Channel Management example


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Channel Management example

  1. 1. BISLERI : Analyzing the Distribution Network Pranjal Parate (11/035) Rishikant Rajan (11/044) Sarit Guha Thakurta (11/174) Srinivas Sandeep Tompala (11/179) Supriya Gahlot (11/184) Presented By Group 5
  2. 2. Agenda <ul><li>Research Methodology </li></ul><ul><li>Background </li></ul><ul><li>Products </li></ul><ul><li>Distribution System </li></ul><ul><li>Hygiene & Quality Commitment </li></ul><ul><li>Pure and Safe -> Play Safe </li></ul><ul><li>Channel Objectives </li></ul><ul><li>Diversity in Channel Strategies </li></ul><ul><li>Margins </li></ul><ul><li>Suitability of Bisleri in India </li></ul><ul><li>Competition </li></ul><ul><li>Recommendations </li></ul>
  3. 3. Research methodology <ul><li>Collection of Secondary data & analysis </li></ul><ul><ul><li>News articles </li></ul></ul><ul><ul><li>Website of Bisleri </li></ul></ul><ul><ul><li>Case study on Bisleri, Going Green </li></ul></ul>
  4. 4. Background <ul><li>Bisleri - An Italian Company created by Signor Felice Bisleri </li></ul><ul><li>Introduction of Bottled Water in India in two varieties bubbly & still in 1965 </li></ul><ul><li>Parle Took over Bisleri (India) Ltd. in 1969 </li></ul><ul><li>Parle initially sold Mineral water in glass bottles </li></ul><ul><li>Later Parle switched over to PVC non-returnable bottles </li></ul><ul><li>Most popular brand for mineral water in India today </li></ul>
  5. 5. Products <ul><li>Bisleri Mountain Water </li></ul><ul><li>Bisleri Mineral Water </li></ul><ul><li>Developed 8 unique pack sizes to suit the need of every individual </li></ul><ul><ul><li>Non-returnable packs </li></ul></ul><ul><ul><ul><li>250ml cups, 250ml bottles, 500ml, 1L, 1.5L, 2L </li></ul></ul></ul><ul><ul><li>Returnable packs </li></ul></ul><ul><ul><ul><li>5L, 20L </li></ul></ul></ul>
  6. 6. Distribution System <ul><li>Integrity of the product across all channels </li></ul><ul><li>Proper care in Storage and Transportation units to avoid chemical contamination </li></ul><ul><li>Ensure complete control over quality in the entire Distribution network owned by Bisleri </li></ul><ul><li>High Emphasis on easy accessibility </li></ul><ul><li>Use of Hybrid marketing systems to suffice diverse consumer profiles </li></ul>
  7. 7. Distribution System(Contd..) <ul><li>Built a well networked distribution system to ensure accessibility </li></ul><ul><li>Competitors had a very strong distribution network giving Bisleri tough competition </li></ul><ul><li>Number of intermediaries were used to minimize fault points in the network </li></ul><ul><li>Bottled water is transported from the factory -> bottling plant -> distributor -> retail outlets </li></ul>
  8. 8. Hygiene & Quality Commitment <ul><li>Put through multiple stages of purification </li></ul><ul><li>Ozonised and finally packed for consumption </li></ul><ul><li>Rigorous R&D & stringent quality controls </li></ul><ul><li>Maintain strict quality controls </li></ul><ul><li>Purchases caps only from approved vendors </li></ul><ul><li>Produce their own bottles in-house </li></ul>
  9. 9. Pure and Safe -> Play Safe <ul><li>Ad campaign to create a distinct brand image—'There is just one Bisleri.‘ </li></ul><ul><li>The campaign focused on the safety provided by the &quot;breakaway&quot; seal </li></ul><ul><li>Objective - To highlight the tamper-proof seal and create doubt in the consumer's mind of the purity of the other brands </li></ul><ul><li>To penetrate every possible segment of the market by introducing more pack sizes and Trendy Packaging </li></ul>
  10. 10. Channel Objectives <ul><li>To ensure high quality and integrity of the product at various levels of distribution network </li></ul><ul><li>To ensure high accessibility and reach for the product by introducing various options in pack sizes as per consumer needs </li></ul><ul><li>Use of minimum hierarchy in distribution network to reduce errors and faulty points </li></ul><ul><li>To increase its reach and availability by use of horizontally diverse distribution network and hybrid marketing systems </li></ul>
