Nestle Distribution Channel

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Table of Contents
Sr. No.| Title| Page Number|
1| Introduction| 2|
2| Distribution Channels Structure| 2|
3| Terms of Appointment and Incentives for Distribution Channels| 3| 4| Reporting, Control and evaluation system for their sales force| 5| 7| Recommendations and Conclusion| 5|
8| References & Bibliography| 6|

Introduction:
Success toady in the competitive world has become very difficult. This is because it does not solely depend on basic factors but on all the factors related to the organisation. Earlier it was possible for an organisation to dominate in the market but today due to lot of different methods, channels and modern tools for marketing and functioning of the organisation, the world has become very competitive. In this assignment the author is concentrating on two major players in this competition, the distribution channels and the sales force. The company in discussion here is Nestlé UK and the product for narrow research is Nestlé’s own most successful brand “Kit Kat”. Nestlé homes itself in Switzerland since 1867 today is one of the world’s most successful organisation in the FMCG category. (www.total-logistics.eu.com, accessed 08 August 2010) It started its UK activities around 100years before and started their own manufacturing unit. Today Nestlé has 8 manufacturing plants in UK with two head offices in Croydon and Dublin. (www.nestle.co.uk, accessed 08 August 2010)

Distribution Channels Structure:

According to Brassington and Pettitt, a channel structure is a route selected in order to move the product to the market through different intermediaries. This is the distribution channel structure which proves vital for the smooth movement of the product and making it available to the end consumer. Distribution Channel Structure forms the fourth element of the Marketing mix for any product. The ‘Place’ element, and therefore it becomes an important factor. There are various channels of distribution adopted by various companies according to their product requirement and strategies. Apart from the above said vital function of a distribution channel, it has various other functions like:

1. Gathering market information which includes market research that helps future market planning. 2. Searching potential buyers and communicating them.
3. Doing promotional activities.
4. Achieving buyer specific demands and requirements.
5. Deciding on offers and pricing issues.
6. Storage and transportation of goods.
7. Managing funds required for functioning of the distribution channels. (www.tutor2u.net)

Nestle adopted a strategy that their products should be made available in all the parts of UK and that they should not be falling behind for the supply, basically called as the ‘whenever’, ‘wherever’, ‘however’ strategy of distribution. In order to achieve this they needed a strong distribution network which supported their strategy and was cost effective. According to marketing department of Nestle UK they had analysed the following different channels of distribution.

Single Tier Distribution Network:

Producer – Retailer – Consumer

Two Tier Distribution Network:

Producer – Distributor – Retailer – Consumer

Multi-Channel Distribution Network:

Producer – Distributor – Regional Distributor – Wholesaler/Retailer – Consumer

(www.nestle.com, accessed 08 August 2010)

Owing to the huge retail market in UK the single tier distribution was almost impossible for Nestle to adopt as the distribution for Nestle directly would have become very complicated and the product strategy could not have been achieved. So they opted for multi-channel distribution network and appointed their own major distribution points at Bardon in Leicestershire and York in North Yorkshire. Bardon handles the food and beverage industry of Nestle in UK and York handles the confectionery industry of Nestle. The product in discussion here is Kit Kat which is...
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