Channel Management of Nestle and Cadbury's, Selection of Channel Members, Conflict Management, Distribution Network , Channel Partners

1. Presented by:
Group:1
NISHANT VARSHNEY -13
NISHANT KUMAR-22
HARSHITA JAIN-30
ANNA JAIN-51
MEGHA SINGH-53
HEENA VYAS-57
AAKASH MINOCHA-60

2. Cadbury with 54% market share and Nestle with 37%

4. Factory
Mother
Warehouse
Depots
Distributor
Warehouse
Retailers
Diamond
Stores
Super
Stockists
Retailers
Primary Sales
Secondary Sales

5.  Factory
 3 Factories at Malanpur, Thane, Induri.
 Responsible for production of different products
 Mother-warehouse
 Exists at the Mumbai.
 Finished products from each of the factories are sent to this
warehouse from where there is direct dispatch to the depots.
 Depots – Around 24 depots throughout the country with an
average of one in each state. Responsible for dispatches to
all the distributors or super stockists of that particular state.

6.  Distributors and Super Stockists
 Points of primary sales
 Have their own sales people
 Retailers
 Come in direct contact with the customers
 responsible for converting secondary sales to tertiary sales.
 More than 30 lakh retail stores being covered throughout the
country.
Intermediaries

7.  Based upon Coverage
 Based on products being sold
 Based on Size

8. Coverage
Direct Indirect

9.  Direct Retailers
 Covered by the distributors or the super-stockists of the
Company
 Are visited directly by the representatives of the
distributor.
 Get benefits and are eligible for the schemes undertaken
by the Company, including Cash Discounts (CD), as all
the sales to them are on cash basis.
 Indirect Retailers
 Ones which are not on the coverage list of the distributor.
 Catered by the wholesalers.
 For the Base Business category the number of such outlets
is very low. But for Mass Market products the number is
very high.
 Exist more in Class D and Class E places.
 Benefit that these retail outlets get is that they do not need
to pay in cash always. Can also get sales in credit.

10.  Groceries
 Confectionary
 Cosmetic Shops
 Department Stores
 Variety Stores
 Kitchenware Stores
 Plastic Products Shops
 Paan-wala

11. Size-
based
Classifi
cation
Diamond
Stores
Normal
Outlets

13. Key aspects to ponder while selecting for a
distributor
 Market segment - the distributor must be familiar with
your target consumer and segment.
 Changes during the product life cycle - different
channels can be exploited at different points in the PLC
e.g. Foldaway scooters are now available everywhere.
Once they were sold via a few specific stores.
 Producer - distributor fit - Is there a match between their
polices, strategies, image, and yours? Look for 'synergy'.
 Qualification assessment - Establishes the experience
and track record of your intermediary.
 How much training and support will your distributor
require?

14.  Analysis of the distributors & super stockist:
 Exclusive Partner – Cadbury India tries to look for
distributors that are exclusive to it. The Company
officials feel that if that does not happen then the
partner might not be in a position to do justice to
Cadbury. But in small places, especially rural areas, it is
not possible. So the super stockists appointed there are
the ones that do not carry brands of competitors.
 Proper Storing Capacity – After the worm infestation
incident, the Company has made a point to go in for the
partners that can provide proper hygienic storing to the
product.
 Well-defined Territory – The areas of the distributors
are geographically well defined so that no clash of
interests takes place.

15.  Importance
 Have a much stronger personal
relationship with the consumer.
 Hold several other brands and products.
A consumer will expect to be exposed to
many products.
 Offer credit to the customer.
 Products and services are promoted and
merchandised by the retailer.
 Give the final selling to the product.

16.  Products are stocked at different outlets depending upon:
 Type of store – This not only includes the type of
products being sold at the outlet but also the size of the
store is kept in consideration. Based on this criterion it is
decided as in what all products could be sold at the
outlet.
 Proper Infrastructure – Need to analyze the storing
capability of the store. A store in Jodhpur cannot store
chocolates if there is no provision for cooling.
 Proper Storing Capabilities – Must have a safe and
hygienic place to store the products. This clause is kept
in mind considering the worm infestation issue.
 As far as the selecting criterion is concerned for the
diamond outlets, no condition is laid because at all these
stores the bare minimum requirements are automatically
met in the process of giving better ambience to the
customers.

17.  Monetary – Margins / Profits
 Visi-coolers – Retail outlets are given Cadbury visi- coolers to stock the
chocolates. Available to the shopkeepers on various schemes and
agreements like EMI, cost-sharing.
 Discounts – At different times of the year, the Company gives discounts
to the outlets on purchase. Retailers get Cash Discounts of around 2% for
cash sales.
 Competitions – Various contests are run for the retailers in for
decorating the shop with the banners, hangers or other below-the-line
promotions. The Company gets exposure for its products and an
opportunity to satisfy the retailers.
 Re-purchase – Expired or spoiled goods, by no fault of the partner, there
is a provision to replace the goods. This value proposition has been
introduced by the Company only after the incident of worm infestation as a
part of Project Vishwas. This is yet another way of establishing trust among
the intermediaries.

