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Sales and Distribution Management Case Analysis


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Appreciating the imperative of
intermediaries in the Indian context,
‘eChoupal’ leverages Information
Technology to virtually cluster all the
value chain participants, delivering the
same benefits as vertical integration does
in mature agricultural economies like the
USA. Analysis of ITC e-choupal initiative and development of a complete sales management plan for Garagebutler.

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Sales and Distribution Management Case Analysis

  1. 1. Sales and Distribution Management Assignment Sairam Iyer G08034 GMP XLRI 1/16/2009
  2. 2. Sales and Distribution Management their local language on the weather & Sales and market prices, disseminate knowledge on scientific farm practices & risk Distribution management, facilitate the sale of farm inputs (now with embedded knowledge) Management and purchase farm produce from the farmers’ doorsteps (decision making is Assignment now information-based). Real-time information and customized ITC e-Choupal knowledge provided by ‘e-Choupal’ enhance the ability of farmers to take Expanding the Horizon decisions and align their farm output with market demand and secure quality & productivity. The aggregation of the Appreciating the imperative of demand for farm inputs from individual intermediaries in the Indian context, farmers gives them access to high quality ‘eChoupal’ leverages Information inputs from established and reputed Technology to virtually cluster all the manufacturers at fair prices. As a direct value chain participants, delivering the marketing channel, virtually linked to the same benefits as vertical integration does ‘mandi’ system for price discovery, ‘e- in mature agricultural economies like the Choupal’ eliminates wasteful USA. intermediation and multiple handling. Thereby it significantly reduces ‘e-Choupal’ makes use of the physical transaction costs. transmission capabilities of current intermediaries – aggregation, logistics, ‘e-Choupal’ ensures world-class quality in counter-party risk and bridge financing – delivering all these goods & services while disintermediating them from the through several product / service specific chain of information flow and market partnerships with the leaders in the signals. respective fields, in addition to ITC’s own expertise. With a judicious blend of click & mortar capabilities, village internet kiosks While the farmers benefit through managed by farmers – called sanchalaks – enhanced farm productivity and higher themselves, enable the agricultural farm gate prices, ITC benefits from the community access ready information in lower net cost of procurement (despite Page 2
  3. 3. Sales and Distribution Management offering better prices to the farmer) Critical Evaluation of e-choupal’s success having eliminated costs in the supply chain that do not add value. Targeting Bottom of the pyramid Current Status and Execution plans ITC’s e- choupal initiative is a perfect example of the bottom of the pyramid Launched in June 2000, 'e-Choupal', has targeting at work in rural India. Realizing already become the largest initiative this potential pretty early, ITC has had among all Internet-based interventions in the first mover advantage along with the rural India. 'e-Choupal' services today project Shakti of HLL. reach out to more than 4 million farmers growing a range of crops - soyabean, coffee, wheat, rice, pulses, shrimp - in over 40,000 villages through 6450 kiosks across 8 states (Madhya Pradesh, Karnataka, Andhra Pradesh, Uttar Pradesh, Maharashtra, Rajasthan, Uttaranchal & Tamil Nadu The problems encountered while setting As C.K.Prahald puts it, there is a fortune up and managing these ‘e-Choupals’ are at the bottom of the pyramid and that primarily of infrastructural inadequacies, there are tremendous benefits to multi- including power supply, telecom national companies who choose to serve connectivity and bandwidth, apart from these markets in ways responsive to the challenge of imparting skills to the their needs. ITC e-choupal stopped first time internet users in remote and thinking of the poor as victims and inaccessible areas of rural India. instead started seeing them as resilient Page 3
  4. 4. Sales and Distribution Management and creative entrepreneurs as well as the mandi system. Farmers have more choices to sell their produce, and they value-demanding consumers. can exercise the same, empowered by the information available on the e- Choupal portal. This has helped improve From efficient Supply Chain to their bargaining power even when they Universal Platform sell to other channels. The best farming practices knowledge disseminated through e-Choupal, together with access e-Choupal was conceived as a more to scientists' panel set up by ITC, the efficient supply chain to source crop yields are increasing too. On the agricultural commodities for ITC’s whole, farmers estimate their export business. Through these e- incremental incomes due to e-Choupal Choupals, individual farmers have been anywhere between 20 and 50% able to check the market trading price of their produce and sell it directly to ITC. Both the individual farmers and ITC have Partnerships and organizational increased their revenues, because the support layers of ineffiency no longer have a role in the transaction between seller and buyer. Efficiency was achieved through In e-Choupal, partnerships with the direct interface with the farmer and by Public Research System to access the leveraging