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A
Summer Training Report
On
Study of the rural distribution of the top FMCG companies and
suggest opportunities for enhancing the rural distribution of Coca –
Cola.
SUBMITTED TOWARDS PARTIAL FULFILLMENT
OF
POST GRADUATE DIPLOMA IN MANAGEMENT
(APPROVED BY AICTE, GOVT. OF INDIA)
ACADEMIC SESSION
2009 - 2011
EXTERNAL GUIDENCE: INTERNAL GUIDENCE
Aashish k Jha Res. V.S.SOLANKI sir
Area channel manager Faculty, IPM, Meerut
Coca-cola, Patna
Submitted by:
Sidharth Shankar Jha
M-209061
PGDM (2009-11)
INSTITUTE OF PRODUCTIVITY & MANAGEMENT, MEERUT
1
DECLARATION
This is to certify that I, the student of PGDM(2nd year) have personally worked
on the topic “Rular Distribution of Coca Cola” under the able guidance of Mr.
Sarvjeet Singh Sir, DY. Director, Mr. V.S. Solanki Sir , & Mr. Michael Samuels Sir,
faculty of IPM, Meerut, U.P during the session of April-July 2010.
The data's mentioned throughout the project are authentic and reliable. I have
worked to the best of my efforts and capability.
Date: 20th July 2010 Sidharth Shankar Jha
Place: Meerut
2
ACKNOWLEDGEMENT
The research report will be incomplete without acknowledge giving my sincere,
gratitude to all person who have helped me in the preparation of this report.
First of all, I thank “GOD” for the blessing showered on me throughout this
project work, which has helped me in the successful completion of the training.
I express my thanks to Hindustan Coca Cola Beverages Pvt. Ltd. for granting
me the permission to work with the esteem organization.
I am also thankful to Mr. Aashish K Jha (Area channel manager) of Hindustan
Coca Cola Beverages Pvt. Ltd. He guided and helped me in all possible ways he
could, at every stage of the report.
I would also like to thank all the executives, distributors and staff of Hindustan
Coca Cola Beverages Pvt. Ltd. who provided all the relevant information and
their kind support on the basis of which this report has been prepared.
I would also like to thank all the executives, distributors and staff of all other
FMCG companies which we have considered.
I would also like to thank Mr. Sarvjeet Singh (Mentor for the summer training),
Mr. V. S. Solanki Sir & Mr. Michael Samuels Sir who helped me and guided me
through the course of internship.
Last but not the list , I am thankful to all retailers who gave their precious time
and support to fulfil this task, without their co – operation the study would not
have seen the light of the day & complete.
Sidharth Shankar Jha
M – 209061
IPM, MEERUT
CERTIFICATE FROM THE ORGANISATION
3
4
CERTIFICATE FROM FACULTY GUIDE
This is to certify that the project report entitled “RURAL DISTRIBUTION OF
COCA – COLA” made during the summer internship done at “HINDUSTAN
COCA – COLA BEVERAGES PVT. LTD” is a bonafide record of work done by
SIDHARTH SHANKAR JHA and has been submitted in the partial fulfilment of
the requirement of Post Graduate in Management from Institute of productivity
& Management, Meerut.
Mr. Sarvjeet Sir
Deputy Director
IPM, Meerut
LIST OF CONTENTS
5
S.NO PARTICULARS PAGE NO
1 BRIEF SUMMARY OF THE PROJECT 10
2 OBJECTIVES OF THE PROJECT 15
3 INTRODUCTION A Brief Insight – The FMCG Industry in India A Brief Insight – Beverage Industry in India
181921
4 THE COCA – COLA COMPANY HistoryHINDUSTAN COCA – COLA BEVERAGES PVT. LTD.(HCCBPL)About the CompanyHINDUSTAN COCA – COLA BEVERAGES PVT. LTD. PATNA Manifesto for Growth Values Mission Products Distribution network Setup of Coca – Cola
24
26
28
29293135
5 LITERATURE REVIEW 37
6 RESEARCH METHODOLOGY 40
7 FINDINGS Distribution Network and role of different channel partners Distribution Margins to the channel partners Order Collection Mechanism Delivery Mechanism Frequency of Service Investment and ROI of the different channel partners Sales Structure Data Management & MIS
424246475153545763
8 SUGGESTION Gaps and opportunities in the current rural distribution set up of Coca – Cola Opportunities to leverage the existing channel of different FMCG Companies Present Rural Distribution set up of Coca – Cola New Distribution model suggested by us Future view of our model Distribution model of COKE CHACHA
67
6770
70717274
9 LIMITATION 77
10 BIBLIOGRAPHY 79
LIST OF FIGURES
6
FIGURE NO
PARTICULARS PAGE NO
CHAPTER 4
4.1 Location of COBO, FOBO in India 28
4.2 Working with bottlers 29
CHAPTER 7
7.1 Distribution Network of Coca Cola 42
7.2 Distribution Network of Parle 43
7.3 Distribution Network of HUL 43
7.4 Distribution Network of Dabur 44
7.5 Distribution Network of ITC 45
7.6 Distribution Network Nestle 45
7.7 Order Collection of Coca – Cola 47
7.8 Order Collection of HUL 48
7.9 Order Collection of Parle 49
7.1 Order Collection of Dabur 49
7.11 Order Collection of ITC 50
7.12 Order Collection of Nestle 50
7.13 Sales Structure of Coca – Cola 57
7.14 Sales Structure of HUL 58
7.15 Sales Structure of Parle 59
7.16 Sales Structure of Dabur 60
7.17 Sales Structure of ITC 61
7.18 Sales Structure of Nestle 62
CHAPTER 8
8.1 Rural Marketing 67
8.2 Present Rural Distribution of Coca - Cola 70
8.3 New Distribution Model 71
8.4 Future view of our Model 72
8.5 Distribution Model of COKE CHACHA 74
LIST OF TABLES
7
TABLE NO
PARTICULARS PAGE NO
CHAPTER 1
1.1 Distribution Network of different FMCG Companies 11
1.2 Distribution Margin to the channel Partners 11
CHAPTER 8
8.1 Initial Investment of Coke Chaha 74
8.2 Investment of Coke Chacha in distributing the products to other outlet
75
8
CHAPTER - 1
BRIEF SUMMARY ABOUT THE PROJECT
9
The work assigned was to study the Rural distribution of the top 5 FMCG
companies and suggest opportunities for enhancing the Rural distribution of
Coca-Cola in Bihar.
Thus project was: -
Study the rural distribution of 5 FMCG companies and suggest opportunities for
enhancing the rural distribution of Coca Cola. For knowing the rural distribution
information requirement was:-
Distribution network and role of different channel partners.
Distribution margin to the channel partner.
Order collection mechanism.
Delivery mechanism – Company to Distributor, Distributor to the
rural partner, rural partner to the outlet.
Frequency of service.
Investment and ROI of the respective channel partners.
Sales structure.
Data management and MIS.
For this we had to collect the information from the distributors of different
FMCG Companies as well as distributors of Coca–Cola of rural areas. We went to
the urban and rural distributor of the different FMCG companies and asked
question on the 8 objectives stated above. We had taken companies like HUL,
Parle, Nestle, Dabur and ITC.
We also got the knowledge of the distribution setup of Coca–Cola.
By analyzing the information on the above mention objectives we had
to find the gaps and opportunities in the current Rural Distribution set
up of Coca–Cola. We had to also find the opportunities to leverage the
existing channel of different FMCG companies.
DATA COLLECTION: -
Data was collected from different location of Bihar as:-
10
Patna
Aarah
Darbhanga
Jhanabad
Gaya
Bhagalpur
1. Distribution network and role of different channel partners.
TABLE–1.1
Channel partners
HUL PARLE Coca
Cola
DABUR NESTLE ITC
C&F √ √ √ √ √ √
Super
Distributor
√
Distributor √ √ √ √ √ √
Wholesaler √ √ √ √ √
Retailer √ √ √ √ √ √
{√ Available}
ANALYSIS
In all other FMCG companies, there is one more intermediary which is
wholesaler. The wholesalers have a benefit that they are not bound to sell a
single company product. They can sell different company products. Coca–Cola
should focus on these wholesalers as this channel partner can help in
distributing the products very well.
