companies do not have a wide network of sales agents and other forces which are required and is ideal for creating their products to the market. This aspects has been taken over by distributors, wholesaler and retailer whose doubles the price of their products by getting margin on every products, when the consumer finally consume the final product. The product of these companies do not directly reaches the consumer market, they are transported by manufacturing unit via c & f agencies or warehouse to distributer who in term sell to wholesaler ,wholesaler sells to the retailers in the consumer market. Contract manufacturing: It has been analyzed that as ” as FMCG companies concentrate on building brand of company , developing their product, creating their distribution network , they are at the same time outsourcing their product requirement to the third party manufacturers .
Moreover small scale industries reserve several items and with this small scale industry unit enjoy the advantages of tax incentives; by this contract management has been grown in importance and popularity.Large unorganized sector: There is availability of large number of the product categories of the FMCG sector in the “unorganized sector”. The small companies from FMCG sector are making use of geographical advantages and regional presence to reach out to remote areas where large consumer product provides only limited number of presence.
Above this their low cost structure also provides them great advantages.