What is Institutional Sales in FMCG Industry ?

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Many people are curious about knowing What is Institutional Sales Or What is purpose of institutional sales.

Today we will discuss in detail about it.

After having discussed product sales, market sales, sale at wholesaler and retailer points, let us discuss another buyer of FMCG products.

Today we will discuss the institutional sales in FMCG.

Institutional sales:

Institutional sales in FMCG means all those sales which are done to institutions .

Institutions have their own captive audience or dedicated customers e.g School ,college canteens or stores run by famous chains like Fast track or WHSmith, Canteen Stores Deptt et al.

Canteens in govt office buildings

Canteens for armed forces like CSD or for police personnel or BSF personnel etc. Goods are sold at concessional rates to armed forces or police personnel at discounted rates by these canteens.

Sales in restaurant chains like Mc Donald's, Starbucks,Cafe Coffee Day etc.

Co-operative stores or employee welfare stores run by state/central government for providing products to state or central govt.employees (as the case may be) at concessional rates. Examples are Kendriya Bhandar,or Nafed etc.

Catering departments who in turn cater to big institutions ,e.g IRCTC which is responsible for supplying food and beverages in trains or on railway station platforms , TAJ SATS which is one of institutions which supplies foods and beverages to airlines for passengers.

Some companies also count modern trade chains like Wal Mart, Metro, Reliance Retail ,D-Mart,Big Bazar etc as institutions and count sales to these chains as institutional sales.

Institutions buy in bulk and this bulk purchasing power helps them negotiate competitive prices from sellers.

Companies promote sell their products through institutions to help increase the reach of their products and get trials of their products with customers of these institutions.

Drawback of Institutional Sales:

One biggest drawback of Institutional sales is that institutional buyers some time dump products bought by them in general market at lower rates.

When these institutional buyers dump the products bought by them in general trade ( retail and wholesale markets ) at prices lower than purchase rates of general trade, it affects the general trade as their sales go down due to lower prices or the general trade has to sell on loss to compete with prevailing prices in trade.

Once trade rates are affected by lower rates offered by institutions , sundry retailers and wholesalers stop buying from authorized distributors of companies which affect business of authorized distributors of companies.

Hope this helps.

Thanks.

Mritunjaya Malhan

©2019 All rights reserved.

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