CHANNEL
SIATRIBUTION
PROJECT
Company: Nestlè
Product: 19L Gallon
Project By:
Neevan Sameh
Olivia Amir
Youssef Medhat
Ahmed Alaa
TABLE OF
CONTENTS
1. Introduction to the company & product
2. Profile Description of The Current State of the channel
3. Ability to meet Target Customer segments’ demands for service outputs
4. Gap Analysis
5. Power Characteristics
6. Suggestions for Improvement
7.
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1.Introduction
Nestlé Egypt is a subsidiary of Nestlé S.A., the world’s largest food and beverage
company. In Egypt, Nestlé operates across several categories including dairy,
coffee, infant nutrition, and bottled water. Nestlé Pure Life is the flagship water
brand, and the 19-liter gallon is a key product for hydration in offices, homes, and
institutions using water dispensers.
• Market Position: One of the top bottled water brands in Egypt.
• Target Market: Urban households, corporate offices, clinics, schools, and
gyms.
• Product Focus: 19L gallon bottles designed for water dispensers, offering
convenience and cost-efficiency for high-volume users.
2. Profile Description
A. Channel Structure
• Type: Multi-channel distribution system.
• Design: Combination of direct and indirect channels.
• Coverage: Nationwide, with stronger presence in urban centers like Cairo,
Alexandria, and Giza.
B. Channel Members
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Role Examples
Manufacturer Nestlé Egypt
Primary Distributors Regional water delivery companies (e.g., Aqua Nile, Aqua
Flow)
Retailers Carrefour, Spinneys, Kazyon, local water shops
Online Platforms Jumia, Talabat, Nestlé’s own app
Logistics Partners Local delivery fleets, third-party logistics
End-Users Households, offices, clinics, schools
C. Channel Functions and Flows
Function Description
Physical Possession Nestlé produces and stores gallons; distributors handle last-mile
delivery.
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Function Description
Ownership Transfers from Nestlé to distributors/retailers, then to consumers.
Promotion Nestlé runs national campaigns; retailers use in-store promotions.
Negotiation Nestlé negotiates contracts with distributors and retail chains.
Financing Nestlé offers credit terms to large distributors; consumers pay upfront.
Risking Nestlé bears quality and return risks; distributors handle delivery risks.
Information sharing Nestlé shares information with the primary distributors and retailers.
3. Actual & Desired Service output
Table
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Service Output Actual Performance Desired Gap
Bulk Breaking High Very high Under-service: No
flexibility in portion
sizes.
Only 19L gallons Smaller sizes (e.g., 10L
available. or 12L) for elderly,
small households, or
low-consumption users.
Spatial Medium- low High Under-service in low-
Convenience density areas.
Strong in urban areas; Consistent availability
limited in across all regions,
rural/suburban zones. including remote areas.
Waiting/Delivery Low High Under-service in
Time delivery speed and
reliability.
Same-day in cities; 2– Next-day or scheduled
3 days in other areas. delivery across all
regions.
Product Variety Low Medium - high Under-service: No
variety to meet diverse
preferences.
Only purified water in Options like mineral
19L format. water, flavored water, or
alkaline water.
Customer Service Medium- low High Under-service:
Inconsistent
responsiveness.
Call center and app 24/7 support, real-time
support available, but tracking, and
limited during peak personalized service.
hours.
Information Medium- Low Medium - High Under-service: Missed
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Service Output Actual Performance Desired Gap
Sharing opportunity to build
trust and educate
customers.
Basic product info; Transparent water
limited education on quality reports, hygiene
water quality, tips, and sustainability
dispenser updates.
4. Gap Analysis
1. Service Output Gaps
A. Bulk Breaking Gap
• Current State: Nestlé only offers the 19L gallon for dispensers. There are
no smaller dispenser-compatible sizes (e.g., 10L or 12L).
• Customer Demand:
Elderly users or small households may find 19L too heavy or excessive.
Some customers want to store multiple smaller gallons for convenience or
space-saving.
• Impact:
Customers may switch to competitors offering more flexible sizes.
Missed opportunity to serve niche segments like elderly, students, or single-
person households.
B. Spatial Convenience Gap
• Current State: Nestlé has strong coverage in major cities but limited
presence in rural or suburban areas.
• Customer Demand:
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Customers in remote areas expect the same ease of access and delivery
frequency.
• Impact:
Inconsistent service leads to dissatisfaction and potential churn.
Distributors may avoid low-density areas due to high delivery costs.
C. Waiting Time / Delivery Time Gap
• Current State: Delivery is often same-day in Cairo and Alexandria, but
can take 2–3 days in other regions.
• Customer Demand:
Offices and clinics require timely delivery to avoid running out of water.
Households expect next-day delivery as a standard.
• Impact:
Customers may overstock or switch to local alternatives.
Nestlé loses competitive edge in responsiveness.
2. Cost Gaps
A. High Last-Mile Delivery Costs
• Cause: Serving low-density areas increases fuel, labor, and time costs.
• Impact:
Distributors may avoid these areas or charge higher prices.