  11. 11. Diversity in Channel Strategies <ul><li>Diversity in channels </li></ul><ul><ul><li>Manufacturer – Distributor – Retailer </li></ul></ul><ul><ul><li>Franchisee </li></ul></ul><ul><ul><li>Direct selling to end customer – office/home delivery </li></ul></ul>
  12. 12. Retail Channel <ul><li>Maximize reach and availability in a cost efficient manner while ensuring quality </li></ul><ul><li>Made packaged water as a commodity </li></ul><ul><li>“ Bisleri “ a generic name for Bottled water in market </li></ul><ul><li>More product options to choose from and low costs increased brand loyalty </li></ul><ul><li>Attractive Packaging with competitive pricing helped increase sales </li></ul>
  13. 13. Bisleri – Distribution Channel
  14. 14. Direct Home/Office Channel <ul><li>Delivery of packs of water to home & office at minimum cost and optimum quality and service levels </li></ul><ul><li>Homes/offices/Stores/Restaurants – Regular need for safe and pure drinking water </li></ul><ul><li>Ensuring service guarantee and high quality </li></ul><ul><li>Channel gave enough scope for Differentiation and value addition than competitors </li></ul><ul><li>20 ltrs. SKU responsible for 70% of the sales </li></ul><ul><li>Fleet of small vans </li></ul><ul><li>Reduced intermediaries leading to better margins </li></ul><ul><li>Cash-on-Delivery reduces average receivables </li></ul>
  15. 15. Bisleri – Delivery System <ul><li>How Bisleri does route selling? </li></ul><ul><ul><li>Large fleet of trucks </li></ul></ul><ul><ul><li>Trained truck drivers who can service </li></ul></ul><ul><li>Benefits </li></ul><ul><ul><li>Reduces overheads of sales representatives </li></ul></ul><ul><ul><li>Better control and information flow </li></ul></ul><ul><ul><li>Efficient operations </li></ul></ul><ul><li>Disadvantage </li></ul><ul><ul><li>Higher investment </li></ul></ul>
  16. 16. Franchisee <ul><li>For regions where Bisleri doesn’t own a manufacturing plant </li></ul><ul><li>Franchisee owns the distribution network </li></ul><ul><li>Quality norms set by Bisleri </li></ul><ul><li>Ensures pan-India availability with less resources </li></ul><ul><li>Minimizes taxes and lead time </li></ul>
  17. 17. Margins
  18. 18. For a 1-litre Bisleri Bottle <ul><li>In case of larger SKUs of sizes 5 lts. and 20 lts., the packaging costs are even lower </li></ul><ul><li>Larger SKUs are also recycled reducing the cost </li></ul>State PCB Charges @ Rs. 0.14 for 1000 lts. of ground water 1-litre bottled water requires 2-3 lts. groundwater Raw material cost = 0.02-0.04 paise Purification Cost Rs. 0.25 per ltr. (max) Cost of pre-form from Reliance Rs. 1.00 per bottle Total cost of packaging (including cost of bottle, cap, carton, etc.) Rs. 2.50 – Rs. 3.75
  19. 19. Overheads and Margins <ul><li>Overheads: </li></ul><ul><ul><li>Labor costs </li></ul></ul><ul><ul><li>Establishment costs (cost of equipments, assets etc.) </li></ul></ul><ul><ul><li>Marketing and sales expenses </li></ul></ul><ul><li>The overheads vary regionally </li></ul><ul><li>In the packaged water industry, major costs are in the packaging and marketing while the raw material (water) is an insignificant expense </li></ul><ul><li>Margins: </li></ul><ul><ul><li>GM range in the order of 20-35% in packaged drinking water depending on the location, SKU, overheads, etc. </li></ul></ul>
  20. 20. Supporting the Channel Structure <ul><li>In packaged drinking water industry, reliability and depth of distribution is the key to success. </li></ul><ul><li>Stock-outs need to avoided </li></ul><ul><li>Bisleri leverages its past experience of highly successful product distribution of Gold Spot and Thums-up to support its distribution system with: </li></ul><ul><ul><li>Robust processes </li></ul></ul><ul><ul><li>Backup processes </li></ul></ul><ul><ul><li>Balanced scorecard </li></ul></ul><ul><ul><li>Company wide efficient SCM </li></ul></ul>
