2. Making a note of our key expectations
Mihir
Shah
Having experience in MR
and IT looking forward
to get an insight into
S&D with a aim to build
a complete profile
Honest feed back about
the work done and the
places I can improve
Leveraging channel
power and sales force to
effectively sell products
in different markets
Vinay
Kasturi
Execution of sales at
retail outlets & dealing
with the competitors
Understand approach of
different types of market
Coordination of various
levels in a distribution
network
Harshit
Agrawal
Understanding the sales
and distribution in ITC
Understanding
challenges faced during
launch of new product
Understanding different
approaches for different
channels
3. FMCG: A reality check
49
110
0
50
100
150
2015 2020
Total FMCG market size
CAGR
14.7%
Over all FMCG market to
grow at a rate of 14.7%
Rural market to grow at a
rate of 17.7% CAGR
Disposable income to rise
at 4.3% CAGR
43%
23%
22%
12%
FMCG segment break up
F&B Health care Personal Care Household
Food and personal care
make up 2/3 of the
revenues
Urban market accounts
for 2/3rd of the revenue
Growing income augers
well for the personal care
market
Growth Drivers in PCP
category:
• Rising income levels
• Evolving lifestyle
• Increasing
discretionary spend
• Availability
• Growth of modern
trade
• New innovative
products
• Greater awareness
and hygiene
• Rural consumption
• Government
initiatives
KeyTrends:
• Product innovation
• Premiumization
• Brand consciousness
• Expanding horizons
• Backward Integration
• Focus on Rural
• Third Party Manufacturing
• Private Labels
• Expanding distribution
• Small sized packets
• Focus on enhancing
presence
4. Leveraging the chemist channel: The fastest
growing traditional retail channel
11.3% of FMCG sales.
Expected to grow yoy
by 20%
Adds $6 billion in
FMCG Sales
Expected to add $12
billion in sales by 2020
90,000 chemist joined
FMCG market in 2014-
2015 most of them in
towns less than 10
lakh
People trust their
neighborhood
chemists to choose
personal care and
healthcare products
FMCG majors
increasingly relying
on them to push
their premium
products
22% of L’Oreal and
30% of bournvita
sales comes through
chemist channel
5. Augmenting value through the chemist channel
Creating a winning
chemist channel
Define and
benchmark key
competitors
Analyze current
outlets serviced
Identify and add
new outlets with
potential
Rank Outlets
Identify and build
talent- create a
“Winning resource”
Create aTrade
marketing offer to
beat competition
Implement a
optimized go to
market route
Outletsranked
A+,A,other
Type
Ease of access
SFT
AverageTurnover
Footfall
Shelf Display
ITO
Benchmarking:
Coverage norm in
industry
No of chemist outlet
serviced by competitor
Salesmen of competitor
Trade Marketing offer of
competitor.
6. Distribution in ITC
Factory
Warehouse
Distributor
Market
Cash Flow
Stock Flow
Distribution Cost
• Salesman Salary
• Supervisor Salary
• Vehicle rent
WD Infra
Salesman, Supervisor,
Operator, Godown Incharge,
Driver, Cashier
Cigarette- Cash & Carry
Atta- 7 days
PCP- 15-21 days
Credit Period
Specifics Expected Actual
Average number of outlets covered 35 32
Average number of billed outlets 20 15
Average time spent in Market 6 hours 4hours
7. Voice from the field
Savlon has higher demand in urban clusters where consumers are more
educated and retailers know the difference between Dettol and Savlon.
High demand for 200 ml and 500 ml SKU of savlon among retailers.
Chemist from a key part of consumer decision making process.They can
influence consumers to substitute Dettol for Savlon.
Generic products like Speclon, hixlon sold at 20% cheaper price in markets like Saidabad
and Gagula ramaram.
Due to pull factor prevalence of Dettol in all markets. If distributor does
not service outlet on time prevalence of buying from open market.
Ultra pro shampoo available only in one variant while head and shoulders and other
competitive brands available in 6-10 variants.The different colour and hanging sachets
makes Ultra pro virtually invisible.
