In fact, all speakers agreed that with traditional media facing immense clutter, brand warfare had shifted to the distribution channel. A competitive advantage in distribution now works as a strategic advantage in brand warfare. Channel domination can even act as an effective entry barrier to new products.

Merchandising, display space, shelf space, stocking levels are all being used as tools to establish brand differentiation or superiority. With the rate of brand SKUs (stock keeping units) proliferating, the pressure on shelf-space increasing, and the number of retail outlets not growing at the same rate, therole of the distributor assumes greater importance.

Elaborating, Pan said the `Distribution Process Brand' becomes a shared resource for all the company's brands. ``Thus, when SBCH entered the oral care business one-and-a-half years ago, which was dominated by Levers and Colgate, retailers almost welcomed us because of our strong distribution brand process.''

With the proliferation of channels from kirana, paan shops, chemist shops to shopping malls, super markets and `mom & pop' stores, the millennium challenge is: managing supermarkets at one end of the spectrum to hole-in-the-wall mom & pop stores at the other end, each needing different kind of skills. The importance of a trade channel then depends on the product cycle. So, for a new over-the-counter product, initially chemists would be important, but as it matures, supermarkets would become a key channel.

Stressing the importance of distributors, Naveen Kshatriya, director, consumer division, Castrol, said Castrol, which earlier had onlywholesalers and semi-wholesalers, was able to increase its reach by opting for a distributor-based system, ranging from small towns to metros. It has increased its distributor network six-fold from 5,000 to 30,000 over the last eighteen months. Stressing speed and manoeuvrability, he compared distribution challenges to driving on a highway, where the prowess of other drivers is not known.

Pointing out that reliable distributors are shrinking, he said ``Efforts should be made to retain good distributors by ensuring a decided return on investments, increasing their volume of business as their costs rise and through consolidation of business.''

Jaswant Nair, CEO, sales, Marico, spelt out the four key issues in the FMCG market as: Cost effective rural distribution; High channel costs; Retailer influence; discontinuities

Together, the challenges are: Reaching 73 per cent of the population, which is in rural areas, dispersed and inaccessible and with widely different living habits. ``All FMCG companies arechasing a small group of distributors who are mainly functioning as traders with very little to further their business,'' he added.

The need is to shift gears, in urban markets from multiplicity to consolidation of distributors, using them as information processors, eliminating the push role of distributors by creating in-shop brand saliency, volume-linked incentives rather than flat margins, developing relationship management skills, and a new generation of retailers: for example, telephone orders, door delivery.

Manish Mehra, divisional manager, Asian Paints, spoke about the comprehensive supply chain solutions which have been implemented by Asian Paints. The Internet has made `disintermediation' a possibility, with companies reaching out to consumers directly. Sustainable e-commerce solutions will also be an important part of the strategy in future.

Other distribution challenges include: enhancing relationships with channel partners (premium clubs, dealer panels, feedback on company policies);improving performance sales force through training; distribution incentives; and gathering business intelligence on competitors through the distributors.