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Ratio of Direct and Indirect Distribution in the Global FMCG Sector by the Example of Beauty Care Products of Henkel, L'Oreal and Unilever in Russia and Brazil

Student: Viktoriia Golubkina

Supervisor: Alexandra Zhukova

Faculty: Faculty of World Economy and International Affairs

Educational Programme: International Business (Master)

Year of Graduation: 2019

Nowadays the Global FMCG market can be characterized as very saturated with a high level of competition between market players. In order to succeed under conditions of such a tough competition, Glibal FMCG companies try to think through all their business processesand special attention is paid to the distribution strategies, that can be divided into direct and indirect. The type of strategy and in what proportion it is used by the global FMCG companies depends on many factors: the host country infrastructure, type of provided products, market peculiarities and conjuncture. It is very important to determine the right ratio of direct and indirect distribution, as in the case of failure it may result in higher shipping, storage, and delivery costs, uncovered areas and unsatisfied customer demand, that eventually lead to decreasing sales turnover. The study analyzes of what proportion direct and indirect distribution strategies are used by the global FMCG beauty care companies in Russia and Brazil. The object of the research - direct and indirect distribution of global companies The subject of the research - direct and indirect distribution in the global FMCG sector. The goal of the research – to identify the effective ratio of direct and indirect distribution in the global FMCG sector,on the example of the Global FMCG beauty care companies of Henkel, L’Oréal and Unilever in Russia and Brazil and to give recommendations concerning the creation of effective distribution strategy. On the way to achieving this goal the following tasks are put forward: - Study theoretical aspects of direct and indirect distribution in the Global FMCG sector; - Carry out thorough research of the Global FMCG Beauty care sector; - Carry out detailed analysis of distribution strategies of Henkel, L’Oréal and Unilever companies in Russia and Brazil, and outline the main differences and similarities in these strategies; - Define differences and similarities in approaches to developing distribution strategies of Global FMCG Beauty care companies, find the best proportion of direct and indirect distribution, provide recommendations for the companies. The following hypotheses are put forward: 1. In global FMCG companies indirect distribution accounts for 10%, while direct distribution accounts for 90%; 2. Global FMCG Beauty care companies have all grounds to develop indirect distribution, especially through distributors.

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