkata, Hyderabad, and
Bangalore.
Nokia manufacturers its mobiles in Chennai
Manufacturing Plant and then it transfers to
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Nokias mother depot
located in Gurgaon.

HCL starts distributing Nokias GSM product


from Gurgaon Mother Depot.
First HCL takes order from all the distributors
in this region and then it supplies the product
to the retailers with the help of RDSS (Re
Distribution Stockist Suppliers).
RDSS city caters to large cities and supply
directly to the retailers whereas RDSS MD will
supply to its micro distributors to cater small
towns and through them it will be supplied to
retailers.
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The above mentioned distribution channel


structure of Nokia HCL is restricted to North
and East part of India.
For west and south India Nokia has developed
its own distribution channel.
Apart from distribution, Nokia also takes
responsibilities like recruiting sales force,
training and developing.
Nokia rolled out its new channel distribution
as Nokia concept store. These stores would
have wide range of Nokia mobiles along with
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mobile enhancements
also.

The new concepts had launched new


branding which was extended to other Nokia
retailer and other multi-brand shops. These
concept outlets will help in reducing the
distribution cost and transportation cost.
Nokia franchised its brand exclusivity in the
name of Nokia Priority Dealers. This would
include converting a normal outlet into Nokia
Priority Dealer outlet. But the franchiser will
help in visual merchandising and loan for
deposits which are refundable.
Nokia planning to venture in rural markets
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along with the concept
of micro financing for

Nokia's mother
warehouse
(Gurgaon)

Network
operator

Large
distributors

Mobile store,
Agents and
Dealers

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Network owned
outlet s

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Apart from its Nokia concept stores, the


company distributes its product to many
multi-brand mobile stores which are well
known in India for their service and price
discounts. They areHot Spot
Univercell
The Mobile Store
The CDMA handsets are transferred from
Nokia Chennai manufacturing center to
Gurgaon mother warehouse near Delhi and
from there it is delivered directly to the mobile
network operators of India.
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There they will assemble their respective


mobile networks SIM card and then send it to
its own operators outlets and large
distributors.
The large distributors will further transferred
to agents, chain of stores, etc. and finally it
will reach the end customers.
Nokia has a tie-up with TATA Indicom and
Reliance network for its CDMA handsets.

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D I S T R I BUT I O N
S T R ATE G Y O F
A M W AY

Amway is an American MNC which uses Multi


Level Marketing to sell its wide product line
primarily in health, beauty and home care
markets.
The supply chain of Amway India banks on
Third party manufacturing. There are total of
seven manufacturers in India and a total of
four main regional warehouses located in
cities such as Bangalore, Kolkata, Delhi and
Mumbai.
There are 55 small warehouses located in
4000 towns and cities. Amway India has about
5 Lakh Amway Business
Owners (ABO).
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Raw Material
Amway Manufacturing and
Distribution
Amway Business Owners (ABO's)

End Consumers

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Amway globally follows a combined strategy


of direct selling and multi level marketing for
distribution where every ABO becomes a part
of Amways distribution network.
Amway business owners can earn income in a
variety of ways such as: Retail Markup,
Volume Rebates, Leadership Bonuses and
Higher Awards & Incentives.
ABOs can buy products directly from Amway
at wholesale price and sell them at retail
prices directly to customers or add a mark up
and sell them to other ABOs. The difference is
earned by the ABO.
The
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In case of Volume Rebates, every product is


allocated a Point Value (PV) and Business
Volume (BV). The PV is used to calculate the
rebate percentage earned. The BV is usually
close to the wholesale price of the product
less relevant sales tax. The rebate paid is
calculated by multiplying the PV rebate
percentage by the total BV.
The Leadership Bonuses and Higher Awards &
Incentives are dependent on excellent
performance in direct selling. Some bonuses
and recognition levels (Silver, Gold, Platinum,
and Diamond) are allotted for this.
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D I S T R I BUT I O N
S T R ATE G Y O F
WALMART

