Question

Explain Presence, the aspect of physical availability. If you would be a manufacturer of fast moving consumer goods, which distribution channels would you prioritise in your marketing mix strategy? MARKETING

Answer 1

Being a FMCG major, it is vital to have a robust physical structure of distribution channel. The distribution channel helps in the transfer of ownership of goods from one party to another, that is from the manufacturer of goods to the end customer. The very aspect of physical presence of an intermediary across the channel helps in Bulk-breaking. Say, a manufacturer has 100 cartons ready to be distributed. Then the company might break the bulk by distributing goods volume of 50 cartons each to two distributors who may further resell it to other channel partners and finally one packet of goods reach the end user.

In case of a large FMCG multinational, which intends to have a strong retail reach, I would suggest having a traditional distribution channel to implement it's trade marketing activities. Trade marketing, as the name suggests, involves marketing of goods to the trade and channel partners so that they are interested in reselling our products to end customers.

By traditional structure, I mean the following channel type:

Manufacturer --> Carry Forward agent (Company owned) --> Distributor (Exclusive) --> Wholesalers/Retailers --> Customers

In this structure, it is necessary to have company owned C&F agent to provide logistics support from company warehouses to dealers to build a credible system of flow of goods. Also, the distributors or dealers should only deal with the company products to ensure strict adhering and compliance of company policies. So, the distributor of the firm is entrusted with the responsibility of selling goods in the given territory and the firm ensures the company's marketing activities and sales promotion plans are put in place to have a good numeric and weighted distribution.

In case of a smaller, FMCG startup, it could tie up with third party logistics provider and also, use the resources of an already existing distribution firm to set up its physical infrastructure. In case of rural markets, where distribution is not possible, the manufacturer could use the distribution arm of any other non competing companies to distribute it's products. Such a new start up can also plan the target market where it wants to distribute and look for a local vendor to do trade marketing.