News papar Distribution

Subject: Sales & Distribution Channel

Project on: Distribution Channel of a Newspapers

Archana Parthasarathy, Sanjay Gupta, Hardik Sheth

(SIESCOMS : EMBA-Marketing Sem-3)

Channel Distribution - Introduction

The chain of businesses or intermediaries through which goods or service pass until they reach the end consumer.

Includes wholesalers, retailers, distributors and even the internet.

It is divided into direct and indirect forms

– “direct" channel allowing the consumer to buy the good from the manufacturer

– "indirect" channel allowing the consumer to buy the good from a wholesaler.

Direct channels are considered "shorter“ than "indirect" ones.

Why use Channel Members

The use of intermediaries results from their greater efficiency

Channel Distribution – Types, Flow & Functions

Types

1. Conventional channel - Channel members independently owned.

2. Vertical channel (VMS- Vertical Marketing System) - Channel members act as a unified system.

3. Horizontal channel - Two or more companies on the same level join together for mutual gain.

4. Hybrid channel - Combination to serve different segments.

Flow

Forward –Physical transfer,

title, promotion

Backward –Order,

payment

Both directions –Information, risk, finance

Use of scarce resources, Performed better through specialization.

Efficiency and Effectiveness decides who does which function between company and channel

Shift-able among channel members

Information &Promotion, Contact, Matching & Negotiation, Physical distribution, Financing, Risk taking.

Functions

Channel Strategy

CHANNEL STRATEGY

Channel Selection

Market FactorsProducer FactorsProduct Factors

Competitive Factors

Distribution Intensity

IntensiveSelectiveExclusive

Channel Integration

Conventional Marketing ChannelsFranchising Channel

Ownership

1. Newspaper Industry – brief overview

2. Analysing the distribution structure of Newspaper

3. Role of each member in Chanel distribution

4. Margins / Compensation

5. Revenue

6. Challenges

7. Conclusion

8. Q&A

We are covering: Newspaper – Printing and Distribution

Project Objective

Industry – Newspaper

To Study the distribution Channel of a Newspaper

The distribution division of a newspaper is charged with the responsibility of moving the finishedproduct to the consumer every day, usually before the reader wakes up in the morning.

We are briefly explaining the process of Circulation of Newspaper from Publication house Printing Pressto end consumer.

Facts on Newspaper Industry

• The second largest circulated daily : Ananda Bazar Patrika – Bengali – Kolkata – 12,63,259

• India is the second largest publisher of newspapers in the world and has a readership base of 350million

• Total number of registered newspapers : 73,146 – according to the report of Registrar of Newspapersfor India (as on 31st March, 2013)

• Hindi - the largest number of newspapers and periodical registered in any Indian language andstatewise Uttar Pradesh - the largest number of registered newspapers and Delhi -the second largestnumber of registered newspapers

• The total circulation of newspapers : 5,79,53,373

• The largest circulated daily : The Hindu – English – Chennai – 14,20,368

Facts on Newspaper Industry

• Apart from English and 22 languages listed in the constitution the newspapers are registered in 100other languages and dialects

• Orissa has the distinction of publishing newspapers in 18 out of 22 principal languages

• As many as 20 highest-selling newspapers the world over are from India

• English newspapers readership are not growing as expected however, Indian language newspapers,especially Hindi, Malayalam, Marathi and Telugu are seeing some phenomenal growth

• Indian newspaper industry is slated to grow manifold, with growth rate circling around 6%. Marketshare is projected to grow from Rs. 56,300/- cr. to Rs. 92,900/- cr. by the end of 2013, as per theresearch done by the Pricewaterhouse Coopers

Our Understanding about the Newspapers

• A periodical publication that contain news like local and national news on crime, business,entertainment, society and sports, feature articles, editorials, and advertising

• Most papers also features an editors page which is written by an editor and columns thatexpress the personal opinions of writers, other than this a wide variety of material is publishedsuch as editorial opinions/criticism, persuasion, obituaries, entertainment etc

• It’s funded by paid subscriptions and advertising

Key Players – Market Shares

Audit Bureau of Circulation(http://www.auditbureau.org/)

Indian Readership Survey 2013

Key Players – Market Shares

Why Newspaper Circulation Is Our Project?