Wal-Mart is Worlds third largest public


corporation. With over two million employees,
this company is also Worlds biggest private
employer and the largest retailer. Wal-Mart is
still a family owned business with 48% of the
stake owned by Walton Family. Wal-Mart is
also one of the most valuable companies in
the world.
Being such a large firm, this company has
achieved the economies of scale. Wal-Mart
has also made it very difficult if not impossible
for the new entrants to enter market.
But the biggestIIM Raipur
reason
behind the growth
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Wal-Mart installed a new barrier to entry when


the firm developed its electronic data
interchange
system
that
improved
communication with suppliers and distribution
centers and improved inventory control.
The firm has launched superstores offering
groceries
and
provides
a
shopping
environment like none other. Greeters
welcome customers at the door and the
employees are departmentally cross-trained in
order to assist the needs of various
customers. Wal-Mart has been extremely
successful in creating a brand name and good
reputation as theIIM leader
in the industry. Their
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D I S T R I BUT I O N
S T R ATE G Y O F P F I Z E R

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Initially, the goods are manufactured and are


passed on to the CFA, which is an external
player who forwards the goods to the Pfizer
stockiest and works on a margin basis.
Pfizer follows an Advance Cheque System for
delivery of goods. Further, the goods are sent
to the retailers, semi-stockiest and the
dispensing doctors.
Semi-stockist are those stockist which are not
Pfizer official stockiest. The doctors who
dispense medicines by their own are known as
dispensing doctors. Through these people the
goods reach the end
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Recently in the year 2011, Pfizer have


formalized an alliance with fast-movingconsumer-goods (FMCG) company ITC to tap
the rural markets for their over-the-counter
(OTC) products.
This alliance is reported to have undertaken a
pilot project in Uttar Pradesh.Pfizer India's
consumer health portfolio includes brands
such as Gelusil, Nebasulf, Selsun, Ferradol,
and Waterbury's Compound.

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D I S T R I BUT I O N
S T R ATE G Y O F A RVI N D
MILLS
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The Arvind Mills operates 205 small format


stores and 6 large format Megamart stores
located across Chennai, Bangalore, Pune and
Mumbai in India.
The Company has a countrywide distribution
Network comprising of about 150 dealers to
whom goods are supplied directly.
The dealers then supply the goods to the
retailers. The Company has appointed agents
to take the indenting and Del Credre
responsibility. This distribution network results
into an unprecedented reach and deeper
penetration into unexplored markets
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It is also pushing IIM
for
more
retail outlets in cities

AIRTEL

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Distribution channels
In Urban Areas

Airtel directly supplies its products to the distributors


in urban areas through Territory Manager.
Territory Manager distributes the products as per
demand for individual distributors, which is scheduled
as per the target for the territory.
In urban areas the margin for the Distributor is 1.3%.
Distributor distributes the products to the FSEs. Their
job is to supply those products to the Retailers.
The Retailers margin is 2.7%.
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D i s t r i b u t i o n - Ru r a l
Same procedure is followed in the rural areas but the
distribution system is completely different from Urban
Area and the margin is also different. Companys
supply system to the territory manager follows the
same procedure as followed in the urban areas. The
product is at first distributed to the Rural
Super(RS).They have a margin of .7%.Products are
supplied
from
the
RS
to
the
Rural
Distributors(RD).They have a margin of 1.1%.As per
the same Urban system, few FSB works under each
RD and they supply the products to the individual
retailers. The retailers have a margin of 2.5% and
2.7%.
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Stock system in
distribution
The complete stock maintenance
procedure is categorically divided in
two parts : Stock to be maintained by Distributor
Stock to be maintained by Retailer

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Distribution network

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D I S T R I B U T I O N S T R ATE G Y
OF MOTHER DAIRY
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- Mother dairy, a wholly owned company of the


national dairy development board (NDDB) is one of
the
biggest
milk
distributor.
- Mother dairy has a market share of more than 60%
in New Delhi where it sells 2.5 million litres of milk
every day and undertakes its operations through
around more than 15000 retail outlets and more than
850
exclusive
outlets.
- Mother dairy also launched ice creams in the year
1995 and today boasts of approximately 60 % market
share in New Delhi and NCR through its distribution
channels.
- Mother dairy is one milk company that sells the
worlds largest branded loose milk.
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- It has more than 50,000 outlets across the


