If not, than be ready to perish as you might be wasting your resources, you might be losing sales and worst you might be helping your competitors increase sales, as atleast one of your competitors would always be available with the retailer, and the retailer would more often than not be able to persuade the customer to buy your competitor's brand even if the customer had come with the intentions of buying your brand. The retailer would not stop at that he would add to your abrasion by adding that your competitor's brand is better than your brand. Such incidents may make a considerable dent in your brand's image.

Allow me to analyze the issues on distribution in India from the following three angles:

	Innovations in distribution
	Mammoth size of retail network in India
	Channels of distribution.

Innovations in Distribution

With product and price parity and the concept of brand loyalty reducing to loyalty towards a set of brands (Consideration Set) in almost all the product categories, innovations in distribution become extremely important in deciding the winner in the market place. The best of marketing plans would not succeed if your product is not able to make it to the retailer's shelf. Distribution is truly becoming an all-pervading factor for success of any marketing plan.

For instance, one could make available soft drinks or juices and scores of other products at barber shops and beauty parlours, where both men and women invariably spend at least about half an hour in a month, or say, one could look at making available products like shampoos and oil sachets at select food stalls near beaches as people would like to consume these products on beaches. This would not only increase sales but also increase number of availability points and visibility in the market.

Mammoth size of the retail network in India:

Recent studies conservatively estimate the number of retail outlets in India at a sky-scraping number of 6 million and this number is increasing steadily. This mammoth size poses a difficulty of being available at atleast in the regular outlets forget about innovations in distribution. Solution obviously lies in using intermediaries in distribution judiciously. Clustered approach in distribution should always be followed; to elaborate, it would mean that your product should be made available at all the potential (to sell) outlets in towns where you are distributing. One could decide against distributing in a (low potential) town completely. It is always preferable and economical to distribute in few towns completely than distributing in many towns partly. It would also allow you to leverage each rupee of the money spent on advertising to the maximum extent. After consolidating distribution in towns selected in phase I, one could move to another cluster of towns.

Channels of distribution: 

To my mind there could be atleast the following six channels of distribution:

a). Indirect Channel :
This is the most popular form of distribution in India; it involves distribution of goods and services through intermediaries. However, one myth should be cleared that the intermediaries would prefer product of those companies, which would offer maximum margin. This is not true. Before margins retailer generally look for three things, which I call the three S's for retailers. They are :

b). Direct Channel: 
This is not yet developed to the fullest extent in India as cost of maintaining a direct channel is high. Eureka Forbes is one of the companies, which is using this channel successfully. Industrial selling generally takes place through this channel.

c). Franchising :
This mode has tremendous potential but is yet to mature in India.

d). Owned Outlets:
Successfully used by companies like Bata, this gives the advantages of better control but this control comes at the cost of very high investment in real estate. This channel's growth would be only to a limited extent, as it requires a lot investment in real estate.

e). Direct Response:
Would mean selling through mailer, TV, Net. Contribution of sales through Direct Response is low and to my mind would continue to remain low atleast for the next 10 years. This would be used more as a medium for information and actual sales continue to take place more through the above four channels.

f). Multilevel Marketing (MLM):               
Another channel that is showing great potential is MLM. Recently companies like Hindustan Lever Limited have also ventured into MLM. The issue in MLM is of trust. People are skeptical about products sold through MLM because number of companies using this channel have duped their customers.

One of the rare points on which India is unanimous is that competition is increasing rapidly perhaps at a rate faster than the rate of growth in population. More and more people are fighting for the same share of the rupee from the consumer's pocket. This would not allow any laziness in the process of Sales and Distribution.

By the next decade, distribution would emerge from the backbenches of marketing discipline to become a highly specialised area of expertise, critical to success of any brand.

Happy Sales and Distributing for survival and growth.

Top