Nestlé may need to subsidize delivery, reducing margins.
B. Manual Order Processing in Some Channels
• Cause: Some orders are still taken via phone or WhatsApp, especially in
B2B.
• Impact:
• Higher error rates, delayed deliveries, and poor tracking.
• Solution: Digitize all order channels and integrate with CRM/ERP systems.
•
C. Inventory Holding Inefficiencies
• Cause: Inconsistent demand forecasting leads to overstocking or stockouts.
• Impact:
• Increased warehousing costs or lost sales.
• Solution: Use predictive analytics and real-time sales data to optimize
inventory.
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5. Power Charastristics
1. Reward Power
Nestlé can offer volume-based incentives, marketing support, or priority restocking to
distributors and retailers who meet delivery commitments or achieve sales targets.
Impact:
• Encourages loyalty and performance.
• Builds a positive, incentive-driven relationship.
• However, if rewards are not perceived as fair or transparent, it may lead to
dissatisfaction.
2. Coercive Power
Rarely used overtly, but:
If a retail partner constantly fails to meet basic delivery or storage standards (e.g.
hygiene, customer complaints), Nestlé may threaten to reduce supply allocations or
terminate the partnership.
Risk:
• Can damage long-term relationships.
• May lead to retaliation or loss of trust if overused.
3. Expert Power
Nestlé is seen as a trusted authority in water purification, quality control, and
logistics.
• Provides training programs, quality assurance protocols, and market
insights to partners.
• Distributors rely on Nestlé’s expertise to maintain product integrity and
customer trust.
Impact:
• Builds credibility and dependence.
• Enhances cooperation and alignment with Nestlé’s standards.
4. Legitimate Power
Through formal contracts, Nestlé establishes delivery schedules, pricing obligations,
and exclusivity clauses that partners agree to honor.
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Example:
A distributor may be contractually obligated to maintain cold chain logistics or
meet minimum delivery frequency.
Impact:
• Provides structure and clarity.
• Reduces ambiguity and conflict.
• Can be used to resolve disputes legally.
5. Referent Power
• Nestlé’s global brand reputation makes it a desirable partner.
• Retailers and delivery agents benefit from brand association, which
enhances their own credibility.
• Nestlé’s presence in a store or platform can attract foot traffic and boost
sales of other products.
Impact:
• Strengthens loyalty and voluntary compliance.
• Encourages partners to align with Nestlé’s values and image.
6. Suggestions For Improvement
1. Bulk Breaking Gap Problem:
Only 19L gallons are available, which are too large or heavy for some users.
Solutions:
• Introduce Smaller Sizes:
Launch 10L and 12L gallon options compatible with standard dispensers.
Offer multi-pack bundles (e.g., 2 × 10L) for flexibility.
• Segmented Pricing Strategy:
Price smaller gallons at a slight premium per liter to cover packaging and
logistics.
• Targeted Marketing:
Promote smaller sizes to elderly users, students, and small households via
social media and in-store displays.
2. Spatial Convenience Gap
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Problem:
Limited availability in rural or suburban areas.
Solutions:
• Expand Last-Mile Partnerships:
Partner with local delivery startups or community-based agents.
• Micro-Distribution Hubs:
Set up small depots in underserved areas to reduce delivery time and cost.
• Geo-Targeted Promotions:
Use mobile ads and SMS campaigns to promote availability in new areas.
3. Waiting/Delivery Time Gap
Problem:
Inconsistent delivery times, especially outside major cities.
Solutions:
• Route Optimization Software:
Implement AI-based logistics tools to plan efficient delivery routes.
• Delivery Time Slots:
Allow customers to choose preferred delivery windows via app or website.
• Performance-Based Incentives:
Reward delivery partners for on-time performance and customer satisfaction.
4. Cost Gaps
Problem:
High delivery costs, manual processes, and inventory inefficiencies.
Solutions:
• Digitize Order Management:
Replace manual order-taking with a unified digital platform for all channels.
• Predictive Inventory Management:
Use sales data and AI to forecast demand and optimize stock levels.
• Dynamic Pricing:
Adjust prices based on delivery zone, order size, and time of day to balance cost
and demand.
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Citations:
• Nestlé Waters Egypt. (n.d.). Nestlé Pure Life 5Gallon Refill
Subscription. Retrieved June 24, 2025, from
https://www.nestlewatersegypt.com/default/5-gallon-18-9-liters-
refill-water-bottle
• Nestlé Waters Egypt. (n.d.). Explore Nestlé Pure Life Products
& Services. Retrieved June 24, 2025, from
https://www.nestlewatersegypt.com/default/all-products
• Nestlé Waters Egypt. (n.d.). Explore Nestlé Pure Life water
gallon (18.9L). Retrieved June 24, 2025, from
https://www.nestlewatersegypt.com/default/5-gallon-18-9-liters-
refill-water-bottle
• Nestlé Waters Egypt. (n.d.). Order water online. Retrieved June
24, 2025, from https://www.nestlewatersegypt.com/
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