2. Distribution margin to the channel partner.
TABLE-1.2
Channel partners
HUL PARLE Coca- DABUR NESTLE ITC
11
Cola
Distributors 4.76% 5.80% 1.44%
- 3%
Rural
Distributors
3.50% 4.00%
Super
Distributor
5.00%
Stockiest 5.63% 1.00%
AMC 3.57%
Wholesalers 5.00% 1.50% 3.00% 2.00%
Shakti Amma 3% -
10%
Retailer 10.00
%
15.00% 13.69
%
10.00% 10% - 12% 8% -
10%
ANALYSIS
Coca-cola gives a good margin to its rural outlet i.e. 13.69% is very good, with
respect to the other FMCG companies. Only PARLE gives a higher margin to the
retailers i.e. 15%.
3. Order collection mechanism.
ANALYSIS
In Coca – Cola there is no fixed day of stock keeping for the rural distributor like
other FMCG companies. For AMC and the outlets, orders are not taken by the
RMD where as HUL, Nestle, and Parle; the order is taken by the ME. Also in rural
areas the order is not collected with the help of Blackberry handset as it is
done in urban areas. HUL is the only FMCG Company which is using HTC
handsets in order collection in some rural areas.
4. Delivery mechanism–Company to Distributor, Distributor to the rural
partner, rural partner to the outlet.
ANALYSIS
Deliver mechanism in rural distribution of all the company is almost the same.
12
But in some companies like Nestle bears 75 % of the transportation cost and
the rest 25% is beard by different channel partners.
5. Frequency of service.
ANALYSIS
Frequency of service of all the company are near about the same.
6. Investment and ROI of the respective channel partners .
ANALYSIS
Retailers of Coca -Cola has to invest in GOD (Glass On Deposit) to the company
which is an extra investment to the retailers. The same is the case with the
distributor and AMC whereas it is not with the other FMCG companies. Also in
Coca-Cola all the intermediaries has to deal with the cash because Coca – Cola
does not do businesses in credit.
7. Sales Structure
ANALYSIS
There is only one RMD for 120km of area and 1000 outlets. Which is not
sufficient? The company should assign more RMD is these rural area; so that
the work should be divided equally is these RMDS. This will lowers down their
work load & will increase their work efficiency
8. Data Management and MIS
ANALYSIS
Coca-cola does not provide any software to its distributor. Whereas HUL, Nestle,
and Johnson & Johnson distributor have some kind of software (Respect
generating) provided by the respective company. Like j & j provide positive
spiral V3. It include reports like top article, dead outlet, reports attribute wise,
product wise, retailers wise, reports like actual receipt v/s order place,
collection report like daily cash balance, providing bills, trial balance, ,balance
sheet. Same is with Nestle and HUL but they use SAP software.
13
CHAPTER - 2
OBJECTIVE OF THE PROJECT
To study the rural distribution of the top FMCG companies and suggest
opportunities for enhancing the rural distribution of Coca – Cola.
INFORMATION REQUIREMENT
14
Distribution network and role of different channel partners.
Distribution margins to the channel partners.
Order collection mechanism.
Delivery Mechanism – Company to distributor, Distributor to rural
partner, Rural partner to the outlet.
Frequency of service.
Investment and ROI of the respective channel partners.
Sales structure.
Data management and MIS.
Gaps and opportunities in the current Rural Distribution setup of Coca
-Cola.
Opportunities to leverage the existing channel of different FMCG
companies.
1. Distribution network and role of different channel partners: -To find
out the distribution network of different FMCG companies and what is the role
of different intermediaries.
2. Distribution margins to the channel partners: -To find out the profit
margins of the intermediaries of different FMCG companies.
3. Order collection mechanism: -To find out how the order is placed from
bottom to top in the distribution channel of different FMCG companies.
4. Delivery Mechanism: -To find out delivery mechanism from Company to
distributor, Distributor to rural partner, Rural partner to the outlet of different
FMCG companies.
5. Frequency of Service: - To find out the frequency of service from
Company to distributor, Distributor to rural partner, Rural partner to the outlet
of different FMCG companies.
6. Investment and ROI of the respective channel partners: - To find out
the investment of different channel partner to start their business and what is
the return on investment to the channel partner of different FMCG companies.
Main focus was on distributors and intermediaries that Coca – Cola does not
have.
15
7. Sales structure: - To find out the hierarchy of the sales department of
different FMCG companies.
8. Data management and MIS: - To find out how the different FMCG
companies manages their data and MIS at distribution point.
16
CHAPTER – 3
INTRODUCTION
Coca Cola is the company that has given the world its best known taste was
born in Atlanta, Georgia on May 8 1886. Coca Cola company is the world's
17
leading manufacturer, marketer and distributor of non – alcoholic beverage
concentrates and syrups, it is use to produce nearly 400 beverages brands. It
sells beverage concentrates and syrups to bottling and canning operators,
distributors, fountain retailers and fountain wholesalers. The company's
beverage product comprises of bottled and canned soft drink as well as
concentrates, syrups and not ready to drink powder products. In addition to
this, it also produces and markets sports drinks, tea and coffee. The Coca Cola
Company began building its global network in the 1920s. Now operating in
more than 200 countries and producing nearly 400 brands. The Coca Cola
system has successfully applied a simple formula on a global scale:”Provide a
moment of refreshment for a small amount of money – a billion times a day.”
The Coca Cola Company and its network of bottlers comprise the most
sophisticated and pervasive production and distribution system in the world.
More than anything, that system is dedicated to people working long and hard
to sell the products manufactured by the company. This unique worldwide
system has made the Coca Cola company the world's premier soft- drink
company. Coca-Cola, more than any other consumer products has brought
pleasure to thirsty consumers around the globe. For more than 115 years Coca
Cola has created a special moment of pleasure for hundreds of millions of
people every day.
The company aims at increasing share owner value over time. It accomplishes
this by working with its business partners to deliver satisfaction and value to
consumers through a worldwide system of superior brands and service, thus
increasing brand equity on a global basis, this aim at managing their business
well with people who are strongly committed to the company values and
culture and providing an appropriately controlled environment, to meet
business goals and objectives. The associate of this company jointly takes
responsibility to ensure compliance with the framework of policies and protect
the company's assets and resources whilst limiting business risk.
A BRIEF INSIGHT- THE FMCG INDUSTRY IN INDIA
Fast Moving Consumer Goods (FMCG) have a quick turnover and relatively low
cost. Consumer generally put less thought into the purchase of FMCG than they
do for other products. FMCG industry witnessed significant changes since 1990.
18
Many players had been facing problems on account of increased competition
from small and regional players and from slow growth across its various
products categories. As a result all the companies revamp their product,
marketing, distribution and customer service strategies to strength their
position in the market.
By the turn of the 20th century, the face of the Indian FMCG industry had
changed significantly. With the liberalization and the Indian customer witnessed
an increasing exposure to new domestic and foreign products through different
media, such as television and the internet. Apart from this, social changes such
as increase in the number of nuclear families and the growing number of
working couples resulting in the increased spending power also contributed to
the increase in the Indian consumer's personal consumption. The realization of
the customers growing awareness and the need to meet changing
requirements and preferences on account of changing lifestyles required the
FMCG producing companies to formulate customer centric strategies.
These changes had a positive impact leading to the rapid growth in the FMCG
industry. Increased availability of retail space, rapid urbanization and qualified
manpower also boosted the growth of the organized retailing sector.