country, it has 3,000 milk booths in New Delhi alone,
of which about 8,00 are under direct company
control, about 750 are franchisees and another
1,500 are under the control of ex-servicemen (as a
part of the army re-employment programme).
- To expand its base, mother dairy is mostly
targeting the highways that connect with New Delhi
as it makes distribution easier. Milk needs to travel
in a route, so we need to cater to every town that
we move in. So we have almost covered the
highway from New Delhi to Panchkula in Haryana.
The route includes cities like sonepat, panipat,
karnal, kurukshetra and chandigarh as well. We have
also gone to Dehradun, the route to which includes
Meerut, haridwar, IIM Raipur
rishikesh
among the rest.
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- Loose milk is the cheapest form of branded milk


available. It is aboutRS.2 cheaper than toned polypack
milk.
- The price also makes it a favoured choice for the
bottom of pyramid (BOP), which also is one of the
target groups of mother dairy for the booth network.
- Insulation container outlets are set up in areas
where four wheelers cannot reach. With a capacity
of 200 to 600 litres, Loni and Wazirabad in New Delhi
are two of the places where one can spot these
containers.
- The company is hoping to add about 700 outlets
(350 each) in New Delhi and Mumbai in 2012.
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PHILIPS

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PHILIPS
DISTRIBUTION
SALIENT
The televisions
and audio products consists
of 1,300 dealers
nationally, the high volume
FEATURES
mass products are sold through 100
distributors
These 100 odd sub-distributors will work as
per advance payment basis.
Dealer health monitor(measuring the dealer
performance ) .The purpose is to improve
sales by increasing POP, merchandising small
schemes at the non
performing counters
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PHILIPS
DISTRIBUTION
PhilipsSALIENT
utilized its lighting network
DVD players
FEATURES

to sell

The
80 super stockists with 2,100
distributors below them began to sell Philips
appliances which included electric irons and
mixer-grinders along with DVD players.
Philips began to train its shop-floor assistants
about product features on a regular basis.
Philips is also communicating with retailers
directly rather than delegating it to
distributors, feedback
from retailers.
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PHILIPS
DISTRIBUTION
SALIENT
FEATURES
Philips is having large distribution networks
with high penetration levels in the semi
urban and rural regions
Philips did product wise mapping exercise in
over 540 districts throughout India
Philips plans to serve over 4,200 towns in
semi-urban region.

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Philips Products

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Volkswagen Distribution Salient


Features
Volkswagen follows in distribution :
Strong dealer network
Adapted local marketing

At the moment ,in India Volkswagen has 43


dealers in 32 cities
VW has its traditional distribution channels
(resellers)
The company had established presence
inIndiathrough
separate
distribution
channels for each of its brands.
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Volkswagen Distribution Salient


Features
Volkswagen distribution in China:Volkswagen & Audi keep separate
distribution channels, but strengthen the
dealership network, sales & service stores,
after-sale service
Distribution network relocation from tier 1,
tier 2 cities to tier 3 and tier 4 cities
Shops main sales and service channel
improve after-sales service
Reverse logistic car decomposition
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Volkswagen products

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D I S T R I BUT I O N
S T R ATE G Y O F N E S T L E

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- Nestle has its own distribution networks equipped


with all necessary transportation facilities for
proper
distribution
across
the
country.
- Transport their products at major regional sales
offices/warehouses, which are situatedat different
cities
of
India.
- Thesesales offices (distribution centres) have
their own vans with salespeoplewho selland
transport
goods
to
the
retail
outlets.
- The productsare sent to the clearing &
forwarding agents of the company from its
manufacturing
unit.
Then at later stage its been sent to distributor and
super stockists.
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-The distributors are responsible to manage the


availability ofproducts in their respective area.
-Whereas super stockistsupplies the goods to
there-distributors who are responsible for
managing the availability of outside the region
ofits
distributors.
-Then
the
distributorsand
re-distributors
supplythe productsto wholesaler and retailers in
their
respective
zones
or
area.

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- The distributors will be appointed by the company


for
every
city.
- Those distributors have the responsibilities to
maintain the proper flow of the nestle goods in their
respectiveregions.
- On the otherhand there will bea super stockist in
the same city who will supply the products to the redistributorwho will be there in the surrounding areas
ofthat
city.

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THANK YOU!!!

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