Delivery boys always dutifully patrol various societies each morning at the exact hour. During our lecturein our class when our professor asked us “Do you know how a Newspaper reaches you?”

One would often think of this query as trivial. After all it is the news that matters; why worry how itreaches us? But it is important to realise that news is of no use if it is not told, and if not said in a timelymanner.

Distribution Process of Newspaper Industry

1. The newspaper sales involve distributing highly perishable products under severe time constraints.

2. The printed newspapers have to be dispatched to various distributors across the region.

3. The revenue of the newspaper distributor is based on a commission on the sale of every newspaper.

4. The circulation is normally through salesmen appointed and are paid by the distributors, who inturn pass it on to the hawkers.

5. Hawkers, vendors and book stall owners are the last link of the supply chain before newspaperreaches its readers.

6. Responsiveness and efficiency play an important role in newspaper distribution channel

Newspaper – Various Stages

The entire process works in three main stages

1. Content Gathering and Layout

2. Printing

3. Distribution

FORMAT OF THE NEWSPAPER DISTRIBUTION CHANNEL

The process of this is very tricky. Even if they get delayed in any one of the process then it affects the

whole system.

We will explain you in detail of how the process of bundling and delivery happens and importance of each member in this cycle in the

coming slides

Distribution - Structure

Newspaper i.e. TOI

Printing Press

Depots Agents

Vendors Vendors

Beat Boys Newspaper Stands

Beat Boys (3-4) Newspaper Stands

Readers


Printing Press

1. It takes the content from the editorial team and prints using high capacity advanced press machines that deliverthe product in packaged condition.

2. Printing starts around 1-1:30 am usually.

3. After Printing, stacking is done before dispatching newspapers to depots

4. Labelling done to match stacks with destination. Usually, stocks for depots situated the farthest are dispatchedearliest

Depots / Distribution Points (4 am to 5am)

1. The distribution centre receives the copies from the transporter and stocks it for a short duration

2. Keep publications (newspaper + magazines) for various companies

3. Serviced by salespersons who are company employees

4. Unorganized – keep newspapers / magazines scattered on pavements or on steps of some malls etc

5. Records are kept at depots.


Agents (5am-6am)

1. Employed where distribution is not organized

2. Exclusive agents of Organisation such TOI

3. Work on commission, themselves act as salesmen

4. Working with depot

Vendors (5am to 6am)

1. Like retailers. Link between depot and end consumer

2. Go to nearest depot everyday. Pick out publications they want


Beat Boys (6am to 7am)

1. The delivery boys have demarcated regions/housing societies, which they serve Hawkers are individuals who donot have established customers and sell at road sides, bus stands etc. They make small quantity purchases

2. Deliver required publications to proper destinations

3. Have route-wise list of addresses and their required newspaper/publications

4. 3-4 beat boys cover an area via their routes

5. Margin given by TOI to channel members is around 30%

6. More or less uniform rate across the industry

7. Agents get 5-10%, salesmen on payroll get fixed salary

8. Vendor receives 20-25%, to cover the costs incurred due to travel, beat boys etc. It depends on the type andlanguage of newspaper.

Role of each Member

1. Printing Press -The press prints the required units for the day according to the production plan. It takesthe content from the editorial team and prints using high capacity advanced press machines that deliverthe product in packaged condition.

2. Transporters -The packaged newspapers are transported through contracted trucks and vans to differentdistribution locations. Each truck / van has a capacity for about 20,000 to 25,000 newspapers.

3. Distribution Centre / Depot / Agents -The distribution centre / Agents receives the copies from thetransporter and stocks it for a short duration before handing it over to the various vendors and hawkerswho source it from the centre. A centre typically employs three persons. The payment for the goods is on adaily basis.