HUL led the way in revolutionizing the product, market, distribution and service
formats of the FMCG industry by focusing on rural markets, direct distribution,
creating new products and distribution and service format. The FMCG sector
also received a boost by government led initiatives in the 2003 budget such as
the setting up of excise free zones in various parts of the country that
witnessed firms moving away from outsourcing to manufacturing by investing
in the zones.
Though the absolute profit made on FMCG products is relatively small, they
generally sell in large numbers and so the cumulative profit on such products
can be large. Unlike some industries, such as automobiles, computers and
airlines FMCG does not suffer from mass layoffs every time the economy starts
to dip. A person may put off buying a car but he will not put off having his
dinner.
Unlike other economy sector, FMCG shares float in a steady manner
irrespective of global market dip, because they generally satisfy rather
fundamental, as opposed to luxurious needs. The FMCG sector, which is
19
growing at the rate of 9% is the fourth largest sector in the Indian Economy and
is worth Rs 93000crores. The main contribution making up 32% of the sector, is
the South Indian region. It is predicted that in the year2010, the FMCG sector
will be worth Rs 143000crores. The sector being one of the biggest sectors of
the Indian Economy provides up to 4 million jobs.
A BRIEF INSIGHT: BEVERAGE INDUSTRY IN INDIA
In India, beverages form an important part of the lives of people. It is an
industry, in which the players constantly innovate in order to come up with
better products to gain more consumers and satisfy the existing consumers.
The beverages industry is vast and there various ways of segmenting it, so as
20
to cater the right products to the right person. The different was of segmenting
it is as follows:
Alcoholic, non-alcoholic and sports beverages
Natural and Synthetic beverages
In-home consumption and out of home on premises consumption.
Age wise segmentation i.e. Beverages for kids, for adults and for senior
citizens.
Segmentation based on the amount of consumption i.e. High levels of
consumption and low levels of consumption.
If the behavioural patterns of consumers in India are closely noticed, it could be
observed that consumers perceive beverages in two different ways i.e.
Beverages are a luxury and that beverages have to be consumed occasionally.
These two perceptions are the biggest challenges faced by the beverages
industry. In order to leverage the beverage industry, it is important to address
this issue so as to encourage regular consumption as well as to make the
industry more affordable.
Four strong strategic elements to increase consumption of the products of the
beverage industry in India are:
1. The quality and the consistency of beverages needs to be enhanced so
that consumers are satisfied and they enjoy consuming beverages.
2. The credibility and trust needs to be built so that there is a very strong
and safe feeling that the consumers have while consuming the
beverages.
3. Consumer education is a must to bring out benefits of beverage
consumption whether in terms of health, taste, relaxation, stimulation,
refreshment and well- bring or prestige relevant to the category.
4. Communication should be relevant and trendy.
The beverage market has still to achieve greater penetration and also a wider
spread of distribution. It is important to look at the entire beverage market, as
a big opportunity, for brand and sales growth in turn to add up to the overall
growth of the food and beverage industry in the economy.
21
22
CHAPTER – 4
THE COCA – COLA COMPANY
HISTORY:
The story starts in Atlanta, Georgia on May 8, 1886, when a pharmacist whose
name was Dr. John Smith Pemberton first mixed Coca- Cola in his back yard.
23
This formula which was made from carbonated water, cane sugar syrup,
caffeine, extracts of kola nuts and cola leaves was brought to the nearby
Jacobs' pharmacy where it made its debut as a soft drink the same day, selling
for only 5 cents. His bookkeeper named this drink “Coca – Cola”.
He first distributed the product by carrying it in a jug and customers bought the
drink for five cents at the soda fountain. Carbonated water was mixed with the
new syrup, whether by accident or otherwise, producing a drink that was
proclaimed delicious and refreshing a taste that continues to be loved today
wherever Coca Cola is enjoyed.
Dr. Pemberton's partner and book keeper whose name was Frank M. Robinson,
suggested the name and noted “Coca–Cola” in the unique flowing script that is
famous worldwide even today. He suggested that the two Cs would look good
in advertising. The first newspaper advertisement for Coca-Cola appeared in
The Atlanta Journal, suggesting thirsty citizen to try the new and popular soda
fountain drink. Hand -painted oil cloths signs reading Coca – Cola appeared on
store awnings, with the suggestion “Drink” added to inform passersby that the
new beverage was for soda fountain refreshment.
By the year 1886, sales of Coca-Cola averaged nine drinks per day. In the first
year Dr. Pemberton sold 25 gallons of syrup, shipped in bright red wooden
kegs. Red has been a distinctive color associated with the soft drink ever since
then. For his efforts Dr. Pemberton earned $50 and spent $73.96 on
advertising. Dr. Pemberton never realized the potential of the beverage he
created. He gradually sold portion of his business to various partner and just
prior to his death in 1988, sold his remaining interest in Coca – Cola to As a G.
Candler, an entrepreneur from Atlanta. Till the year 1891, Mr. Candler
proceeded to buy additional rights and acquire complete ownership and control
24
of the Coca – Cola business. Within 4 years, his merchandising flair had helped
expand consumption of Coca – Cola to every state and territories after which he
ended his pharmaceutical business and focused his full attention on the the
soft drink. Mr. Candler formed a Georgia corporation named the Coca- Cola
Company. The trademark “Coca – Cola” used in the marketplace since 1886
was registered in the United States Patent Office on January 31 1893.
The business continued to grow and in 1894, the first syrup manufacturing
plant outside Atlanta was opened in Dallas, Texas, Chicago, Illinois, Los Angeles
and California. In 1895, three years after The Coca- Cola Company's
incorporation, report to share owners that “Coca – Cola is now drunk in every
state and territory in the United States”
As demand for Coca Cola increased, the Company quickly increased its
facilities. A new building devoted exclusively to the production of syrup and the
management of the business. In the year 1919, the Coca Cola Company was
sold to a group of investors for $25 million. Robert W. Woodruff became the
President of the Company in the year 1923 and his more than 60 years of
leadership took the business to unsurpassed heights of commercial success,
making Coca – Cola one of the most recognized and valued brands around the
world.
HINDUSTAN COCA -COLA BEVERAGES PRIVATE LIMITED
ABOUT THE COMPANY:
Every person who drinks a Coca Cola enjoys a moment of refreshment and
shares an experience that millions of others have savoured. All of those
individual experiences combined have created a worldwide brand – a truly
global brand. On the distribution network front, 10-tonne trucks, three-wheelers
that can go the narrow alleyways of Indian cities, ensure availability of Coke
25
brands in every nookar and corner of the country. The company – owned
bottling arm of the Indian Operations, Hindustan Coca – Cola Beverages Private
Limited is responsible for the manufacture, sale and distribution of beverages
across the country.
Coca – Cola was the leading soft drink brands in India until 1977, when it left
the Indian market because of the reveals its formula with the Government and
reduces its equity stake as required under the Foreign Regulation Act( FERA)
which governed the operations of foreign companies in India. Coca – Cola re–
entered the Indian market on 26th October 1993 after a gap of 16 years. An
agreement with Parle Group gave the Company instant ownership of the top
soft drink brands of the nation. With access to 53 of Parle's plant and a well set
bottling network, an excellent base for rapid introduction of the company's
international brands was formed. The Coca – Cola Company acquired soft drink
brands like Thumps Up, Gold – Spot, Limca, Maaza which was introduced by
Parle, as these products had achieved a strong consumer base and formed a
strong brand image in Indian market during the entry of Coca Cola in 1993.
Thus these products became a part of range of products of the Coca Cola
Company.
In the new liberalized and deregulated environment in 1993, Coca Cola made
its re – entry into India through its 100% owned subsidiary, HCCBPL, the Indian
bottling arms of the Coca Cola Company. However, this was based on
numerous commitments and stipulations which the company agreed to
implement in due course.
