ITC's sales force structure, supply & distribution study by CIMP's student

Group:04Alok Kr.Amrita KumariBalram Kr.Deepti ManishaMayur KhandeliaPriya KumariRaushan Kr.Shourya SumanVikash Kr.Ved Prakash

A project on the study of sales & distribution of Sunfeast (ITC)

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About ITC Ltd.

Company Profile:

ITC was established on August 24, 1910

Indian public conglomerate company headquartered in Kolkata, West Bengal, IndiaITC's annual turnover stood at $7 billion and market capitalization of over $34 billionThe company is currently headed by Yogesh Chander Deveshwar (CEO)It employs over 29,000 people at more than 60 locations across India and is listed on Forbes 2000ITC Limited completed 100 years on 24th August 2010

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About ITC Ltd. (Contd.)

Vision

• To sustain ITC’s position as one of India’s most valuable corporations through world-class performance, creating growing value for the Indian economy and the Company’s stakeholders

Mission

• To enhance the wealth generating capability of the enterprise in a globalising environment, delivering superior and sustainable stakeholder value

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About ITC Ltd. (Contd.)

Food ( GR 1)

Personal Care

(GR 2)

Cigarettes( GR 3)

Bingo (GR 4)

Paper Boards(GR 5)

Diversified Product Categories:

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1. To make in depth study of recruitment process of sales personnel; their training and development; compensation, evaluation & control by the company

2. Develop proper insight about distribution management involving channel member selection; effective working; monitoring and control of logistics and channel strategy

3. To compare the service of competitors with that of ITC

4. To identify the problem in sales effort, sales administration and sales and distribution management strategy developed of the company

5. Suggest the proper solution for the inefficiencies and inaccuracy found in the process

Objectives of the study

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Methodology followed:- 1. Secondary Data ( Research Papers and companies websites)

• literature review of existing research papers on different aspects sales and distribution

• Finding the factors which improve the sales efficiency if sales force• Identifying the ways for designing effective distribution channel

2. Primary Data(Interview of company’s sales official and retail survey) Methodology followed:-

a. Structured Interview of company’s sales officials b. Survey of retailersResearch tool• Questionnaire• Onsite observationSampling method: Convenient samplingSample size: 100 retail outletsAnalysis tool: M S Excel-2007

Approach for study

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Literature Review

• Specific training of sales people enhances their performance and produces customer-oriented selling

• In different circumstances firms might choose an appropriate distribution flexibility strategy which fits with their distribution environment

• Incentives motivates sales people to perform more effectively

• Many companies today are trying to identify innovative compensation strategies that are directly linked to improving organizational performance

• Evaluating the performance of sales territories

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Strength Strong brand recognition and product portfolio Experienced Management Diversified Product PortfolioEstablished Research & DevelopmentGlobal market reachWell established distribution network

Weakness Dependence on tobacco revenues Negative Connection of TobaccoLow export levelsBrand Proliferation

Opportunity Low per capita consumption of personal care products Untapped rural Market Collaboration with foreign playerse-retailing

Threat Competition both Domestic & International Ban on smoking Competition from unbranded productsHigh competition from established companies

SWOT Analysis

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INTERVIEW OUTCOME

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Presence of ITC Ltd..

North (NDO)

East(EDO)

South(SDO)

West (WDO

)

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EDO Branches

Patna

Bhubaneswar04/10/2023 11

Sales Hierarchy of ITC

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Recruitment

• Assistant under Trainee Top B-

Schools

• Sales Trainee Other

B- schools

• Lateral Recruitment (for the post of AE) by BM and HRM

Employee References and

Consultancy

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Level 5

Quality of hire

Level 4

Level 3

Level 2

Recruitment (Contd.)

Written Test - 3 sections. Total of 55 questions. Numerical - 15, Analytical - 20, Verbal - 20 questions.

Group Discussions / Business Plan Competition

Interview round 1st Round

Level 1CV Short listing

Interview round 2

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Training and Development

Induction Training

On Job Training

Internal Training

Competency Development

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Training and Development (Contd.)

Sales Trainee

Duration: 1 week

Place: HO

Induction Training:

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On Job TrainingDistributor’s Sales Person &

SupervisorTop distributors

3 Salesman are selected

New Entrant (S. Trainee & AUT)

Duration: 3days

New Sales Personnel

Training Through NIS

Process

On Job Training:

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Training and Development (Contd.)For Sales Trainee and AUT

Duration: 1 month

In Branch office

Internal Training:

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Branch Manager recommends AE

and AM for training

Location: Head Office

Duration: 6 Days


Competency Training:

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Compensation (Contd.)