4. Vendors and Hawkers -Vendors and hawkers source their newspapers from the distribution centre anddeliver them to the customers. Vendors are larger in scale than hawkers and employ delivery boys. Thedelivery boys have demarcated regions/housing societies, which they serve. Hawkers are individuals whodo not have established customers and sell at road sides, bus stands etc. They make small quantitypurchases.

Financial Transactions and Credit Terms

1. Transporter - Transporters follow contractual terms and conditions. They are paid on per km basis. Theyadhere to strict time schedules and penalties are imposed based on the delay in delivery to distributioncentres.

2. Distribution Centre / Depot / Agents -The distribution centre / Agents make payments on weekly /Monthly basis and receive money from Vendor wither daily or Weekly depending upon business receivedand relationship maintained with Vendor from Daily to weekly to fortnightly.

3. Vendors - Vendors buy a fixed, large amount of newspapers daily and pay in cash on a day-to-day basis.Any paper which remain unsold at the end of the day can be returned back to Newspaper Organisation likeTOI etc.

4. Hawkers - Hawkers typically buy a small quantity (around 100 newspapers) and may not be regular basis.On paying cash at a cash counter, they can collect the newspaper. There is no arrangement to take backthe unsold stock.

Revenue

1. For Organisation like TOI - 80% of the revenue comes from advertising & 20% from sales

2. Distribution points (Company appointed)

3. AGENTS – 5-15%

4. Vendor receives 35-40%, to cover the costs incurred due to travel, beat boys etc. It depends on the typeand language of newspaper.

5. Vendors also make money by inserting pamphlet (Rs. 100 per 500 pamphlets)

6. Beat Boys are normally employed between Rs. 800 to Rs. 1000 per month.

There are various discounts, incentive and bonus schemes by individual organizations such as TOI, DNA etc

OUTCOMES OF OUR VISIT TO

TIMES OF INDIA,

BUSINESS STANDARD

AND

GUJARAT SAMACHAR

PRINTING PRESS AND DISTRIBUTION OFFICE

POINTS PUBLICATIONS

TIMES OF INDIA / SAMANA BUSINESS STANDARD GUJARAT SAMACHAR

FOUNDED IN THE YEAR

1838 1975 1932

Published by Bennett, Coleman & Co. Ltd and owned by Sahu Jain family

Business Standard Ltd (BSL) & Kotak Mahindra Bank (Owner)

Lok Prakashan Ltd.

Type English daily Premier Business Daily Daily newspaper

Languages English English & Hindi Gujarati

Ranked as 1st in the English dailies 2nd in the business dailies 8th in Regional Dailies

Published from / Editions

All major cities Weekdays published in al locations, but on Sundays, only from Mumbai, Delhi, Kolkata and Bangalore

Ahmedabad, Vadodara, Surat, Rajkot, Bhavnagar, Mumbai, Mehsana, Bhuj and

New YorkReadership 3.14 million 6,87,000 4.5 million (in Gujarat)

Circulation 31,40,000 daily more than 1000 cities across the country, i.e, 217,000 10,40,619 daliy

Editorial content Daily news, international news, business pages, local and

international sports, weekend leisure reading

Financial and general news Financial and general news

Competitors Hindustan Times, DNA, The Hindu Economic Times, Mint, The Hindu Business Line, The Financial Express, Financial Chronicle,

Lokmat, Dinakaran, Malayala Manorama

Margins /Compensation

Margin given by TOI to channel members is around 30%

1.50 paise per paper to its vendors 2.50/- paise per copy to its vendors

Price Monday to Friday – Rs 6/- along with Mumbai Mirror / Economic Times /

Maharahstra Times

Saturday - Sunday - Rs 7/- along with Sunday Mumbai Mirror

Monday to Friday – Rs 3 / 5Saturday – Rs 6/ 7Sunday – Rs 10/-

Their supplements like Smart Investors; The Strategists gives a rise in their newspaper distribution.