Coca Cola consist of 7000 local employees, 500 managers, over 60
manufacturing location, 27 Company Owned Bottling Operations (COBO), 17
Franchisee Owned Bottling Operations (FOBO) and a network of 30 Contract
Packers that facilitate the manufacture process of a range of products for the
company. It also has a supporting distribution network consisting of 70, 00,000
retail outlets and 9000 distributors. Almost all goods and services required to
cater to the Indian market are made locally, with help of technology and skills
within the company. The complexity of the Indian market is reflected in the
26
distribution fleet which includes different modes of distribution, from 10- tonne
trucks to open – bay three wheelers that can navigate through narrow
alleyways of Indian cities and trademarked tricycles and pushcarts.
“Think local, act local”, is the mantra that Coca Cola follows, with punch line
like “Life ho to Aisi” for Urban India and “Thanda Matlab Coca Cola” for
Rural India. This resulted in a 37% growth rate in rural India visa – vie 245%
growth seen in urban India. Between 2001 and 2003, the per capital
consumption of cold drink doubled due to the launch of the new packaging of
200 ml returnable glass bottle which were made available at a price of Rs 5
per bottle. This new market accounted for over 80% of India's new Coca Cola
drinkers. At Coca Cola, they have a long standing belief that everyone who
touches their business should benefit , thereby inducing them to uphold these
values enabling the company to achieve success, recognition and loyalty
worldwide.
HINDUSTAN COCA–COLA BEVERAGES PVT. LTD. PATNA
Hindustan Coca – Cola Beverages Pvt. Ltd. Patna is the organization which is
having its plant and office is in Patliputra industrial area. It looks on the sales ,
distribution of Coca – Cola products in Bihar ,Jharkhand and some part of
western West Bengal. Its plant capacity is to produce 8000 cases of RGB
(Resumable Glass Bottle) in a day. The rest of the pet bottles come from the
Dasna factory in Ghaziabad.
27
FIGURE–4.1
FIGURE: Location of COBO, FOBO & Contract Packaging in India (Source: -
Google images.com)
MANIFESTO FOR GROWTH
VALUES
The values for the employee of the company is expected to
keep up the work regular ly are:
Leadership: To take in i t iat ive, lead, mot ivate and deal the
team with energy so that i t can del iver good and
outstanding resul ts .
Innovat ion: To a lways t ry for progress and try to reach the
above level of excel lence in whatever we do.
28
Pass ion: To be committed and del iver outstanding
performance.
Teamwork: To uni te people for greater strength and work in
teams to achieve the common goals of the organizat ion.
Ownership: To th ink and act as owners at d i f ferent levels ,
so those decis ions are taken at the lowest level .
Accountabi l i ty: To be accountable, t ransparent to our
co l leagues so that agreed targets and goals are achieved.
VISION FOR SUSTAINABLE GROWTH
To provide an except ional strategic leadership for the Coca Cola
resul t ing in consumer preference and loyal ty.
FIGURE–4.2
MISSION
To create consumer products , customer serv ice and bott l ing
system strategies, processes and tools in order to create
compet i t ive and del iver super ior va lue to:
Consumer as a super ior beverage exper ience.
Consumer as an opportuni ty to grow prof i ts through the
use of f in ished dr inks.
29
Bott lers as an opportuni ty to grow prof i ts in vo lumes.
Bott lers as a t rademark enhancement and pos i t ive
economic value added.
Suppl iers as an opportuni ty to make reasonable prof i ts
when creat ing real va lue added in an environment of
system wide team work, f lex ib le bus iness system and
cont inuous improvement.
Ind ian soc iety in the form of a contr ibut ion to economic
and soc ia l development.
QUALITY POLICY
To ensure customer del ight , we commit to qual i ty in our
thoughts , deeds and act ion by cont inual ly improving our
processes every t ime.
PRODUCTS
The Coca–Cola Company offers a wide range of products to its consumers.
Coca–Cola is the world's most valuable brand. It is the largest manufacturer,
marketer and distributor of non alcoholic beverages in the world. There are
many brands of Coca–Cola each with a different taste and it has also many
SKUs. Some of the brands Coca–Cola bought from Parle like Thums Up, Limca
etc. All the brands of Coca–Cola come in different pack- size with different
prices.
THE DIFFERENT BRANDS OF COCA – COLA ARE AS FOLLOWS:
Thums Up: - In India Thums Up is the main brand of Coca Cola. Coca – Cola
bought this brand from Parle. It has a punch line “Taste the Thunder”. It come
in different pack size of 200 ml, 300 ml, 350 ml,330 ml(can),600ml, 1.25 litters,
2 litters, 2.5 litters.
30
Coke: - Coke is the second main brand of Coca – Cola in India. Coke is the main
brand of Coca – Cola in the world. It come in different pack size of 200 ml, 300
ml, 350 ml, 330 ml (can), 600ml, 1.25 liters, 2 liters, 2.5 liters.
Sprite: - Sprite is one of the most selling brands of Coca – Cola in India. It has a
punch line “Sidhi Bat No Bakwas”. It come in different pack size of 200 ml, 300
ml, 350 ml, 330 ml(can),600ml, 1.25 liters, 2 liters, 2.5 liters.
Maaza: - Maaza is the brand of Coca–Cola which is categorized in juice
category. It tastes like mango. It comes in 250 ml RGB bottle, 250 ml tetra
pack, 600 ml, 1.2 liter, 2 liter.
31
Fanta: - Fanta is the brand Coca–Cola introduces in lieu of Gold Spot the brand
which Coca Cola bought from Parle along with Thums Up and Limca. It comes in
200 ml, 300 ml, 330 ml (can), 350 ml, 600 ml, 1.25 liter, 2 liter and 2.5 liter.
Limca: - Limca is the brand which Coca – Cola bought from Parle. It tastes like
lemon drink. It comes in 200 ml, 300 ml, 330 ml(can), 350 ml, 600 ml, 1.25
liter, 2 liter and 2.5 liter.
32
Minute Maid Pulpy Orange: - Minute Maid Pulpy orange comes under juice
category. It has pulp of orange in it. It comes in packs of 400 ml and 1.25 liters.
Minute Maid Nimbus Fresh: - Minute Maid Nimbus Fresh has been launched
this year only. It tastes like nimbu pani. It comes in pack of 400 ml.
33
Kinley Mineral Water & Soda: - Coca–Cola owns a brand “Kinley”. It comes
in mineral water and soda. Mineral water comes in pack of 1 liter and Soda
comes in pack of 600 ml and 1 liter.
DISTRIBUTION NETWORK SETUP OF COCA–COLA IN BIHAR
AND JHARKHAND.
Coca – Cola has two different distribution network setup in Bihar. One is for
urban area and one is for rural area. In urban area like Patna Coca–Cola
distribute its SKUS with help of one C&F and distributors. In rural areas it
distributes its SKUS through distributors and AMC.
Retailers are classified as FOLLOWS: -
Bronze: - The retailers who sells 0 – 199 case in a year.
Silver: - The Retailers who sells 200 – 399 case in a year.
Gold: - The retailers who sells 400 – 799 cases in a year.
Diamond: - The retailers who sells above 800 cases in a year.
Distribution of visi–cooler (refrigerator) to the retailers depends upon this
category. i.e.: -
i. Bronze : - 4 vc
ii. Silver : - 7 vc or 9 vc
34
iii.Gold : - 15 vc or 20 vc
iv. Diamond : - 20 vc or 30 vc
RETAILERS COUNTER IS CLASSIFIED AS:-
Red Counter: - Where the Coca – Cola refrigerator has been set up.
Non Red Counter: - Where the refrigerator is not available.
RETAILERS SHOPS ARE CLASSIFIED AS FOLLOWS: -
Convenience: - Shops like panwala.
E&D Type 1 : - Quick service restaurant without sitting arrangement
E&D Type 2 : - Restaurants with sitting arrangements
Grocery: - General stores.
DISTRIBUTORS ARE CATEGORIZED AS FOLLOWS: -
Urban Distributors: - One urban distributor distributes the products within
an area of 10 – 15 Kms.