the capabilities of traditional agricultural knowledge generated by intermediaries. ITC soon realised that them and with the Public Weather the same infrastructure can connect Monitoring System to access the weather villages efficiently with rest of the world, information have played a major role in into or out of villages. Now e-Choupal is disseminating useful and real time a universal platform for rural India. information to the farmers. In addition to the partnerships, support of both central government and all the Bargaining and Economic State governments, where it is operating, empowerment has been critical. As e-Choupal model itself is collaborative by design, support of all partner companies contributed When the farmers sell to ITC, their substantially to the success of e- transaction costs are much lower than Choupal. Page 4
  5. 5. Sales and Distribution Management Summary Corporate Strategic Alignment The success factors discussed in the ITC's corporate philosophy to create above report have been depicted as a shareholder value through serving model below. The confluence of all these society helps make a strategic choice like factors has made an impact to the script e-Choupal which have prolonged period of the ITC e-choupal success story of investment with an equally long gestation. Targeting BOP Partnerships Empowerment Strategic Efficient SCM alignment ITC's deep insights into agricultural value chains and socio-cultural dynamics of rural India helped design this innovative business model. Then, the ITC businesses such as foods and agri exports offered anchor support through large volume off- take of farm produce from e-Choupal. Page 5
  6. 6. Sales and Distribution Management Customer-oriented selling Sales Management Plan Prospecting Prospecting would play the most GarageButler important role as the product is a new product. Creating awareness and a buzz about the product would be vital for its Customer and Market analysis forecasts success. Since the product is associated with safety, and a credence attribute, the threat of security lapses would need to Since the product is a completely new be highlighted. A few ways to accomplish product, and the initial stages of the PLC, this would be by: establishing exact requirements in the market would be tough. Certainly the figures relating to existing garages and Collaborating with high-end car • especially those fitted with automatic dealers and displaying their door openers can be evaluated. Based on products. them a rough estimate can be established Collaborating with real estate • about the size of the market. Another developers and housing societies. vital aspect is the customer segment which may ideally form the biggest pie of House to house campaigns • the market is certainly the affluent conducted by the sales force to families. Since, traditionally Indian’s do educate about the safety aspects. not have a garage space built especially for parking. In fact in Delhi which is Demonstrations in major • chock a block of 4 wheelers; most of the automotive kiosks at roadshows. cars are parked in front of their respective owner’s houses, on the These steps along with information roads!!! dissemination via the print and electronic media will not only help in establishing demand but also help the product in getting into the consideration set of the customers. Page 6
  7. 7. Sales and Distribution Management Promoting Channel willingness/incentives Making the information available to the As in the plan there is heavy reliance on consumers would also influence the channel partners in educating the decision making process. Some of the customers about the safety aspects and methods from prospecting can be technical aspects of the product, a channel incentive scheme will be replicated to share the information. required. Channel design Advertising Channel design decision needs to be made keeping in mind the target segment and the goals of the channel partners. Deciding on the number of channels and Selling number of levels should be based on the strategy initial rough estimated forecast. Sales force Channel management management Distribution Channels Garagebutler would need a network of company showrooms and channel Place utility partners in the form of auto dealers in the best market places. There is a certain place utility aspect which the customer will be keen on The product can also be sold through obtaining. If the decision to obtain a channels such as: automatic garage door closer can be clubbed while buying a luxury/premium Electrical shops • car, the sale process can be closed with minimum difficulty. Auto component dealerships • Home décor outlets • Hardware outlets • Page 7
  8. 8. Sales and Distribution Management Apart from these there also needs to be Garagebutler in the initial phase needs to a door to door selling in place, in posh leverage its channel partners and the localities of the towns. Garagebutler also sales-force to start creating a mindspace needs to leverage the internet and launch by entering the consideration set and a jazzy website, which delivers all later trust. information about the product and also displays testimonials from satisfied customers. Customers should be able to buy the product online from their portal. Search Experience Credence N.A N.A Trust/loyalty Appraisal of channel members The channel members would be N.A N.A N.A appraised on the following parameters: Sales performance • Information Salesforce Demos dissemination create trust Servicing • Financial discipline • Inventory maintenance • Selling capabilities • Support to the company • Page 8