  21. 21. Investment in Logistics - 2002 to 2007 <ul><li>Parle Bisleri invested Rs 400 crore for expanding its facilities including its bottling capacity and distribution network. </li></ul><ul><li>The company expanded its bottling capacity from the current 50 million cases to 200 million cases a day. </li></ul><ul><li>An additional Rs 200 crore was invested in Bisleri's distribution network spanning 2,500 towns and cities in India. </li></ul>
  22. 22. Competition
  23. 23. Bisleri, Aquafina, & Kinley   Bisleri Aquafina Kinley No of Bottling Plants 35 12 15 No of Retail Outlets 3,50,000 5,00,000 9,00,000 Market Share 51% 11% 22%
  24. 24. Prices of Packaged Water in India SEGMENT   COMPANY   BRAND   PACKS   PRICE (Rs) Popular   Parle Bisleri   Bisleri   250 ml   3   500 ml   5   1.2 litres   12   Parle Agro   Bailley   330 ml   3.5   500 ml   5   Pepsi   Aquafina   750 ml   10   1 litre   11   Coca Cola   Kinley   1 litre   10 Bulk   Parle Bisleri   Bisleri   5 litres   25   Parle Bisleri   Bisleri   20 litres   60 Premium   Nestle   Perrier   330 ml   55   750 ml   90   Danone   Evian   1 litre   85
  25. 25. Suitability of Bisleri in INDIA <ul><li>Hygienic drinking water availability is scarce in India </li></ul><ul><li>Tourism industry is a huge potential market </li></ul><ul><li>Large number of local/regional players suggests that there is a huge market for packaged drinking water </li></ul><ul><li>With its brand name & extensive distribution Bisleri has the potential to further increase its market share by capturing some of the local players’ sales </li></ul><ul><li>In the 5 & 20 lts. segment there are no other branded national level players other than Bisleri </li></ul>
  26. 26. Suitability of Bisleri in INDIA
  27. 27. Future Plans <ul><li>Introduction of vending Machines </li></ul><ul><ul><li>Automated machines in offices, shopping malls, airports and other high traffic points </li></ul></ul><ul><ul><li>High price of bottled water at airports and cinema halls discourages sales </li></ul></ul><ul><ul><li>There are also places where bottled water is not available </li></ul></ul><ul><ul><li>Vending Machines will take care of both the problems </li></ul></ul>
  28. 28. Future Plans <ul><li>Introduction of flavored Water </li></ul><ul><ul><li>Launch of 12 fruit flavors </li></ul></ul><ul><ul><li>Position it as a premium segment Product </li></ul></ul><ul><ul><li>Huge opportunity </li></ul></ul><ul><li>Aimed at trebling Bisleri’s sales from around Rs300 crore now, to Rs1,000 crore by 2009 </li></ul><ul><li>To double its distribution network from 800 distributors to around 1,500 in next 6 months </li></ul>
  29. 29. Logistics growth
  30. 30. Recommendations
  31. 31. Recommendations <ul><li>Targeting Office Segment for 20 liter Bottled water </li></ul><ul><ul><li>B2B Sales Force at distribution centre </li></ul></ul><ul><ul><li>Promotional Schemes For bulk deal </li></ul></ul><ul><li>Promotion of 200 ml bottle/cup </li></ul><ul><ul><li>Target parties, marriages, functions </li></ul></ul><ul><ul><li>Easy to carry in pockets or ladies purse </li></ul></ul>
  32. 32. Recommendations <ul><li>Introduction of Fresh lime juice </li></ul><ul><ul><li>Target regions close to Bottling plants such as Delhi, Hyderabad, Chennai </li></ul></ul><ul><ul><li>200/250 ml bottles/cups </li></ul></ul><ul><ul><li>Promote it as healthy substitute for cold drinks </li></ul></ul><ul><ul><li>Price range Rs 4-5 </li></ul></ul><ul><li>Extensive Advertising and POS display </li></ul>
  33. 33. References <ul><li> </li></ul><ul><li> </li></ul><ul><li> </li></ul><ul><li> </li></ul><ul><li>www. bisleri .com </li></ul><ul><li>,flstry-1.cms </li></ul><ul><li> </li></ul><ul><li> </li></ul><ul><li> </li></ul><ul><li> </li></ul><ul><li> </li></ul>
  34. 34. THANK YOU!!