Weekday’s price of the newspaper is less and Weekends are more because printing cost is more

Monday to Friday – Rs 4/-Saturday – Rs 5/-Sunday – Rs 7/-

Channel StrategyChannel Selection :

Distribution Intensity: Channel

Integration:

Market Factors Intensive

Ownership

Product & Competitor Factor Selective Selective &Intensive (Gujarat, Baroda,

Rajkot)

Product variety

Sister Newspapers: The Economic Times, Navbharat Times,

Maharashtra Times and Ei Samay. Education Times, Times Wellness, Zig Wheels, Times Life supplement

on Sundays

Have supplements like Smart Investors, The Strategists, Two monthly magazines - Indian Management and Business Standard Motoring & Asian Management

Review. BS has a books division, which publishes books under the BS Books imprint.

Dharma Lok, Sahiyar, Hello Mumbai, Chitralok, Shatadal, Ravipurti

BSL’s website properties include bshindi.com, bsmotoring.com, and smartinvestor.in. This last is a

dedicated information-cum-trading site for investors.

Negotiation It takes place as when the newspapers price increases, the commission price also increases

It takes place as when the newspapers price increases, the commission price also increases

It takes place as when the newspapers price increases, the commission price also

increases

POINTS PUBLICATIONS

TIMES OF INDIA BUSINESS STANDARD GUJARAT SAMACHAR

Newspaper Strategies & Distribution ChannelDISTRIBUTION STRATEGYOF “TOI”

There are three ways to sell the “TOI”

1. CASH SALES: Take newspaper from ‘panwala’ or any shop in cash.2. SUBSCRIPTION SALES: Pay money in advance and read “TOI”3. LINE SALES: Maximum % of sales comes from this method. Money collection works in reverse order.

DISTRIBUTION STRATEGY OF “BUSINESS STANDARD” 1. BS is sold to specific consumers and are available at all the centres2. They provide subscription for Business Schools Students 3. They also have consumers who still continue with their old subscription plan4. They don’t have any new subscription plan for the consumers

Promotion

• Business Standard keeps its copies at Kotak Mahindra Bank (all branches) and also initiating the sameat other banks as they want consumers to know about their presence

• From Monday to Saturday, they circulate their newspaper at B Schools for students at a minimal cost(Rs 325/- approx) and it’s distributed by their area vendor. Also B schools needs to mention theamount of newspaper. They don’t circulate on Sundays as the B Schools are closed. They don’t haveany schemes for part time MBA students

Challenges in Distributionand how they have been overcome

• Managing vendors is a big challenge which they face on almost daily basis. They have good hold onvendors, depot managers and have unions at each centre

• Gujarat Samachar had a major conflict with one of its vendors at Mulund area and there was nodistribution of Gujarat Smachar for 3 weeks

Service Output Expectations

• Bulk Breaking: Bulk breaking is done at various levels:

– Printing press

– Vendors

– Agents

– Beat boys

• Spatial Convenience:

– High convenience as the newspapers are delivered at the doorstep

• Waiting Time:

– Moderate

Consumer Segments

Gujarat Samachar have in total 4.4 million readers

as per Livemint news - March 2014

Times of India has in total More than 13.5 million readers

as per TOI site

Channel – Segment MappingCONSUMER (HIGH INVLOVEMENT)

CONSUMER (LOW INVLOVEMENT)

HIGH

CONTENT

QUALITY

LOW

CONTENT

QUALITY

Operations of Distribution Channel (Relationships and Expectations)

Organisation - The Organisation is at the head of the value chain and is clearly the Channel Leader. Thecustomers come to the vendors and/or hawkers with an intention of buying a particular newspaper whichclearly indicates that the brand of the product is important and not the vendor or hawker as such.