Rural Distributors: - One rural distributor distributes the products within
an area of 50 – 60 villages.
AMC (AREA MARKETING CONTRACTOR): - i t i s very usefu l in
d istr ibut ing the product where the rura l d ist . cannot reach.
35
CHAPTER – 5
LITERATURE REVIEW
According to National Council of Applied Economic Research (NCAER),(2004)
rural households from 71.7% of the total households in India. Spending in this
segment is growing at a fast pace and consumption patterns are closing in on
those of urban Indian market. Jagan Singh Raju, professor of marketing at
Wharton says “No consumer goods company today can afford to forget that the
rural market is a very big part of the Indian consumer market. You cannot build
a presence for a brand in India unless you have strategy for reaching the
villages.”
According to National Council of Applied Economic Research (NCAER) the low
penetration rates in the rural markets can be attributed to three major Factors:-
1. Low income levels, 2. Inadequate infrastructure facilities and 3. Different
36
lifestyles from urban. But income levels are going up, infrastructure is
improving and lifestyle is changing in rural areas. Almost one third of the rural
population in India is using shampoo now compared with 13 % in 2000.
According to Hansa Research, the penetration of consumer durables has rise
very good in India's village between the years 2000 -2005. In color TVs
segment sales are up 200%, in motorcycles it is 77%. In absolute numbers the
penetration of durables is still low. Coke, for instance reaches barely 25% of the
rural market. This means the potential is huge for companies that develop
effective marketing strategies.
The Confederation of Indian Industry (CII) has recently released the report
which was prepared by McKinsey & Company “Bhart Nirman Plus: Unlocking
Rural India's Growth Potential”. The success of Bhart Nirman Plus depends on
two key factor – creating innovative models that can be replicated across
India's vast and diverse rural sector and concerted action by all stakeholder –
central and state government, locals communities and panchayats and the
private sectors. CII believes that Bhart Nirman Plus has the potential to help
India realize its aspiration of Inclusive growth.
FICCI has brought out a book titled “Business in Service of Rural India”. In this
an attempt has been made to portray some of the success stories of the
different organizations which has been actively involved in the empowerment
and development of the rural masses through various social welfare scheme
and useful programs. These models thus depict synergies between the
corporate and the rural economy, it also inspire other organizations to venture
into similar projects in rural India leading to rural upfiftment and better quality
of life for the rural population.
Trends indicate that rural markets are coming up in a big way and growing
twice as fast as the urban markets. According to NCAER study there are almost
equal numbers of middle income and above households in the rural areas as
there are in the urban areas. There are also almost twice as many lower middle
income households in rural areas. And at the highest income level there are 2.3
million urban households as against 1.6 million households in rural areas.
According to Shivakumar, D., (2005), Business head, personal products
Division, HUL. Stated “the money available to spend on FMCG products by
urban India is Rs 49,500crores and by rural India is 63,500crores.” According to
37
him there are four factor which influence demands in rural India and they are –
access, attitude, awareness and affluence. HUL has successfully used these to
influence the rural market for its shampoos in sachets successfully.
Aithal, Rajesh K., (2007), Structure of Distribution in Rural Areas, IRMA, Gujrat
stated “The essence of marketing lies in the exchange process and channels of
distribution facilitate this exchange process by providing the linkage between
the producer and the consumer.”
Prahalad, C.K, (2008), “The future lies with those companies who see the poor
as their customer”.
38
CHAPTER – 6
RESEARCH METHODOLOGY
Research Design: Exploratory design and Descriptive design
Sample Design:-
Sample Unit: Urban and Rural Retailers and Distributors of different FMCG
companies of Bihar.
Sample Size: 2 Urban and 2 Rural Distributors of different FMCG companies.
20 Urban and Rural Retailers.
Sampling Techniques: Convenience Sampling
Sampling Area: Bihar
Data Collection: Primary Data and Secondary Data
39
Source: Primary data are collected by Personal Interview. Secondary data are
collected by internet, Coca-Cola's official reports.
Tools: Unstructured Questionnaire.
40
CHAPTER – 7
FINDINGS
Findings based on the 8 information as : -
Distribution network and the role of different channel partners.
Distribution margins to the channel partners.
Order collection mechanism.
Deliver mechanism – Co. To distributor, Distributor to rural partner, rural
partner to the outlet.
Frequency of service.
Investment and ROI of the respective channel partners including the last
tier.
Sales structure.
41
Data management and MIS.
We have taken companies like HUL, Parle, Dabur, Nestle and ITC . We have
found out the above mention information regarding these FMCG Companies.
1. Distribution network and role of different channel partners
COCA-COLA
COMPANY Godown RURAL DISTRIBUTOR
AMC REATILER
FIGURE 7.1
THIS DISTRIBUTION NETWORK IS ONLY FOR THE RURAL SECTOR.
ROLE OF DIFFERENT CHANNEL PARTNERS:
DISTRIBUTOR: This distributor is only for the rural sector, which
focuses on the rural distribution. They directly deliver to AMC as well as
to the Retailers. Rural Distributor received the products from Company's
warehouse.
AMC: They also give the products to the retailers. It acts like a
wholesaler.
PARLE
Company Warehouse Urban Distributor
42
Rural distributor
Retailers
FIGURE–7.2
ROLE OF DIFFERENT CHANNEL PARTNERS:
1. Urban Distributor: It distributes the products in the urban area.
2. Rural Distributor: It distributes the products in the rural area.
HUL
Company Warehouse Distributor {urban distribution}
Super Stockiest (rural distribution)
Wholesaler Retailer Shakti AMMA
FIGURE-7.3Role of different channel partners:
1. Distributor: Distribute the products in the urban areas.
2. Super Stockiest: It is also called rural distributor. It distributes the
products in the rural markets.
3. Wholesaler: It is that intermediary that keeps the products of different
companies. In HUL wholesalers are of two types i.e normal wholesalers and
Vijeta. Vijeta are those wholesalers that invest more than Rs. 40000/- in a
month.
4. Shakti Amma: These are women of rural areas helping in distributing the
products to the remote areas.
DABUR
43
Company Warehouse Distributor {urban distribution}
Super Distributor (rural distribution)
Wholesaler Retailer
FIGURE – 7.4
ROLE OF DIFFERENT CHANNEL PARTNERS:
1. Distributor: Distribute the products in the urban areas.
2. Super Distributor: It is also called rural distributor. It distribute the
products in the rural markets.
3. Wholesaler: It is that intermediary that keeps the products of different
companies.
ITC
Company Warehouse Distributor {urban distribution}
Stockiest (rural distributor)
44
Retailer Wholesalers
FIGURE–7.5
Role of different channel partners:
1. Distributor: Distribute the products in the urban areas.
2. Super Distributor: It is also called rural distributor. It distribute the
products in the rural markets.
3. Wholesaler: It is that intermediary that keeps the products of different
companies. In ITC there are 3 different wholesalers for cigarets items, food
items and persona products items.
NESTLE
Company's C&F Distributor Urban & Semi urban outlet
Wholesalers
Rural Distributor Rural
Outlet/wholesalers
FIGURE–7.6
Role of different channel partners:
1. Distributor: Distribute the products in the urban and semi urban areas as
well as delivers the products to the rural distributors.
2. Rural Distributor: It distributes the products in the rural markets to the
45
outlets and wholesalers.
3. Wholesaler: It is that intermediary that keeps the products of different
companies.
2.DISTRIBUTION MARGINS TO THE CHANNEL PARTNERS
COCA-COLA
Distributor- 4.76% margin (3% excluding transportation cost)
AMC - 3.57% Margin
Retailer - 13.69% Margin
HUL
Super Stockiest - 5.63%
Wholesaler - 5%+1.5 %( according to scheme)
Shakti AMMA - 3 %( door to door selling)
10 %( when sells to retailers)
Retailers - 10%
PARLE
Rural distributor -3.5%
Wholesaler - 1.5%
Retailers - 15%
DABUR
Super distributor -5%
Wholesaler -3%
Retailer - 10 %
ITC
Distributor- 1.44(in cigarette)
3 % (in other personal care product)
Stockiest -0.72 % (in cigarette)
Retailer - 8 %( in cigarette)
10 %( personal care product)
NESTLE
Distributor -5.8 % in other products and 4.8 % milk items.