Position CTC (in Lakhs annually)

Variable

Branch Manager 18 - 20 20% of CTC

Assistant Manager

12 - 14 20% of CTC

Area Manager 8 - 8.5 20% 0f CTC

Area Executive 5.5 - 6.5 20% of CTC

Sales Trainee 2.5 - 2.6 20% of CTC

Variable salary is decided on the basis of performance and target met by sales personnel04/10/2023 20

Performance evaluation of sales personnel

•Monthly Sales Target•Visibility Target

Monthly Target

•Sales Volume for each product category•Market share growth rate

Performance of the branch

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STAR WARS:

Quiz

Motivation

Updated

Performance evaluation of sales personnel

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Wholesale Distributor (WD)

WD

Salesmen

(Salary: 5-6

K)

Supervisors(Salary: 8K)

Driver/ Thelawala

(Salary: 3.5-

4k)

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WD employees: Recruitment and Compensation

• Their fixed salary is paid by the distributor but is reimbursed by the company

• The variable salary of salesmen is decided on his meeting of sales target

Recruitment:

The salespersons of distributors are appointed by the distributor himself in consultation with ITC officials

Compensation:

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Salesmen Evaluation and Compensation

• The compensation received by salesmen depends upon the target achieved by them

• Targets under consideration:1. Monthly sales target2. Product wise sales target3. Category wise


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Control mechanism:

• The performance and work of WD employees is evaluated by company’s officials weekly

• Their daily sales order is monitored by Area Executive

• The salesmen is given a geographical territory which doesn’t consider sales potential

• Salesmen has to cover 30 outlets each day• They are given a beat plan for each day• If a WD employee is not performing then the

company can sack him


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Role of Salesmen:

• Prospecting- Searching for new outlets• Targeting- Visiting potential outlets• Communicating- Informing about products and

offers• An order taker- As per requirement in retail and

convenience outlet • Selling to retailers and convenience outlet• Servicing- Removal of

damaged/expired(DND)products• Information gathering- About needs/ preferences

of customers• Allocating- Fixed time to each outlets• Cash collection


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Distribution Channel

FACTORY

CNF

WHOLESALE

DISTRIBUTOR

WHOLESALE DEALER

BASE

RETAILER

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Channel Type

Company

Wholesale

Distributor

Wholesaler

Retailers

Consumer

Company

Wholesale Distributor

Wholesale

r

Consumer

Company

Wholesale Distributo

rRetailers Consume

r

2 -level Distribution Channel:

3-level Distribution Channel:

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Distribution Type

Exclusive (Textile)

Selective (Paper Boards & Cigarettes)

Intense (Other FMCG Products)

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Physical Distribution/Logistic

Mother Hub/Factory

Warehouse Service Provider

WD Godowns

Outlets

Central Warehous

e

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Effective Working of Channel Members

Business Area wise Evaluation

Percentage

1. Convenience 25

2. Grocery 1/3 25

3. Grocery 2 25

4. WD system & Processes 25

Performance is measured on following broad parameters:1.) Distribution Health (Outlet coverage, availability, visibility levels, etc)2.) Business Health (Sales Performance benchmarked to relevant Circle)04/10/2023 33

Effective Working of Channel Members (Contd.)

Score card for Measurement of WD Performance:

Bands Score

Platinum > 95%

Gold 85-95%

Silver 80-85%

Bronze Star 75-80%

Bronze 60-65%

Non Performing < 60%

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Essentials Check Bands Follow up action

Not Qualified Non Performing Replace with NSA

Not Qualified Bronze On Notice

Not Qualified Bronze Star/ Silver On NoticeBM to revert with

follow up plan

Qualified Non Performing On Notice

Qualified Bronze On NoticeTime bound action

plan

Qualified Bronze Star/ Silver Encouragement for further improvement

Actionable basis for WD evaluation:

Effective Working of Channel Members (Contd.)

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RETAIL SURVEY OUTCOME

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Companies rated best in service by retailers

HUL P&G Britannia ITC Pepsico Parle Nestle0%

5%

10%

15%

20%

25%

30%

35%

40%

45% 43%

18%

7%5%

7% 6%

14%

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Retailer’s reson for purchase from stockist’s

65%

35%

Easy access Attractive schemes

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Salesperson conveying about the products, rates and

schemes correctly

78%

22%

Yes No

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Problems in Sales and Distribution system at ITC

• Lack of proper training to distributor’s salesmen• Territory allotted to salesmen doesn’t consider the

sales potential of the areas• Salesmen hides offers from retailers in ready stock

sale model• Problem of product recall by salesmen• Salesmen focuses more on large outlets which

purchase in large volume• Billing of new outlets done on the name of other

existing outlets• All the SKU of a product are not brought in the

market at a time• TPS (Sify software) is not updated regularly04/10/2023 40

Solutions• Proper training should be provided to salesmen• Salesmen should be regularly informed about the

changing offers and schemes on the products• An apparel containing detail of offers should be given to

salesman for ready stock sales• Apparel should be provided to salesmen to enhance brand

awareness• Territory allotted to salesmen should consider the sales

potential and concentration of outlets in that area• Salesmen should be provided incentive for adding new

outlets• TPS should be updated regularly to show current stock

details• The incentive of the salesmen should be based on the

number of outlets served by them too rather than merely on sales volume 04/10/2023 41

References

• Sergio Román, Salvador Ruiz, José Luis Munuera, (2002) "The effects of sales training

• Kangkang Yu, Jack Cadeaux, Hua Song, (2012) "Alternative forms of fit in distribution flexibility strategies", International Journal of Operations & Production Management, Vol. 32 Iss: 10

• Andrew Napier, (1986) "Incentives — A Vector of Improved Sales Performance?", European Journal of Marketing, Vol. 20 Iss: 6, pp.36 – 51

• Steven H. Appelbaum, Loring Mackenzie, (1996) "Compensation in the year 2000: pay for performance?” Health Manpower Management, Vol. 22 Iss: 3, pp.31 - 39

• Journal of Marketing; Jan1972, Vol. 36 Issue 1, p31-37, 7p• www.itcportal.com

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http://www.itcportal.com/