Many retailers do not have clear understanding of
various schemes and these are not clarified by the
salesmen hence they have a perception of being
cheated.
Axe invest heavily in displays and refreshes its
inventory on a quarterly basis. Also fogg has a
perception of “get more for less”.Axe also bundles its
products of different variants into combo packs of 2/3.
Due to delivery
problems in area
order placed on
Wednesday reaches
on Saturday hence
no order placed on
next Wenesday
Old expired stock of J&J still not taken care of.
New stock should be launched with retailer sample pack.
8. Patanjali: The new age disruptor
Patanjali
Ayurvedic
products
limited
Patanjali Gram
Udyog
Divyaa
pharmacy
Operations divided
into four parts
Biscuits
and foods
Vishal Arogya Sampath,
TrimulgherryC and F for
entireTelengana andAP
110 distributors, 85
Chikatsalay, 285Arogya
Kendra inTelengana andAP
Product range includes 189
medicines and 380 general
products Honey, Ghee, Dant
Kanti High sellout velocity
handwash, soaps low
17 Cr p/m turnover of super
distributor at average
margin of 3-4%
Cash up front model
followed. No return on
damaged and DND stocks.
Average margins to retailers
14%
9. Supply Chain Management
Warehouse Location
Areas Serviced
Medchal-9 Cr Sales
mst imp
KarimNagar
2.5Cr
Rajamundry
3.5 Cr
Kaddapa
2Cr
Hyderabad Warangal East
Godavari
Nellore
Mehubnagar Adilabad West
Godavari
Prakasham
Medak Nizamabad Srikakulum Rayalseema
area
Rangareddy Vizag
Factory and Manufacturing
Warehousing
Structure and SD infrastructure
Order processing and channels
Distributorship requirements
Key Figures:
• 85% order fulfillment
• SD margin 3-4%, Distributor-5%
Chikatsalaya and arogya Kendra 12-18%
• Average monthly turnover 17 Cr Inventory
holding 24 Cr
• SAP B1 used to match demand and supply
and forecasting based on historical data
• Out sourcing model followed for various
products and operating profit of 20%
10. Patanjali Chikatsalay: A revolutionary model
Self-select outlets, High organization, market
research based display,Total modern trade
experience with guidance to consumers.
• 3 doctors salary between 10,000 to 20,000- Free
consultation, 90% purchase of prescribed medicines.
Close to 50 Consultations per day.
Neatly organized 3x1 feet racks Honey, ghee
well stocked 60%, fast selling SKU’s
prominently displayed at billing counter
• 15+ lakh inventory maintained turnover around 8 lakh
p/m also acts as a distributor servicing 6 areas with 1 beat
plan each having 30-40 outlets.
Many product
lines with
differential price
points
Introducing
Ayurveda across
categories
Outsourcing
model and
strong backward
and vertical
integration Doctor
consultation
Induces trials
and 90%
conversion rates.
High visibility,
Day to day MIS
reporting, Strong
relationships
11. UniCharm: Capturing masses through availability
Value Capture through
Quality, Large variety
of SKU, and incentive
schemes change every
month.
Types of Market: Baby
Store, Chemist,
Grocery,Wholesale,
Convenience, Modern
retail
Retiler Margins: 15%
Distributor Margin:5%
Seasonal product 7-8
lakhs monthly sales
during rainy season 4-5
lakhs monthly during
summer season
1Week credit period,
Average 2 to 3 lakh of
stock maintained.
Retailers prefer Mamy
Poko
Products % margins on MRP
Mamy poko standard 14%
Mamy poko Xtra Absorbent 15%
Sofy 14%
Wipes 15%
Leafy 20%
Store type Minimum requirement
A+ 15000+
A 10000+
B+ 5000
B,C Below 5000
Schemes
• 5+1 and 7+1 are the 2 most regular schemes
• Display incentive schemes related to displaying
stocks and cut outs 500 to 1000 quarterly.
• Bandhan scheme: 1gm gold coin or 10gm silver
coin based on cartons ordered.
• Cash and carry 2% incentive.