Rural Distributor –4 % in both items (milk as well as others).
46
Retailers –It varies between 10% - 12%.
Wholesalers – 2 %
3. ORDER COLLECTION MECHANISM
COCA–COLA-Company has appointed RMD (Rural Market Developer) for the
field work. These RMD takes the order from the retailers and AMC. Generally
RMD takes order on beat plan i.e. one RMD has 200 – 250 retailers with him
and it is up to the RMD to take orders twice in a week from one retailers. Some
times RMD takes the order on mobile phone in spite of visiting the retailers
personally. Then RMD passes the order to the local distributor. In urban areas
the MD (Market Developer) uses the Blackberry Handset to take the order. By
taking the order on this handset it automatically get generated to the database
of the company as well as to the distributor. The distributor gives the order to
the ASM (Area Sales Manager). Then the ASM forwards the order to RTM in the
main office twice a month because the distributor has to keep at least 18 days
stock with him.
FIGURE–7.7
HUL
Company has appointed MEs (Marketing Executives) for the field work. These
MEs takes orders from different outlets and then place the order on a hand
device known as HTC device.
47
Market Developer of Coca - Cola
MD Takes order on Blackberry (hand device of Coca-Cola)
Coca Cola company database
Concerned Godown or the concerned Distributor
Forwards the order automatically to company and concerned godown
HTC is the device which automatically forwards the order to the concerned
Distributor as well as to the company. HTC has the functions which immediately
generates the total value of the order.
FIGURE – 7 .8
PARLE
Company has appointed SMs (salesman) for the field work. These SMs takes
orders from different outlets. They take order on NOC (new order collection)
book and they place the order too the rural distribution point.
SM takes a order in MSSS (monthly stock and sales statement) and place the
C&F.
48
Marketing executives of HUL
ME Takes order on HTC (hand device of HUL)
HUL company database
Concerned C&F or the concerned Distributor
Forwards the order automatically to company and concerned godown
Salesman of PARLE
SM Takes order on NOC (new order collection book
Forwards the order to concerned rural distributo
PARLE
Forwards the order to Concerned C&F
FIGURE–7.9
Dabur
Company has appointed SMs (sales man) for the field work. These SMs takes
orders from different retail outlets and then place the wholesale point.
The salesman takes order to the SGB (sales generation book) and forwards the
order to the concerned rural wholesale Distributor. As well as to the company.
FIGURE–7.10
ITC
Company has appointed PSR (Pilot sales representative) for the field work.
These PSR takes orders from different retail outlets and then place the order on
an OGB (order generation book).
PSR take order to an OGB (order generation book) and forwards the order to
the concerned Distributor.
FIGURE–7.11
Nestle
49
Pilot sales representative of ITC
PSR Takes order on OGB (order generation book of ITC)
Forwards the order to concerned stockiest.
ITC company database
Concerned C&F or the concerned Distributor
Salesman of DABUR
SM Takes order on SGB (Sales generation book of DABUR)
Forwards the order concerned wholesaler
Dabur company database
Concerned super- Distributor Concerned godwon
Sales man of the distributor having the company sale book takes the order
from the urban and semi urban outlets once in a week. The rural distributor can
give order over the phone to the distributor. The rural distributor gives order to
the distributor as per their needs, it is not fixed.
FIGURE–7.12
4.Delivery Mechanism – Company to Distributor, Distributor to rural
partner, rural partner to the outlet
Coca – Cola
Company to C&F and C&F to Rural Distributor:
Company directly delivers its good to the C&F and through the C&F the goods
supply to the Rural Distributors through its own vehicles. Rural Distributors
have two vehicles only. 9 AMC works under 1 rural distributor.
The main difference between the Urban & Rural distribution is that delivery
cost is less in the urban distribution then rural distribution.
Rural distributor to the AMC as well as Retailers both:
Rural Distributor directly delivers its good to the AMCs as well as to the
Retailers. Sometimes AMCs also deliver its good to the retailers directly.
HUL
50
Salesman of Nestle
SM Takes order on SGB (Sales generation book of Nestle)
Forwards the order concerned wholesaler
Nestle company database
Concerned super- Distributor Concerned godwon
Company to Distributor and Super stockiest: -
Company directly deliver its goods to Warehouse and then to the C&F.
C&F then delivers the goods to the Distributor for Urban distribution and to the
SUPER STOCKIEST for Rural distribution by their own transport.
The main difference between the Urban & Rural distribution is that delivery
cost is less in the urban distribution then rural distribution.
SUPER STOCKIEST to Rural Partner: -
Super Stockiest have their own vehicle from which they supply the goods in the
rural area. Every vehicle goes in their particular route and it goes again in a
same route after a week.
They deliver the goods to the wholesaler, retailer and to the Shakti AMMA.
In case of Shakti AMMA the Super Stockiest delivers the products twice in a
month.
Parle
Company to C&F to rural Distributor: -
Company directly deliver its goods to Warehouse and then to the C&F.
C&F then delivers the goods to the Distributor for Urban distribution and to the
rural distribution by their own transport.
The main difference between the Urban & Rural distribution is that delivery
cost is same.
RURAL DISTRIBUTOR to Rural retailers: -
Distributor has their own vehicle from which they supply the goods in the rural
area. Every vehicle goes in their particular route and it goes again in a same
route after a week.
They deliver the goods to the retailer.
Dabur
51
Company to Super Distributor and Super distributor to rural
wholesaler: -
Companies directly deliver its goods to the C&F.
C&F then delivers the goods to the Distributor for urban super distributor and
SUPER DISTRIBUTOR deliver the goods to the rural wholesaler by their own
transport.
SUPER DISTRIBUTOR to Rural Partner: -
Super Distributor has their own vehicle from which they supply the goods in the
rural area. Every vehicle goes in their particular route and it goes again in a
same route after a week.
They deliver the goods to the wholesaler.
ITC
Company to Distributor: -
Company directly deliver its goods to Warehouse and then to the C&F.
C&F then delivers the goods to the Distributor for Urban distribution and to the
STOCKIEST for Rural distribution by their own transport.
STOCKIEST to Rural Partner: -
Stockiest have their own vehicle from which they supply the goods in the rural
area. They deliver the goods to the retailer.
Nestle
Company to Distributor:
The good are delivered to the distributor once in a week. The goods are
delivered from the company's C & F .
Distributor to Rural Distributor and Urban & semi urban Outlet :
52
Distributor delivers the goods to the Rural distributor and urban outlet once in
a week.
Rural distributor to rural outlet:
Rural distributor delivers the products to the rural outlet twice in a week.
In distributing the products company bears the 75% of the transportation cost
and the rest of the 25% of transportation cost is beard by different channel
partners.
5. FREQUENCY OF SERVICE:
COCA-COLA
The company work through the Beat plan system. Sales man goes to the particular market weekly. If sales man gets a good response from the market
then they visit 2 – 3 times in a week.
HUL
HUL works on GTM theme. (I.e. GO-TO-MARKET) Take the order per week
Deliver the order per week.
PARLE
Take the order per week. Deliver the order per week.
The distributor goes every week in a month to deliver the goods to Retailers.
DABUR
Take the order per week. Deliver the order per week.
The retail outlets who have a less capacity of purchasing goods, for these the super distributor have kept salesman to see all these outlets.
The Super distributor goes weakly to deliver the goods to rural distributor.
ITC
53
Take the order per week. Deliver the order per week.
The retail outlets who have a less capacity of purchasing goods, for these the stockiest have kept boys to see all these outlets.The Stockiest goes once in a week to Retailers.
