Distribution model
Channel Structure In
Model 1, rural distribution has been separated from urban distribution to
create a specific focus on the rural market.
Coverage area of rural
distributors is clearly defined. Company appoints a sub-distributor under the
distributor to penetrate deeper into rural areas upto the 5000 population
villages.
The RD covers a large
area with poor road network and a low volume per outlet, which would make it
unprofitable for him to cover small locations. The RD services the wholesale
market in his area.
It has a large number
of points appointed in the rural areas, because the locations are many and
scattered.
Model focuses more on distributors and
sub-distributors rather than the wholesale channel.
This is a simpler model compared to DM1. There is no
separate channel for rural distribution.
This model minimizes distribution costs, allowing
the company to offer better margins to the distributors and other channel
partners who then push the sales of such products.
Wholesaler
locations work as
feeder markets, from
where the company
caters to the
requirements of nearby villages, places not covered
by the distributor.
It is mostly companies with a limited number of SKUs
and high sales volume that adopt this model.
Channel partners are few and the
distributor is given a large territory.
The structure followed by Nirma consists
of minimum channel partners. Direct distributors receive supplies from the
depot. Market coverage is mainly through the wholesaler‘s network and hence few
distributors are required to handle bulk despatches.
In some cases, a big wholesaler plays
the role of a sub-distributor, supplying to the retailers and wholesalers.
Since durables are
purchased largely from small and large towns, the number of locations for
distribution is a few thousand only and these can be managed by a few channel
partners.
LGs manufacturing plant is located in Greater Noida,
near Delhi. The finished goods are transported from the manufacturing plant to
the company-owned depot, which in turn passes down the line to C&F agents.
There is a specific area assigned to each C&F agent and multiple dealers
and exclusive dealers are The orders are generated by the company‘s C&F
Manufacturers to wholesalers/retailer in
big city or small town, or directly to customer
–Manufacturers
take orders for fake products through personal visits or over the telephone
from big wholesalers/retailers who deal in fakes. They also leave
sample of new fake products for test marketing. Delivery is made to
wholesalers/retailers through vans and tempos authorized by the manufacturer.
Wholesaler in big city to wholesaler in
small town/kasba –Wholesalers in kasbas source their
supply of fakes through daily rail commuters. These passengers book
orders from
wholesalers and collect supplies from the
manufacturer of fake goods. These are hand delivered the next day.
Wholesaler in small town/kasba to
village retailer/mobile trader/haat –Salesmen of fake
products visit retailers in villages of 3000+ population category
located 15-20 km.
from the nearest town to deliver products. Mobile
traders get their stock of fake goods for purchases above Rs. 500 from mandis
in nearby towns, or from the nearest kasba for
smaller purchases.
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