Tuesday, July 04, 2006

Role of Distribution in launching new Brands

As mentioned in the last few posts, distribution is the key in FMCG sector. So lets start with some stats.
  • ITC cover 2 million outlets directly and 4 m indirectly
  • HLL cover 3 to 3.5 million outlets indirectly
  • India has 6 million outlets

Does this presence of ITC and HLL will help them to launch new Brands? Lets look at some points:

  1. Brand ITC/ HLL
  2. Established relationship of with the outlets
  3. Outlets dependent on the companies for other brands in Demand in Market
  4. Attractive Trade Promotions
  5. Retail Outlets also need a variety, be it biscuits or soap, to satisfy different needs of the consumers

A combo of Branding Expertise and Distribution Capabilities is required.

Lets take few examples:

  1. STAR Cigarette: With ITC's deep penetration and right relationship with the outlet owners, they were able to launch a new brand in Bingo category. Just think of the numerous rules & regulations in tobacco industry which make any cigarette company almost impossible to lauch a new name. But nothing is impossible with ITC
  2. Sweet N Salt: With ITC's umbrella biscuit brand - Sunfeast and deep touch in the market, ITC was successful in launching a new brand few weeks ago - Sunfeast Sweet N Salt

So all FMCG companies out there build Distribution Expertise !!

5 Comments:

Anonymous Anonymous said...

Can u please define what is a outlet.

August 01, 2006 7:58 PM  
Anonymous Anonymous said...

Very cool design! Useful information. Go on! » » »

February 06, 2007 3:34 AM  
Blogger noni said...

plz update me on some distribution ideas wich can inrease the overall acceptability (or sale) of the brand among retailers......

July 17, 2007 10:41 PM  
Blogger Nitin Kochhar said...

the most important thing for a retailer is money or some incentive

Many companies keep running some scheme or the other ... may be on sales, visibilty over a period of time, customer trials etc and make them motivated to sell their brands. Many companies like HLL, ITC, Colgate Palmolive will take windows in the outlet and will pay for example Rs. 300 a month ... or in case of super value stores of HLL they give a straight discount of 3% as extra incentive ...

This world is materialistic so better the marheters leverage that ...

But thats not all ... some innovative things can be done like retailer management system ... where the company has details of the retailer B day etc and send him across a gift on these occasions .... the gift may not be that expensive ...but it develops a bonding with them ... there comes an emotional connect

As mastercards says - money cant buy everything ... for everything else there is mastercard

July 18, 2007 7:37 PM  
Blogger manivannan said...

hi good information.
i have just finished my mba an wanted to start distribution business . pls guide me with information and i need answers for questions like
1.will big companies give distribution for new entrants.
2.is it a profitable business.
3.how to know about the opportunities for distribution in the market . pls guide me.....

May 10, 2010 10:56 PM  

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