ITC is one of India's largest private sector companies with a diverse portfolio including cigarettes, hotels, food, personal care, and more. It has a deep distribution network of manufacturers, distributors, wholesalers, retailers, and paanwalas to ensure its products reach both urban and rural consumers. ITC selects distributors based on their infrastructure and population coverage. Distributors are expected to stock all ITC FMCG products except stationery. ITC leverages its established distribution network for cigarettes to also sell complementary products like matches and expand into new categories like biscuits.

1. ITC~Touching your life. everyday A study on the Channel DistributionBy:Radhika Gupta- 91041ShiviAggarwal – 91051Madhusudan partani- 91029

2. What is ITCITC is one of India's foremost private sector companies with a market capitalisation of nearly US $ 19 billion and a turnover of over US $ 5 billionITC has a diversified presence in Cigarettes, Hotels, Paperboards & Specialty Papers, Packaging, Agri-Business, Packaged Foods & Confectionery, Information Technology, Branded Apparel, Personal Care, Stationery, Safety Matches and other FMCG productsITC's diversified status originates from its corporate strategy aimed at creating multiple drivers of growth anchored on its time-tested core competencies: unmatched distribution reach, superior brand-building capabilities, effective supply chain management and acknowledged service skills in hoteliering

3. The Product-MixFMCGCigarettesFoodsLifestyle retailingPersonal CareStationerySafety MatchesAgarbattiHotelsAgri-businessPaperboard and PackagingInformation Technology

4. Overview

5. The CompositionManufacturing UnitSeparate for each product lineContract ManufacturingBackward IntegrationE-ChaupalStorage HubsStores all the products

6. Cont…DistributorsExclusive based on populationNeeds to stock all FMCG products( Except Stationery)WholesalersRetailersPaanwalasDeepest penetration possible

7. SuitabilityPerishableShort SpanCustomers prefer fresh productsLot SizeSmaller Lot sizesConvenienceWaiting TimeProduct Assortment

8. ChannelObjectivesConsumer BehaviorQuality ConsciousConvenience goods, Needs Intensive distributionDemands varietyVery less waiting timeCompany ObjectivesReach massesRural penetrationDiversificationCompetitive advantageAlternativesSell ready to eat products through sweet shops like bikanerwalaShowrooms for High-End productsE-Chaupal

9. FeaturesSelectionDistributor is selected based onInfrastructures, Delivery Van, Computer, Warehouse, Sales Force Population based ( 1 Distributor per 20-25 thousand)ControlUses Coercive powerTo deal in Cigarettes, it is must to deal in Other goodsTerms and ConditionsPrice, Selling Condition, Godown Condition etc…

10. FunctionsManpowerPromotionCreditInfrastructureStocking

11. BenefitsNo Benefits Higher marginsNo Credit- Only Cash PaymentsNo Freebies, Paid Vacations Gifts etc..Very rarely Cash gifts (linked with performance)

12. OthersOrderDistributors- WeeklyRetailers- Twice a weekPaanwalas- dailyOnline order is placed by distributorThe periodical order from wholeseller , retailer, paanwalas is collected by staff of distributor.PaymentMostly on Cash-Basis; sometimes post dated chequesVery rarely Credit is allowed on cigarettes

13. Cont…TransportationUses delivery van, Rickshaw, Cycles, AutosConflictsNo ConflictsSome tiffs raise between distributor and retailer due to under supply from distributorProblems

14. AnalysisITC has the most popular brands of cigarettes in India. The sale takes place from the largest of retailers like Big Bazaar, Spencers to the smallest of paanwalas at every nook and corner in India. Thus ITC has deeply penetrated the Indian cigarette market. With an already established distribution channel for cigarettes, ITC is also selling safety matches, which is complementary to both the cigarettes and agarbattis. The retailers and paanwalas are also ready to stock ITC’s candies, potato chips and finger snacks because of the higher margin as compared to Frito lays, which is its biggest rival in potato chips and finger snacks segment.

15. AnalysisBy entering into the branded Indian biscuit industry there was a business synergy. ITC was already value-adding to wheat with its branded atta presence. By entering the biscuits segment, it improved its bottom-line further. The company used its existing network of convenience stores -- the company’s name for the hole-in-the-wall pan-beedi shops-- for Sunfeast. The company says the brand is now available in nearly 1.8 million outlets.Sunfeast captured around 7% in mere 3 years since its launch in 2003

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