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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
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