Sales channels to reach your customers
Selling through retailers, wholesalers and other distributors
Selling through an intermediary may be a more cost-effective way of reaching your end-customers than selling to them directly.
If you are targeting business customers who prefer to deal with large suppliers, selling directly to them may not be a realistic option. Instead, you might aim to supply wholesalers who have existing relationships with those businesses.
If individual consumers buy low value quantities of your products, the best option might be to target retailers that sell similar products. Or you might choose to focus your efforts on a relatively small number of wholesalers who can in turn supply your products to many retailers.
Other distribution channels may also reach your end-customers. For example, technology suppliers often sell to resellers who can configure and install the technology to suit end-users’ particular needs.
Managing your distributors
You need distributors who will value your product. If they sell competing products, what will make them push yours?
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Think about how you set your prices. Distributors will be more enthusiastic if they can make a large profit – but setting too low a price will eat into your own margins.
Effective advertising and promotions can be vital. As well as marketing to the distributor, you can promote your products directly to end-customers. Distributors will be keener to stock and sell products that their customers are asking for.
The key terms of the supply relationship should be covered in a written contract. Key issues might include:
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how much stock the distributor will hold
what the distributor will do to promote your products
how quickly you can resupply and minimum order levels
whether the distributor has exclusive rights to your product (for example, in a particular territory)
what happens if either you or the distributor want to end the relationship
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Indian FMCG Sector Trends – 2008
In this post i have covered multiple trends happening in the Indian FMCG sector.1. Focus on HealthCompanies are widening their health food portfolio to cash in on the rich, urban, health conscious Indian. In recent we have seen flurry of products in this segment. Have a look of some of them:1.1) Sugar free Chywanprash1.2) Organic spices/ pulses1.3) Multi grain pastas/ Biscuits1.4) Processed foods particularly juices1.5) Probiotic Ice Creams1.6) Butter Lite (Nutralite)1.7) Corn Flakes/ Oats1.8) Lays (40% less saturated fats) Snack Smart1.9) Low Calorie Sweetners2. Impact of Inflation: The expenditure of FMCG in the consumer’s wallet is coming down year on year. This is leading to low sensitivity with price increases. ALmost a decade back people use to downtrade from expensive brands to value for money ones. But now the trend is changing. Consumer are not switching to cheaper substitutes. Rather companies have come with lower quantity SKUs and make consumers switch from higher to lower SKUs and not from premium to popular brands (like Dove to Lux International). Just to give you an example, Henkel instead of increasing the price of their Henkwl detergent from Rs. 46 to Rs. 50, they have launched a new SKU of 400gms for Rs. 40. During the time of inflation, people shift to sachets of their brands. Sales numbers of FMCG companies are quite robust.FMCG spend now comprises a smaller share of consumers wallet3. Micro Segmentation/ Niches: Its interesting and funny to see that companies are not leaving any opportunity to micro segment the market. I can forsee that we are here to see further segments in different categories. Here are some examples:Agea) Junior Horlicksb) Junior Chyawanprashc) Pepsodent Barbie for Kids/ Colgate StrawberrySexa) Womens Horlicksb) Male fairness creamSpecialized Household Cleanersa) Kitchen Cleaner: Mr. Muscleb) Power Cleaner (Rust): Easy Off Bang4. Low value SKUs – Sachetization: You name the category it has a sachet !! We all know that it all started in 1980’s with shampoos. I think Nano is an interesting example of an automobile sachet. Here is a small list of sachets:4.1) Shampoos4.2) Butter (Munna Pack)4.3) Hair Oils (Navratan Thanda Thanda Cool Cool)4.4) Noodles (Chotu Maggi)4.5) Ketchup (Pichko)4.6) Toilet Cleaner (Harpic)5. Jet Age Consumer Products: Becasue of changing lifestyles, busy jobs etc marketers are coming up with Jet Age consumer products.Ready to Eata) Con Flakes/ Oatsb) Pastasc) Biscuitsd) Noodlese) Pizzasf) BurgersReady to Drinka) Energy Drinksb) Non-Cola Drinks (Juices)Ready to Cooka) Cut Vegetablesb) Soupsc) Paranthas/ Rotisd) Snacks6. Mainstream Penetrated Growth Categories: The high penetrated categories like Hair Oils, Washing Detergents, Detergent Cakes, Soaps etc are expected to grow at a healthy rate of 10%, attributed to price increases (not much impact of inflation – explained in point 2) and low volume growth.7. Under-penetrated Growth Categories: Barring few main mainstream categories as mentioned above, there are number of FMCG categories with low penetration and are expected to grow by 20% during 2008-2009. Have a look of that list:7.1) Mens grooming products7.2) Skin care & Cosmetics7.3) skin/fairness cream7.4) Anti-aging solution7.5) Shampoos7.6) Toothpaste7.7) Hair Colour7.8) DeodorantsThere lies a huge potential in these categories.8. Low Per Capita Consumption: Currently we are nowhere near to other developing countries in terms of per capita consumption. Be it Laundary, Skin Care, Shampoos or deodarants. Marketers have put in efforts to increase the consumption frequency or quantum of consumption per occasion. Colgate started the “twice a day” campaign few years back. Recently we have Good Night coming up with Double power pack. Per Re1 increase in per capita consumption of a category will lead to growth of more than 100 crores (with a popular base of more than 1 Billion)9) Evolved Product Forms: 20 years back consumers had limited choices to pick from. The days of Tortoise Mosquito repellent coils are gone. This is the age of aerosols with value added functionality. I have picked up some examples, were we have seen a change in the product forms. Here is the list:Dish Wash: Powder to Bar to LiquidShaving: Creams to Foams/ GelsRepellents: Coils to Aerosols/ Body Creams/ GelsAir Freshners: Sprays to ElectricToilet Cleaner: Acid to Harpic to In-CisternLabels: FMCG Trends