NESTLE
Company to Distributor: Once in a weekDistributor to Rural Distr. and Urban & semi urban Outlet: Once in a week
Rural distributor to rural outlet: Twice in a week
6. INVESTMENT AND ROI OF THE DIFFERENT CHANNEL PARTNERS
COCA-COLA
Distributor: - Investment-10, 00,000
Turnover- 20, 00,000(monthly)
Margin- 4.76%
(Margin=3% excluding transportation cost)
ROI= 60, 000/10, 00,000*100=6%
AMC: - Investment – 20000
Turnover – 60000(monthly)
Margin – 3.57
ROI = 2142/20000*100 = 10.71%
Retailers: - Turnover – 15000(monthly)
Investment – 2500
Margin – 13.69%
HUL
Super Stockiest: - Turnover - 600000 (monthly)
Investment-300000
54
Margin-5.63%
(Margin=4%excluding transportation cost)
ROI= 2, 40,000 / 30, 00,000*100 = 8%
Wholesaler: - Turnover – 250000 (monthly)
Investment – 50000
Margin – 5%
ROI = 12500/50000*100 = 25 %
Shakti AMMA: - 20,000 turnover
Investment-10,000
For retailer-12,000*10/100=1200
For door to door-8000*3/100=240
Then, ROI=1440/10,000*100=14.40%
Parle
Rural distributor: - 20lakh monthly turnover
Investment-5lakh
Margin-5%
(Margin=3.5%excluding transportation cost)
Roi-20, 000, 00*3.5%/500000*100
Rural retailers: - 20,000 turnover
Investment-5000
Margin -15%
Dabur
Super Distributor: - 40lakh monthly turnover
Investment-10lakh
Margin-5%
(Margin=4%excluding transportation cost)
ROI-4000000*4%/1000000*100
55
Rural wholesaler: - 4lakh monthly turnover
Investment-1lakh
Margin-3%
ITC
Stockiest: - 20 lakh monthly turnover
Investment-5 lakh
Margin-.72% (on cigarette)
5% (personal care product)
(Margin=3.5%excluding transportation cost)
ROI= 70,000 / 5, 00,000*100 = 14%
Nestle
Distributor: Rs 40 lack Turnover
Rs 20 lack investment
Margin = 5.3% avg
ROI = 212000/2000000* 100 = 10.6%
Rural Distributor : Rs 10 lack Turnover
Rs 3 lack investment
Margin = 4 %
ROI = 40000/300000*100 = 13.33%
56
7. SALES STRUCTURE
Coca – Cola
RTM
Area Sales Manager
Sales Team Leader
Rural Market Developer
Under Rural Distributor
Sales man
Driver
Munsi
57
FIGURE–7.13
HUL
Area Sales & Commercial Manager
Sales Channel Manager
Activation In charge
Operational Manager (for distributor)
Territory sales in charge (the concerned person of HUL for rural distribution
only)
Sales Team Leader (1 STL for 10 ME)
Marketing Executive
58
FIGURE–7.14
NOTE: The work of Territory Sales in Charge is to cover all the issues of rural
distribution, such as investment issue, sales issue, any market problem etc.
Parle
Area in charge
Sales manger
Area sales manager
Area manager
Sales man
FIGURE–7.15
NOTE: The work of area Sales manager is to cover all the issues of rural
distribution, such as investment issue, sales issue, any market problem etc.
59
Dabur
Area Sales Manager
Area Sales executive
Sales officer
Pilot sales manager
Sales man
FIGURE–7.16
NOTE: The work of pilot Sales manager is to cover all the issues of rural
distribution, urban distribution, such as investment issue, sales issue, any
market problem etc.
60
ITC
Sales manager
SWSD (semi whole sale dealer)
PSR (PILOT SALES REPRESENTITIVE)
Supervisor
Distributor
FIGURE–7.17
NOTE: The work of Supervisor in Charge is to cover all the issues of rural
distribution, urban distribution such as investment issue, sales issue, any
market problem etc. and pilot sales representative plays an important role in
the rural distribution in all aspects
61
Nestle
Area Sales Manager
Sales officer
Pilot Sales man
Sales Man
FIGURE–7.18
Pilot Sales Man – All the rural area are taken care of by the Pilot sales Man .It
deals with the problem of rural distributor and rural outlet.
Sales Man – Sales man deals with the Urban outlets and distributors
62
8. DATA MANAGEMENT & MIS
Coca – Cola
Coca – Cola does not provide any software or database to the distributor to
manage sales and order list data. The work is done simply on ledgers and
register. It uses a blackberry hand set to take order in urban areas but not in
the rural areas. The order is taken by the salesmen in their monthly stock and
sales statement (MSSS) book. The salesman goes to the distribution point order
thus generated goes to the company’s database. PARLE checks this data on
daily basis and through this the company come to know about the requirement
of every C&F and Rural Distributor. The order goes to the C&F; through this the
C&F generates the order to the company about its requirement.
HUL
In most of the rural areas HUL uses HTC device to take order from the retailers.
The order thus generated automatically goes to the company’s database. HUL
checks this data on daily basis and through this the company come to know
about the requirement of every C&F and Distributor. The 2nd copy of the order
goes to the C&F; through this the C&F generates the order to the company
about its requirement.
Thus HTC device is the key player in the Data Management of HUL.
Ex of MIS Format
SALESMAN
NAME
MARKET NAME GROSS
SALE
NO. OF BILL
Parle
The order is taken by the salesmen in their monthly stock and sales
63
statement (MSSS) book. The salesman goes to the distribution point
order thus generated goes to the company’s database. PARLE checks this
data on daily basis and through this the company come to know about
the requirement of every C&F and Rural Distributor. The order goes to the
C&F; through this the C&F generates the order to the company about its
requirement.
Ex of MIS Format
SALESMAN
NAME
MARKET
AREA
GROSS
SALE
TOTAL
AMOUNT
%OF DISC. NO. OF
BILL
Dabur
The order is taken by the salesmen in their sales generation book. The
salesman goes to the distribution point order thus generated goes to the
company’s database. DABUR checks this data on daily basis and through
this the company come to know about the requirement of every C&F and
Super Distributor. The order goes to the C&F; through this the C&F
generates the order to the company about its requirement.
Ex of MIS Format
SALESMAN NAME
MARKET NAME
GROSS SALE
TOTAL AMOUNT
NO. OF BILL
ITC
The order is taken by the pilot sales representative in their OGB (order
generation book). The PSR collect the order to stockiest and deliver the order
to the urban distributor and thus generated automatically goes ITC checks this
64
data on daily basis and through the Sifyforum software. Company comes to
know about the requirement of every C&F, Distributor and rural stockiest. The
2nd copy of the order goes to the C&F; through this the C&F generates the order
to the company about its requirement.
Thus sifyforum device is the key player in the Data Management of ITC.
Nestle
It has SDS Software (Star Distributor solution). It has information like:
Daily Sales report
it is a online software
Actual receipts v/s order placed
Order placed v/s order generated
Route wise outlet wise bill value
Route wise retailing summary
Outlet wise retailing summary
Collection report - Daily cash balance
Pending bills
65
CHAPTER – 8
SUGGESTIONS
GAPS AND OPPORTUNITIES IN THE CURRENT RURAL DISTRIBUTION SET
66
UP OF COCA-COLA:
According to us the gap in the current rural distribution of coca-cola can be
seen in the following ways:-
FIGURE–8.1
Availability- This is the main thing which is concerned with the right product
at the right time, at the right place. The goods don’t reach in a time due to
road problem which leads to a negative word of mouth and customer
dissatisfaction. Other things are about electricity problem due to which the
67
product doesn’t remain chilled and thus retailer hesitate to keep a product.
