Sales objective analysis and sales territory analysis hemas holdings (plc), sri lanka

Sales Objective

Analysis and Sales

Territory Analysis Hemas Holdings (PLC), Sri Lanka

Group Assignment , Department of Marketing Management

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1 Department of Marketing Management

SALES OBJECTIVE ANALYSIS AND SALES TERRITORY

ANALYSIS OF HEMAS HOLDINGS (PLC)

GROUP ASSIGNMENT

Third Year First Semester

Department of Marketing Management

Faculty of Management Studies

SUSL

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ACKNOWLEDGEMENT

We take this opportunity

to express our profound

gratitude and deep regards

to our guide

Miss Kapuge

for her

exemplary guidance,

Monitoring and constant encouragement

throughout the course of this report…..

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ABSTRACT

This report investigates the sales objectives and sales territory establishment of a

selected organization. Though that we have selected the FMCG sector of “Hemas Holdings

PLC” and gathered the support of Planning Department and Sales Manager Mr. Ramesh

Baghavan to accomplish the task. In here, we discuss about how Hemas Holdings has

analyzed market potential and their sales forecasting methods under the topic of sales

objectives. Estimating of sales territories and deciding sales force size according to the

territories will be discussed under the heading of Territory establishment.

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Table of Contents Chapter 1 .................................................................................................................................... 5

Introduction ............................................................................................................................. 5

1.1 Mission Statement........................................................................................................... 5

Chapter 2 ..................................................................................................................................... 6

Deciding Market Potential ......................................................................................................... 6

2.1 AC Nielsen....................................................................................................................... 6

2.1.1 Market size by category volume ................................................................................ 6

2.1.2 Market size by share................................................................................................. 7

2.2 Lanka Market Research Bureau ........................................................................................ 7

2.2.1 Socio Economic growth............................................................................................. 7

2.2.2 Gross Domestic Production ....................................................................................... 7

2.2.3 Regional Habits ........................................................................................................ 8

Chapter 3 ..................................................................................................................................... 9

Sales forecasting ....................................................................................................................... 9

3.1 The projection of Past Sales Method................................................................................. 9

3.2 Time series analysis ........................................................................................................10

3.3 Survey of customer buying plan.......................................................................................10

Chapter 4 ....................................................................................................................................12

Establishing Sales Territories.....................................................................................................12

4.1 Estimating sales territories ..............................................................................................12

4.1.1 Geographical basis ..................................................................................................12

4.1.2 Customer basis........................................................................................................13

4.1.3 Combination basis ...................................................................................................14

Chapter 5 ....................................................................................................................................15

Deciding Sales territory size and Sales force size ........................................................................15

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5.1 Deciding sales territory size .............................................................................................15

5.2 Deciding sales force size..................................................................................................15

5.2.1 Store Keeping Units (SKU) .......................................................................................16

Reference ...................................................................................................................................17

Chapter 1 INTRODUCTION

Hemas Holdings is a highly demanded company all over the world as it is a

multi-production company. When talking about the history of this company it has been

commenced operations in 1948. And now there are five major sectors with more than 20

subsidiaries that this company supplies its service. They are FMCG,Healthcare,

Transportation, Leisure and Strategic Investments. Hemas Holdings firstly created by Sheikh

HasannallyEsufally (MBE) as a pharmacy and trading company. After some decades it has

been transformed to a largely spread firm with several recognizable brands including Baby

Cheramy, Clogard. Kumarika, Diva, Godridge……..etc.

1.1 Mission Statement

“We are committed to delivering to our shareholders the best ever returns a listed company

has given over the first seven years of listing. For our employees, we are committed to

creating exciting new opportunities and a rising share of wealth. For our business partners,

we will be a winner to grow with. To our customers, from all quarters, we will deliver

excellence… every time. We are a responsible corporate citizen close to the lives of the

community. To the state, we are a future winner with the nation at heart.”

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Chapter 2 DECIDING MARKET POTENTIAL

Market potential is the entire size of the market for a product at a specific time. It

represents the upper limits of the market for a product. Usually market potential is an

estimate of the maximum possible sales opportunities present in a particular market segment

and open to all sellers of a good service during a stated future period.

When decide the market potential, Hemas Company look at AC Nielson data on the market.

They report on the market size by category volume & shares. In addition to that Hemas

company look at trends in market such as consumer behavior. This data are taken from

Lanka Market Research Bureau (LMRB).

2.1 AC Nielsen

When considering the FMCG category, they report on the market size by category volume

and shares.