KeyTargets:
Booking value 10000+ minimum
Outlets targeted: 40-45 as per company policy
35 but to reach the target 40
Minimum outlets billed: 15
12. Analyzing the route and sales men behavior
21
11
3
Break up of stores
Grocery Chemist Fancy Store
35
4
3 2
Number of stores targeted: 44
Visited
Covered by other salesmen of same WD
Shut
Payment cleared
11
24
Number of Conversions: 31.5%
Converted Not Converted
Day 1 Route Ramnagar
Time spent on route 165 mins
Average time spent in each
store
3.28 mins
Time ofTravel 50 mins
Average productive time 1.14 mins
Unproductive time 75 mins
Sales Achieved 12-13k Mp- 10000 sofy- 800
wipes 800 leafy 700
50
75
40
Time Spent: 165 mins
Travel Unproductive Productive
13. Analyzing the route and sales men behavior
9
14
2
Break up of stores
Grocery Chemist Fancy Store
25
4
Number of stores targeted: 29
Visited shut
13
12
Number of Conversions: 52%
Converted Not Converted
Day 2 Route KavidaGuda and
Bholakpur
Time spent on route 123 mins
Average time spent in each
store
2.12 mins
Time ofTravel 28 mins
Average productive time 1 mins
Unproductive time 70 mins
Sales Achieved 12.5k
28
70
25
Time Spent: 123 mins
Travel Unproductive Productive
14. Reckitt Benckiser: Gleaning insights from a leader
Seprate pharma
channel post Paras
pharma takeover
effective product
bundling
Types of Market:
Grocery, Bakery, Super
Market,Convenience,
Pan Shop, Cosmetic
stores, Gift Stores
Retiler Margins: 11%
Distributor Margin:5%
Service weekly once all
outlets visited. Order
placed weekly-30%,
Forghtnightly- 30% and
monthly- 40%.
15 days credit period in
market focus on MSL
Schemes
• Uddan: Flexible scheme, No compulsory KPI
and targets lesser incentive compared to vison.
• Vison: 3% incentive which is higher compared
to udaan.
• 2 windows paid quarterly. 2 non paid windows.
• Target to bill SKU once a month forced to stock
MSL
Key Observations:
Mid size sku’s 210,500 ml doing well in the
market.
Bundeled reckitt display at POS mostly with
Moov.
Benefits by high brand recall high POS with
savlon lacks POD.
Grocery Silver Gold Platinum
Entry slab 13k 30k 50k
Visibility 200 500 1000
Additional discount 20%
KPI
1%
MSL Incentive 0.5%
Qualifier 2 category dressing
Pharma Silver Gold Platinum
Entry slab 7.5k 15k 30k
Visibility 200 500 1000
Additional discount 20%
KPI
1%
MSL Incentive 0.5%
Qualifier 2 category dressing
15. R and B Distribution: Gleaning insights from a
leader
Supply Chain
Serviced by C&F Kompally 3rd party order placed
3 to 5 days. Service area- 35km
8 sales men 48 routes
Vehicle- paggio- 3 vehicle observed average
loading 40- 60%.
Sales and Margin
1.5 Cr business p/m
15 days inventory 2.5 Cr to 4 Cr inventory value.
Criteria for distributorship
2000 sqft space, 50 lakhs of business, Distributor
infra.
Technology used
Stocky: Between company and distributor.
Handles: Billing, reports, Account ,holding and
inventory.
Zoom:All salesmen have this app.
Only syncing required for connectivity.
Future Goals
20%YOY growth.
Each region monitored by overall country sales.
Aggressive ATL, BTL,Trade marketing, numeric
distribution to reach target.
Priyadarshani
Enterprise
1600 outlets
Order placed
weekly-30%
Forghtnightly-
30%
Monthly- 40%
1400 grocery
and others
200 Chemist
16. HUL
4 Divisions: Detergent,
Brookbond, Personal
Products, Food
Fast Selling : Surf Excel
Bar,Wheel; Red
Label(100g); F&L; Axe,
Clinic Plus Shampoo,
Huggies(wonder pant)
Retailer Margins: 8-
15%
Distributor
Margin:5.75%
1-2Week credit period
Products % margins on MRP
Detergents 8%
Personal Products 10%
Brooke bond 10%
Huggies 15%
Store type Minimum requirement
A 100000
B 50000
C 10000
D Below 5000
Distributor info:
• C&F: Medchal
• Total Number of Outlets served: 2370(Uppal to
Nampally)
• Medical Outlets: 300
• Number of Salesman: 54
• Has to come to WD for dinking orders and takes
orders for next day
• Cash payment incentive 2%.