Thus, from the point of view of the vendor/hawker, the supplier power is relatively high. The dealers(vendors/hawkers) expect the following from the company:

1. Timely delivery of the newspaper each morning in all weather conditions.

2. Proper quantity to be delivered each day as per their demands.

3. Newspaper which are not sold the prior day to be returned and reimbursed.

4. Their commissions to be maintained in the long run and not reduced especially as the newspapercirculation picks up.

5. Make it easier for them to collect newspapers

Operations of Distribution Channel (Relationships and Expectations)

Dealers / Agents - The dealers (vendors/hawkers) are the company’s sole touch point to the customers. Thecompany’s relationship with hawkers is temporary since they have a fluctuating demand and hence theimportant dealers from the company’s perspective are the vendors who typically have a committed demandbased on the number of customers they serve. The company expects the following from these vendors: Todeliver the newspapers on time to the customers.

1. To ensure that they do not overcharge the customers making it expensive for the customers.

2. To ensure that any supplement/promotional material being sent along with the newspaper by thecompany being delivered to the customers without any pilferage (e.g. at times newspaper stick samplesof products on pages in their advertiser’s promotion campaigns).

Interview of local Vendor (Sanpada-NM) Mani Subramanian (91 9820380717)

Q: Cost of the Printing according to you for Newspaper like TOI A: According to me, It would cost Rs. 60 to TOI but they sell at Rs. 3 (TOI always bundle with other papers like

MM, ET etc) so the actual cost would be Rs. 6, HT, DNA would be at Rs. 3

Q: How do you source Paper? A: We source Newspaper from Agents i.e. Orbit is Agent for TOI group, Dangad for Lots of newspaper like Samana, Navsagar, Hindustan times, Lokmat etc and Ambika for DNA, They all come together at Sanapda Railway station from 4:00am to 5:30am.

Q: How many Newspaper you normally pick up? A: We pick around 2000 newspaper of various Publications and TOI we source exact 220 as they do not take it back.

Q: What is your margin? A: In TOI we get around Rs 2.15 to Rs 2.35 out of Rs 6 depending upon our volume. HT and DNA give us fixed Rs.1.25 out of Rs 3 (i.e. we source it at Rs 1.75). We prefer selling more other newspaper than TOI due to their return policy. We also sell TOI at cheaper rate in afternoon if we source to cover our cost.


Q: How many beat boys do you employee? A: We employee 5 beat boys to service various nodes (Sectors) and societies.We provide them Cycle along with Monthly salary which varies between Rs. 800 to 1200 per month.

Q: How much do you charge for pamphlet? A: We charge Rs. 200 per thousand for small or Rs. 300 for large ones.

Q: How do you make payments? A: We pay monthly to our beat-boys as we collect monthly from our customers. To our agents we either make weekly or fortnightly or Monthly payments depending upon our relationship.

Q: How much do you make every month? A: We make around Rs. 30,000 to 40,000 every month but we have to work around 360 days out of 365 days in year.


Q: What are your timings of work? A: a) We start in morning at around 4am.

b) We collect pamphlets in the night itself, so organising the paper areas wise, house wise our responsibilities (I have two boys ding the same at Rs. 1000 per month.

c) We insert pamphlets depending upon customer request for an area.

d) Beat boys get papers by 6am to complete deliveries by 7am.

e) After handling the papers to beat boys, I go at my stand / stall to sell newspapers, magzines till 12 noon.

f) From 12 to 2 pm I eat and carry out calculation of my earnings.

g) From 2:30pm to 5:30pm, I sleep every day and then again from 6 to 8pm I work at my newspaper stand / stall.

h) From 8 to 10pm I spend time with family and then go to sleep again to get up at 4am sharp to go to Sanpada railway station.

Conclusion

• This Presentation hence finds answer to the question it had raised – “Do you how a newspaperreaches you?” In course of its unfolding it attempts to show how this simple question has suchcomplicated answers to make.

• We end the presentation by a small movie prepared by us

Queries??

References

• Personal experience

• www.slideshare.net

• Google.co.in (For studying various article)

• Audit Bureau of Circulation (http://www.auditbureau.org/)

• Indian Readership Survey 2013

Archana Parthasarathy, Sanjay Gupta, Hardik Sheth

(SIESCOMS : EMBA-Marketing Sem-3)