2.1.1 Market size by category volume

Categories Sub categories Hemas product

1. Personal care sector

i. Baby and adult hair

care

ii. Skin care

iii. Fragrances

iv. Oral care

i. Baby heramy

ii. Goya, Paris

iii. Capri, Pro

iv. Clogard

2. Home care _ Diva

3. Paper products _ Nimex

4. Skin care _ Cheramy touch

5. Personal wash _ Velvet

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In Sri Lanka there are about 250 000 outlets around the country. But Hemas consider only 80

000 outlets when calculating sales potential. They decide their sales potential under five

categories. Thus when they determine market potential they measure the entire FMCG

market sales value according to these five categories. Those categories are mentioned below.

2.1.2. Market size by share

In addition to category volume AC Nielson determine the market potential by measuring

market shares of FMCG market. They measure the market share by concerning the buying

habits of the consumers and the market growth of the FMCG products.

Ex:

Hemas flagship brand Baby Cheramy continued to maintain its stance as the

market leader in the baby care category

Diva detergent continued to be market leader in terms of volume generated.

2.2 Lanka Market Research Bureau (LMRB)

LMRB provide the data about market trends such as consumer behavior. They focus o n the

goods, which are used by a household. Here market potential is determined by concerning

market trends (consumer behaviour)

They use some rates to decide consumer behavior. Those rates are discussed below.

2.2.1. Socio Economic Growth (SEG)

They categorize SEG to two sub categories as SEG- 1 and SEG -2.

SEG – 1 denotes the group of the person who are in the high level of the society and

SEG – 2 denotes the group of the person who are in the low level of the society.

Ex:

If we consider about toothpaste products of Hemas Company, SEG-1 category person use the

Colgate toothpaste and SEG-2 category person use the Denta toothpaste.

2.2.2 Gross Domestic Production (GDP)

Table 2.1

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In the past, when consider about consumer behavior people mostly focused about their food

items. But recently, as a new trend, people more aware about their cosmetics items than foods

items.

Ex:

When selecting their cosmetic items consumer tend to select best option among cosmetic

items such as perfume, cream, shampoo etc. To illustrate that Hemas offer their cream under

many categories such as baby cream, fairness cream, sun cream, body lotion. (Baby cheramy,

Cheramy touch, Paris)

2.2.3. Regional habits

As the people consumption habits are different from one region to another region, they offer

different products to different regions.

Ex:

Hemas invested in Bangaladesh to manufacture the Kumarika oil. Thus, Kumarika oil is

produced by considering their consumption habits.

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Chapter 3 SALES FORECASTING

Businesses are forced to look well ahead in order to plan their investments, launch

new products, and decide when to close or withdraw products and so on. For their success,

organizations use various strategies. A good sales forecasting methodology also helps

business run more efficiently. So Hemas Holdings company realize that Sales Forecasting

is the process of estimating what their business’s sales are going to be in the future .Sales

forecasting is an integral part of business management. Without a solid idea of what your

future sales are going to be, you can’t manage your inventory or your cash flow or plan for

growth. The purpose of sales forecasting is to provide information that organization can use

to make intelligent business decisions.

Therefore Hemas Holdings Company used various sales forecasting methods for

planning their sales for achieving their target profit. Because well managed companies do not

rely upon a single sales forecasting method but use several. Company used following sales

forecasting method for their sales planning.

3.1 The projection of past sales method

the projection of sales past sales method of sales forecasting takes a variety of

forms. The simplest is to set the sales forecast for the coming year at the same figure

as the current year’s actual sales, or the forecast may be made by a set percentage to

last year’s sales. In the following, you can see chart of the historical data of the

Hemas Holding Company.

Annual results 2012 2013 2014 2015

(e)

2016

(e)

Sales

Million LKR

Released

Forecast Spread

21 410

20 894 2,5%

26 098

25 667 1,7%

32 833

31 053 5,7%

33 477

34 863

Operating income

(EBITDA)

Million LKR

Released Forecast Spread

3 183 3 083 3,3%

3 793

Operating profit

(EBIT)

Released

Forecast

2 276

3 379

2 939

3 591

4 573

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Million LKR Spread 15%

Pre-Tax Profit (EBT)

Million LKR

Released Forecast

Spread

2 406 2 031

18%

3 047 2 766

10%

2 354

2 665

Net income

Million LKR

Released Forecast Spread

1 658 1 552 6,8%

2 409 1 845 31%

1 861

2 107

EPS

LKR

Released

Forecast Spread

3,22

3,01 7,0%

4,68

3,97 18%

5,00

6,60

Announcement Date 05/29/2012 05/29/2013 05/30/2014

Annual Publication

Hemas Holding PLC

This company used those data and they realized their business situation. After they

compare the their present and past data according to the that Hemas Holding company

forecast their future sales as well as in order to plan their investments, launch new products,

decide when to close or withdraw products and so on.