18. Channel Intermediary Margin
Distributor / Super
Stockist
5-6%
Retail Outlet 10-12%
Diamond Outlet 12-13%

19.  At best, channel conflict can result in tension among
trading partners.
 At worst, retailers, wholesalers, and even the internal
sales force can retaliate, using such tactics as:
 Reducing the manufacturer's retail shelf space
 Decreasing marketing support for the manufacturer's
products
 Providing additional shelf space or marketing
support for a competing brand
 Promoting the retailer's or wholesaler's own private-
label brand
 Dropping the manufacturer's product line

20.  No major conflict in Cadbury India
 Lack of multi-channel in case of the Indian
subsidiary
 No sales through electronic means in India
 Minor tussle exists between the two retail types.
 Organized v/s Unorganized retail stores.
 Reasons
 Benefits given to the organized stores in terms
of better margins and bargaining power of
these diamond stores.

21.  Proper measures by compensating traditional
partners by providing benefits in the form of
 Visi-coolers
 Discounts
 Competitions & Rewards
 Re-purchase
 Cash Discounts
 Cadbury has so far been very successful in striking
the equilibrium and keeping the interests of both
the types of partners.

23. FORMAL STRUCTURE
INFORMAL STRUCTURE
Mother Godown
Respective C&F
Agents
Distributors as
per assigned
territories
Retailers in their respective
territories
End Consumer
Wholesalers in
their area.
Distribution Structure of Nestle

24. FACTORY
MOTHER GODOWN
C&S AGENTS C&S AGENTS C&S AGENTS
C.D C.D C.D
STOCKISTS
STOCKSARECOMPANYPROPERTY
INVOICING AGAINST PAYMENT
Transfer Challan
Transfer D.A
OwnershipTransfer

25. Moga Factory
Sahibabad Mother
Godown
By Rail By Road
Indore
Guwahati
Patna/ Calcutta
Hyderabad
Directbyrailcontainers
Delhi-UP border
Transhipment Godown
Direct Trucks
Mostly by
Road :
Containers
/ trucks
C&S C&S C&S C&S
C.D. C.D. C.D. C.D. C.D. C.D. C.D.
By trucks
By Canters / Vns

26.  Capital Investment
 Relevant Experience
 Infrastructure

27. Company
Distributor
Wholesalers
Retailer
Retailer
5.8%
11.5% Flexible
Negotiable

28. Credit Policy
Nestle India Limited:
The distributors are termed as Cash Distributors
because the company charges the distributors
before the stock is delivered; the company has
connected the distributor online and the
transactions happen online.
The Distributor:
The distributor sells goods on credit; the period of
credit ranges from 1-2 week. The wholesaler allows
discount of 1% on cash payment (policy followed by
the wholesaler).

29. As per the company regulations the
distributor is supposed to maintain a
stock of 3 weeks; the distributor
maintains a stock of 3 -3.5 weeks in
monetary terms it equals to Rs. 30 lakh
for the distributor.

30. Wholesaler:
The lead periods in providing stocks to the dealers
differs from the SKU and quantity ordered; some
SKU’s are delivered correspondingly with taking
order but some are sent from the warehouses. A
higher quantity ordered has to be replenished
from the warehouse.
Company:
The stock from the company is provided every
month but company keeps replenishing stocks at
the requests of the distributors. It takes 2 days
for company to replenish stocks.

31. Return Policy
The company follows a policy of return when the product has past its expiry date,
damaged or has a defect; the replenishment is done with cash and happens at
the end of every six months.
Return On Investments
The company does not gives any guarantee to the distributor with regard to
returns on his investment which is in line with the market credentials of the
company.
Storage Policy
The distributor maintains Cold Storages and Deep Freezers for the storage of the
products; the investment in infrastructure is considerable for the company to
maintain such infrastructure.
Sales Force
The company does not have a policy to train the staff of the distributor, the
distributor trains his own sales force. The remuneration and all other expenses
are borne by the distributor.
Promotion Policy
The company follows a policy for consumer promotions but as regard the trade
promotions they are scant rather negligible, the promotions put in extra
pressure to push more quantity. The problem of maintenance of the
promotional item is considerable and takes in huge energies and money.

32.  Sources of Channel Conflict
 Wholesalers'
 Invasion by Sales Officer

34. KC71V-822F-24F7-
47B6-63AB