Outlets targeted:Wholesale: 15
Retail Outlets: 25
Minimum outlets billed: 10
MonthlyTurnover: 6 crores
Margin: C&F- 2%
Stockist – 4%
17. P&G
Sriven Corp is the
biggest
Distributor in
Telangana
Fast Selling:
Laundary
Category(Airel &
Tide)
Retailer Margins:
8-20%
Distributor
Margin:6%
1-2Week credit
period, Average
50lakh of stock
maintained.
Products % margins on MRP
Detergents 8%
Paper category 10%
Vicks 20%
Pampers 15%
Store type Minimum requirement
A 135000
B1 100000
B2 80000
C1 50000
C2 35000
Distributor info:
• MonthlyTurnover: 35-40 crores(10% Pharma,
8% Ecommerce)
• Cash payment incentive 2%
• Every 3 months the have schemes for a
particular product.
• Current scheme: 2% if retailer takes 3 pcs of
each SKU of OLAY.
Outlets targeted:Wholesale: 8-10
Retail Outlets: 35
• Minimum billing amount: 1000
• Number of Salesman: 183
• Number of hours spent in Market: 6 hrs
• Vehicle used:Ape with 1 tonne capacity
18. Adding new outlets with potential: Navya
Marketing
Navya Marketing: Balanagar
Total number of outlets in list 62
Outlets added 29
Outlets shut 24
Outlets not interested 5
Outlets not located 4
New outlets added not in the
list
4
Key observations
Small shops, no ease of access, Limited
stocking ability,Variable operating
hours, Low awareness.
High “Fungibility”
an advantage to
ITC
Goods bought
from open market
and common
salesman
Lack of proper
display, tempory
infrastructure as
tendency to
switch business
quickly
Bigger shops in
the area not in the
list not serviced on
time problem in
order taking and
delivery
Most Chemist
shops have a clinic
associated with
them goods sold
on doctors
prescription
29
24
5
4
4
Break up of 66 outlets
Outlets added Outlets shut Not intrested Not located New Outlets
19. Adding new outlets with potential: Navya
Marketing
23
6
Types of outlets
Predominantly Chemist Chemist+others
3
31
Categorization of outlets
A others
25
5
4
Shelf display
Small Medium Large
Average SFT: 160
Average
Turnover: 1100
Average footfall:
50-60
20. Adding new outlets with potential: MRL Trading
MRLTrading : Malakpet WD
Total number of outlets in list 93
Outlets added 50
Outlets shut 15
Outlets not interested 13
Outlets not located 10
Already Serviced 4
New outlets added not in the list 5
Key observations
Many outlets in a
concentrated area
High
“Fungibility”
an advantage
to ITC
Goods
bought from
open market
and common
salesman
Good potential
for the
products, need
good follow up
for good results
Complaints
regarding
the supply of
the ordered
products
Many stores
with good
infrastructure
and potential
50
15
13
4 10 5
Break up of 97 outlets
Outlets added Outlets shut Not intrested
Already serviced Not located New Outlets
21. Adding new outlets with potential: MRL Trading
56
42
Types of outlets
Predominantly Chemist Chemist+others
30
53
Categorization of outlets
A others
35
33
13
Shelf display
Small Medium Large
Average SFT: 150
Average
Turnover: 1100
Average footfall:
70-80
22. Adding new outlets with potential: S&S
Distributor (Sanath Nagar)
Total number of outlets in list 76
Outlets added 31
Outlets shut 10
Outlets not interested 10
Outlets not located 16
Others( Pharmacy, Already
Taking from Distributor)
9
New outlets (not in the list) 45
Key observations
Many outlets were
complaining about late
deliveries and salesman
not visiting these
outlets
Salesman are
not explaining
various
products and
schemes
properly
Goods bought
from open
market: (Metro,
Pawan Gen
Store
Erragadda,
Thakur Begum
Bazar, Bhavani,
Padma in Koti)
Many medical
outlets are
interested in
keeping Food
products of ITC
as well.
