As of Sep 2007, India had a population of 1.1 billion that is every six person in the world is an Indian. Of this, about 33% live in urban areas, and the rest in villages. The country landscape is Vast, it topography varies across regions and its climate conditions vary across both regions and months. With the population of 742 million (66 %) living in ruler areas, distribution of consumer nondurable is a mammoth task. The estimated market size of fast moving consumer goods (FMCG) in 2007 was Rs 7,800 billion per year across the rural markets, which is 52% of the total rural market for the consumer nondurable goods. The FMCG market size in the country is estimated at Rs 7,200 billion per year. Thus, the market for consumer nondurables is spread almost equally between urban and semi-urban towns on the one side and rural areas on the other. Of the total FMCG market of Rs 15,000 billion per year one third is the expenditure on the food items. Even if one assumes that the villages get their stocks replenished once a month, the distribution challenges are staggering, given the number of villages estimated to be over 6 LHKS and poor condition of infrastructure such as road and bridges not to talk of the distance to be covered. The consumer nondurable require frequent replenishment since consumer prefer to purchase such product in smaller quantities but more frequently. Further, given the low income levels of much of the population, shopping as a preferred activity is rather insignificant and hence neighborhood convenience outlets contribute toward much of the sales. This has resulted in the evolution of a large number of the retails outlets to the serviced by the companies in the FMCG sector, both in towns/cities and in villages, due to which the channel structure comprises Warehousing, Clearing & Forwarding Agent who hold possession but not ownership of the stocks distributor, semi wholesaler, and retailers across the country, marking it the most complex sector for distribution activities in India (Please refer below Figure). Which of the eight flows are being managed by each channel member? And describe each channel member manages these flows?
Case Study
FLOWS IN THE CHANNEL: CONSUMER NONDURABLE GOODS (FMCG) IN INDIA
As of Sep 2007, India had a population of 1.1 billion that is every six person in the world is an Indian. Of this, about 33% live in urban areas, and the rest in villages. The country landscape is Vast, it topography varies across regions and its climate conditions vary across both regions and months. With the population of 742 million (66 %) living in ruler areas, distribution of consumer nondurable is a mammoth task. The estimated market size of fast moving consumer goods (FMCG) in 2007 was Rs 7,800 billion per year across the rural markets, which is 52% of the total rural market for the consumer nondurable goods. The FMCG market size in the country is estimated at Rs 7,200 billion per year. Thus, the market for consumer nondurables is spread almost equally between urban and semi-urban towns on the one side and rural areas on the other. Of the total FMCG market of Rs 15,000 billion per year one third is the expenditure on the food items. Even if one assumes that the villages get their stocks replenished once a month, the distribution challenges are staggering, given the number of villages estimated to be over 6 LHKS and poor condition of infrastructure such as road and bridges not to talk of the distance to be covered.
The consumer nondurable require frequent replenishment since consumer prefer to purchase such product in smaller quantities but more frequently. Further, given the low income levels of much of the population, shopping as a preferred activity is rather insignificant and hence neighborhood convenience outlets contribute toward much of the sales. This has resulted in the evolution of a large number of the retails outlets to the serviced by the companies in the FMCG sector, both in towns/cities and in villages, due to which the channel structure comprises Warehousing, Clearing & Forwarding Agent who hold possession but not ownership of the stocks distributor, semi wholesaler, and retailers across the country, marking it the most complex sector for distribution activities in India (Please refer below Figure).
- Which of the eight flows are being managed by each channel member?
- And describe each channel member manages these flows?
(Complete the answer within 250 words)
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