Distribution Decisions

Having a strong product does little good if customers are not able to easily and conveniently obtain it. Along with price and promotion decisions, a decision has to be made on the distribution system. There are two components to this - the physical (order processing storage/warehousing and transport) and the institutional aspects. The latter involves the choice of agents, distributors, wholesalers, retailers, direct sales or sales forces.

Amul products are available in over 500,000 retail outlets across India through its network of over 3,500 distributors. There are 47 depots with dry and cold warehouses to buffer inventory of the entire range of products. GMCMMF has 42 regional distribution centres in India and exports to more than 15 countries.

A marketer’s distribution system must be both effective and efficient.

In order to facilitate an effective and efficient distribution system many decisions must be made including (but certainly not limited to):

·         Assessing the best distribution channels for getting products to customers

·         Determining whether a reseller network is needed to assist in the distribution process

·         Arranging a reliable ordering system that allows customers to place orders

·         Creating a delivery system for transporting the product to the customer

Resellers

These organizations, also known within some industries as intermediaries, distributors or dealers, generally purchase or take ownership of products from the marketing company with the intention of selling to others. If a marketer utilizes multiple resellers within its distribution channel strategy the collection of resellers is termed a Reseller Network. These organizations can be classified into several sub-categories including:

·         Retailers.

·         Wholesalers

·         Industrial Distributors 

·         Specialty Service Firms

These are organizations that provide additional services to help with the exchange of products but generally do not purchase the product (i.e., do not take ownership of the product):

·         Agents and Brokers

·         Distribution Service Firms 

·         Others

The success of AMUL has depended on how well it has formed or managed to become a part of these existing network of suppliers and consumers. These economies are complex and have unique characteristics that range from underdeveloped markets to small and fragmented supplier base.

In the end:

It is noteworthy that successes such as building networks, developing trusts and value in networks, developing fair mechanisms for sharing benefits across the supply chain, coordination for operational effectiveness were achieved within the framework of a network of cooperatives organized in a hierarchical manner.