Irregular
opening
and
closing
time
Lack of
proper
display
because of
size
constraint
31
10
10
169
45
Break up of 76 outlets
Outlets added Outlets shut Not intrested
Not located Others New Outlets
23. Adding new outlets with potential: S&S
Distributor (Sanath Nagar)
24
7
Types of outlets
Predominantly Chemist Chemist+others
25
5
4
Shelf display
Small Medium Large
Average SFT: 140
Average
Turnover: 2 lakhs
Average footfall:
80-100
24. Building people and talent readiness:
Benchmarking against competition
Company Basic salary Maximum salary
Dabur 7500 16000
Marico 6500 10000
Godrej 7000 9300
J&J 8000 13500
P&G 8000 18700
HUL 12000 15500
Incentive
DABUR
Target Others
Individual target
4100 Focus brands
1000Stockist target
3900
MARICO
Incentive
Individual
Target
1000
Quarterly
Bonus
2000* (% of
target
achieved)
Incentive
GODREJ
Target Focus brands
600
Individual
target 2800
Active outlet
productivity
1000
26. Building people and talent readiness: Proposed
model
Name Company Experience Phone
number
Srikant Emami 2 xxxxxxxxxxxx
Naresh johnson 2 Xxxxxxxxxxxx
Ramesh private pharma 1 Xxxxxxxxxxxx
LingamYadav GSK 5 Xxxxxxxxxxxx
Srinivas Reddy Ayurwin 1 Xxxxxxxxxxxx
parmeshwar reddy private pharma 1 Xxxxxxxxxxxx
Suresh Unicharm 1 xxxxxxxxxxxx
ITC
(Proposed
model)
Individual
Target
2000
Focus
500
DRCP
500
Service Star
3 star-1500
5 star-2000
7 star-2500
Perfect Day
500
ServiceStar-15
Secondary Sale- 5
Width target- 2
Focus-3
Perfect day-2
DRCP-1
Field Capability -2
Service star score= 5*%Target achieved + 2* (No of weeks
achieved/4)+ 3* % of focus target+ 2* (Perfect day/30)+ 1* (If
more than 2 stores added)+ 2* (no of days field capable/30)
Service star computation:
5-8 3 Star
9-12 5 Star
12-15 7 Star
27. Implementing a separate chemist channel at KVB
translating strategy to action: Analysis
Key Observations:
• PG Road, Diamond Point, Bowenpally are routes
with high potential.
• High education among retailers and consumers
and retailers amenable to product activation.
• 196 stores initially identified order taking with
low SKU count can be serviced by the same truck
which service other channels.
27
40
129
StoreType
A+ A Other
116
80
Types of outlets
Pure Chemist Chemistc + Other
29. Tackling the delivery problem
Factory CFA
Superstockist/
Hub
Supervised/Unsupervised
Substockist/
Spoke
Retailer in low potential
market
Consumer
Lack of consistent operating
hours
Less order from a particular area
lack of profit for distributor
Low ITO so accounts not
important to distributor
Difficulty in servicing outlets
which fall in “other” category
Outlets not discovered located
Reasonsfordeliveryproblem
Supervised model
High level of control by the company on substockist
Substockist monitored by company officials designated for
this specific job
Billed through Sify.
Unsupervised model
The Superstockists are generally charged with the job of
appointing substockists and the company supervision ends
at the Superstockist level itself.
Billed and monitored at superstockist
30. Tackling the delivery problem: Special FC outlet
Special FC
incentive
Basic incentive 2.5% of
amount
delivered
Monthly fixed 4*50
Loyalty bonus 5% of annual
delivery
Sub distributors considered as Special FC outlets:
Billed under current distributor as Special FC outlets. Additional
Incentive to perform 4 deliveries per week.