Acceptability- First of all acceptability is concerned with the retailers that
product is acceptable to the retailers or not. To fulfill this gap the coca-cola has
to provide ice-boxes and deep freezer as per their requirement due to
electricity problem. The second thing is acceptability of product by the rural
consumer. It means coca-cola have to provide such type of product which is
easily acceptable to the rural consumer. As other companies provide a product
in a smaller pack, in the same way the coca-cola has to provide a bottle size
which is different from urban areas and which is easily acceptable to the rural
consumer.
Affordability- The main thing in the rural area is about the affordability of the
product. As other companies provide small unit packs which is affordable by
the rural consumer, the same process should be followed by the coca-cola to
bridge the gap of affordability. As we know that due to low income level and
lower standard of living the rural people are more conscious about the pricing
issue which has to be seen by the coca-cola. Coca-Cola has addressed the
affordability issue by introducing the returnable 200-ml glass bottle priced at
Rs 5. The initiative has paid off: Eighty per cent of new drinkers now come
from the rural markets. This is a good move, like this the company has to
make different strategies to lure the rural consumers.
Awareness- Awareness is termed as a backbone of marketing. If consumer will
not be aware, how come they know about the product and their features? So,
main thing is that there should be a proper advertising in the rural areas. Such
as signage, hoarding should be placed in a proper place. Vans should also be
utilized for the advertisement. In many places the folk-dances are organized in
the rural areas, so in these places the coca-cola can place an advertisement or
some Programs such as some promotional event to make aware about the
product and some new offers.
We also found some gap in the current Rural Distribution set up of Coca-Cola
that are-
As we know that the rural distributor handles the 50-60 villages and one RMD
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sees the 3 rural distributors. This is the tough task. If the rural distributor can
handle less villages may say 20-30 then they can nicely manage the work load
and other new distributor can get an opportunity to invest and to manage their
work which is also beneficial for the Coca-Cola.
Another thing is that the distributor place an order to the RTM and RTM to the
Company. So in our point of view it is a lengthy process which leads to a late in
a delivery system. Due to which the goods doesn’t reach in time in the rural
area. So it impact in the unavailability of product which leads to a negative
word of mouth for a company. So the company has to take some steps
regarding this issue to make fast delivery of goods.
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OPPORTUNITIES TO LEVERAGE THE EXISTING CHANNEL OF DIFFERENT FMCG COMPANIES
Present Rural Distribution set up of COCA-COLA:
COCA-COLA Company
C&F of COCA-COLA
Rural Distributor Rural Distributor
Rural DistributorAMC AMC
AMC Retailers Retailers
Retailers
FIGURE–8.2
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1 RURAL DISTRIBUTION AREA
Note: There are 3-4 rural distributors under each Rural Distribution Area.
After our survey and research work we have figured out a new distribution
model for COCA-COLA Rural, in this model we added the idea of SUPER
STOCKIEST presently used by HUL and DABUR. This Super Stockiest will act as
a warehouse in the Rural Sector. Definitely Company has to bear a good
amount of investment on its set up. But, concentrating on the future prospect
we will find that we can form a HUB & SPOKE model around this Super
Stockiest.
So, this idea will definitely give an extra edge to the company’s distribution.
New Distribution Model suggested by us:
C&F of COCA-COLA Super Stockiest
Rural Distributor Rural Distributor Rural Distributor
AMC AMC AMC
Retailers Retailer Retailer
FIGURE–8.3
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1 RURAL DISTRIBUTION AREA
FUTURE VIEW OF OUR MODEL:
Super Stockiest
FIGURE-8.4
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1ST
DISTRIBUTION AREA
2ND
DISTRIBUTION AREA
3RD
DISTRIBUTION AREA
Super Stockiest
Now, we are looking forward to convert our model into HUB & SPOKE model.
Thus, in future our super stockiest will act as an HUB. To ensure full loads, the
company depot supplies, twice a week to the super stockiest, this will act as
hub. This Super Stockiest appoints and supply, once a week, rural distributors
in adjoining areas.
Another opportunity that we can find out from the existing channel of FMCG
Company HUL, i.e. we can use their wholesaler which are providing good sale
to the HUL.
We found that HUL is running a project named VIJETA, under this project if a
wholesaler is having a monthly sale of 30,000 – 35,000 for HUL then they are
called as VIJETA. HUL gives more priority to these wholesalers.
Now, according to us what COCA-COLA can do is that it can have a talk with
those wholesalers and use them as their rural partners. As these wholesalers
are having a good hold over their market, this will definitely increase the
chance of COCA-COLA to overcome one of their important barriers i.e. keeping
their wholesaler alive in the OFF-SEASON.
DISTRIBUTION MODEL OF COKE CHACHA
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Company Depot Rural Distributor Local
Retailers
AMC COKE CHACHA
FIGURE–8.5
In this model there is one rural distributor who is distributing the products in an
area of 50 – 60 villages. These rural distributors distribute the products to the
local retailers as well as the AMC. In this model we have introduce a new
intermediary i.e. COKE CHACHA. This COKE CHACHA could be either a
connivance store or E&D type 1 outlets . Under one rural distributor we would
initially open 20 COKE CHACHA. We can create more of this COKE CHACHA
latter as time progress. These COKE CHACHA further can act as a wholesalers
in their local marketplace. It can distribute the products to other retailers of
other kind. Also there would be only one COKE CHACHA in a village.
COKE CHACHA will give the order to the rural distributor over the
phone once a week. Rural distributor will deliver the products to the COKE
CHACHA on weekly basis. For distributing the products the rural distributor will
have to take a delivery van for ex -TATA ACE. All the local retailers can take the
products from the COKE CHACHA by their own connivance. Rural distributor will
supply the goods to 10 COKE CHACHA in a day.
Initial Investment for the COKE CHACHA would be as follows: -
TABLE–8.1
SKUS Distribution Trade Price Total Cost Over Sale
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of SKUS(case)
Charged Price
200 ml 16 168 2688 10 3840
300 ml 2.5 258 645 14 840
250 ml 3 258 774 14 1008
600 ml 4.5 516 2322 27 2916
2 lit 2.5 500 1250 60 1350
1.25 lit 1.5 411 617 38 684
Total 30 8296 10638
This is the investment for his own shop.
The investment he will incur in distributing the products to the other local
retailers would be as:
TABLE – 8 .2
SKUS Distribution of SKUS(case)
Trade Price Total Cost Charged Price
Sale
200 ml 10 164 1640 168 1680
300 ml 5 254 1270 258 1290
250 ml 5 254 1270 258 1290
Total 20 4180 4260
The company will provide the products to the COKE CHACHA on the same rate
which is for the AMC for distributing the products to other retailers.
Apart from these investments there are more investment which is required.
They are as follows:
GOD (Glass on deposit) – 5000
Electricity + Generator Bills – 1000
Total Investment – 5000 + 4180 + 8296 = 17476
Profit from his own Outlet by selling Coca – Cola products:-
10638 – 8296 = 2342
Profit by selling products to other outlets :-
4260 – 4180 = 80
75
Total profit = 2342 + 80 = 2422
Variable Cost =1000
Total Profit = 1422
We would also appoint one market developer who will only look and help in
enhancing the sales of COKE CHACHA and the outlets near it.
CHAPTER – 9
LIMITATION
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The study was done in only a few district of Bihar.
The time period of 2 months was not sufficient.
Due to the financial and time constraints we were not able to include
more retailers and distributors.
In rural areas, it was very much difficult to find the investment and ROI of
the intermediaries especially the retailers as of their conservative mind
set.
The Investment and ROI part of the information is not very much
accurate.
A retailer sometimes gives wrong information.
All the information was collected by group of 5 students including me,
which was not sufficient. More members could have helped more.
The research was based on primary collection of data so there may be
chance of human error and biasness.
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CHAPTER – 10
BIBLIOGRAPHY
Websites : -
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Coca – Cola India
Myenjoyzone
Beverages Market ing Corporat ion
Beverages Digest
Books
Company's C i rcular
Kot ler , Ph l ip (2009) , Market ing Management, Pearson
Publ icat ion India.
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