Monitored by ASE stores serviced by sub distributor active outlets on
sify
Outlets
Register for
special FC
ASM selects
the best
possible
outlet
Salesmen
takes order
and updates
special FC on
deliveries
Deliveries
performed by
special FC
outlets
Performance
monitored by
ASE and
salesmen
Requirements
400 Sft area
Mode of
transport
Easy
connectivity
Fixed
operation
hours
31. Pharma Flexi sitara
Entry slab 1k
Visibility 100
Additional Discount on
monthly target achieved
2%
MSL Incentive 0.5%
Display criteria 1 category dressing
Monthly loyalty bonus 1%
Creating a Trade marketing offer to beat competition
Monthly Loyalty Bonus : Outlet has to cut at least
10 lines for 4 consecutive weeks to achieve
additional benefit of 1%
Increase
the
visibility
of brands
by
providing
a flexible
plan for
Phama
outlets
Pharma 3 Stars 5 star 7 star
Entry slab 2.5k 5k 7.5k
Visibility 250 +1.5% on turnover 500+1.5% on turnover 750 + 1.5% on turnover
Additional discount on
target
3%
MSL Incentive(2 brands) 0.5%
Display criteria 2 category dressing
Monthly loyalty bonus 1%
Sitara plan for
pharma
retailers
Sitara plan
Targeting established chemist outlets in urban clusters.
Higher incentives based on fixed target achieved.
Provides credit card to 5 star and 7 star outlets retailers can buy ITC products
against the incentive accumulated with a additional 1% discount.
Flexi Sitara plan
Targeting smaller chemist outlets in low potential clusters.
Flexible scheme where incentive will be disbursed according to
percentage of target achieved.
32. Other General Recommendations
Product
Activation
• Short term, high powered activation blitz by means of live project for MBA students
• Activation at FC stores, ISS andA+ outlets ShunTheBurn campaign for savlon and Engage:More for deodrants
• Use innovative methods like snapchat geofilters, twitter, Instagram to Engange:More
IT
recommend
ations
• Use simple dashboards like tableau
• Minimal cost, Information available universally using a single link.
Auditor
• Audit of routes on a monthly random basis to access AVF criteria.
• Audit to be done by a specially appointed auditor/AE.
Incorporating
Retailer
suggestion
• Smaller SKU in savlon 200, 500 ml.
• Shower to Shower ”Beat the Heat” cap with 150 gm.
Active addition
of new outlets
• Distributor retail coverage plan incentivizes addition of new outlets and service outlets not serviced within a particular route.
• Outlets should be proactively added to sify and billing started promptly.
33. Other General Recommendations
Effective
communication
• Better communication of products/schemes and incentives.
• Pre communication of gift, gift slabs and qualifications.
• ITC messages in local language.
Building sales
competencies
• Buddy program where 7 star salesman andAE mentor regarding various aspects of sales.
• Outlets where sales men spent more than 3 mins in conversation with the retailer resulted in 80%
conversion rates.
34. References
Reports
• B. Joseph Pine, James H. Gilmore,The Experience Economy, Published by Harvard business press
• Three rules for building the modern retail organization- BAIN & COMPANY
• How retailers can improve promotion effectiveness- Boston Consulting Group
• Emerging Consumer Demand- Nielsen
• Re-Imaging Retail in India- BCG and CII
• Conceptual Framework for designing a Rural Distribution Model for FMCG products in India:A Situational Guide
• Demand Spotting: Rise of the Indian Chemist-Nielsen
• FMCG industry analysis by- Indian Brand Equity Foundation
• The Indian FMCG sector:The innovation imperative- PWC
• Rethinking consumer product distribution in developing countries: ATKearney
35. References
Books
• Research Methodology - Naresh Kumar
Malhotra
• Retail Management – Ogden
• Marketing Management by Philip Kotler
• Sales and distribution Management by
Venugopal
• Retail Management by SC Bhatia
Websites
• www.Itcportal.com
• www.itcindia.com
• Wikipedia
• Scribd
• HUL website
• R&B website
• Patanjali website
• Unicharm website
• CMIE
• Slideshare
• Idea Make Market