3.2 Time Series Analysis

Hemas Holding PLC used Time Series Analysis for their sales forecasting.

The time series analysis method, predicts the future sales by analyzing the historical

relationship between sales and time. Properly forecasting sales helps you plan and

prepare for the months and years ahead, allowing you to control costs and focus on

successful growth strategies. A good sales forecasting methodology also helps your

business run more efficiently so Hemas Holding Company used this for their short

term operating sales forecast. As well as they identified the influence of some facts

such as Long term trends, cyclical changes, seasonal variation and irregular

fluctuation for their products like baby care (baby Cheremy products),Hair

care(Kumarila,Dandex Shampoo),Oral care(Clogard Toothpaste),Female Fragrances

(Goya,Capri) so on. According to that, they decided their sales plan.

3.3 Survey of Customers Buying Plan.

What more sensible way to use this approach for forecasting their sales.

Hemas company always tries to satisfy their customer need. Customers are the key

Table 3.1

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factor for organization need for achieving their goals. Therefore they closed to the

customer and through the survey get the information regarding their products.

Example: we can get Hamas Pharmaceuticals Hemas Surgical & Diagnostics.

Their pharmaceutical network is unrivalled in its size and efficiency, standing strong

as the leading sales and distribution matrix in Sri Lanka. All of the country’s pharmacies,

private hospitals, supermarkets, and other private and government institutions are included in

this network, benefiting from the optimized logistics and personalized service that we offer.

Their team of Sales and Marketing Representatives is in constant contact with Doctors,

Pharmacists and Healthcare Professionals, informing them of the latest developments in

medical research and in cutting edge Pharmaceuticals. Thus creating an immediate supply

and demand dynamic that is rewarding both them and their principals.

Hemas Holding Company through survey they can determine the cause and effect

relationship of variables, such as customer demand, worker productivity, advertising and

promotion. For example, hiring an additional salesperson has an impact on sales.

Demographic trends, such as an influx of consumers with high household income, can also

have an effect on sales. Greater advertising and promotion affects sales, as well. According to

that, company decides their sales.

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Chapter 4 ESTABLISHING SALES TERRITORIES

Establishment of sales territories facilitates matching selling efforts with sales

opportunities. Sales personnel are assigned the responsibility for serving particular grouping

of customers and prospects and provide contact points with the markets. As a leader in the

personal care sector, Hemas brands encompass a range of products for babies and adults in

hair care, skin care, toiletries, fragrances and oral care. Moreover, home care, paper products,

skin care, personal wash and traded brands acts as a major role in FMCG sector of Hemas

Holdings. Establishment of sales territories is the most crucial part to distribute these

category products among the customers within the island and overseas.

4.1 Estimating sales territories.

Considering the above sales forecasting results and estimated market potential, sales

territories are established with the help of research institutions.there are mainly three sources

to establish sales territories. Estimation is done according to these three bases.

4.1.1 Geographical basis

As the products of Hemas Holdings have spread in a large area the product network

has been sub divided in geographical vise. They serve 75000-80000 outlets all over the

country among 250000 of whole market outlets. Most commonly, the population of each area

has been taken into account and then assigned the territories regarding each area. Generally

they estimate sales territories in geographical basis as follows:

Outlets

500

Territories

10

1 Loan

1 territory (may be

a district)

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According to above diagram Hemas Holdings consist with about 160 territories and 16 loans.

The sales force is divided in regards with these each territory.

International market

Hemas FMCG category products are exported directly to countries such as Maldives,

Lebanon, Bangladesh, Belize,New Zealand, Zambia, Malaysia, Pakistan, Australia, and The

Middle East. Basically, they export Kumarika, Baby Cheramy, Clogard, Nimex, Goya and

Pro Sport. The international market territories are decided according to sales agents of each

country.

4.1.2 Customer basis

Customer basis is used to estimate the territories when the customer preferences are

different to each other. Hemas holdings divide their customers mainly into 3 categories as

Whole sellers, retailors and individual customers.

Whole sellers

The company currently handling over 200 whole sellers around the country which

distributes FMCG products to their customers. The territories are designed according to the

size of the whole sellers and divided in to categories as large scale whole sellers and small

scale whole sellers. As Hemas provides FMCG products, the supply chain should move faster

and fill the gaps within channels. Hence Hemas has efficient sa les force to fulfill this

requirement.

Retailors

Hemas holdings has over 75000 retail outlets all over the island within super markets,

small general stores, counter markets and normal stores. These retail outlets are mostly

handled by the wholesellers and products are provided according to their preferences such as

amount, type and bulk purchases.

Figure 4.1

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Individual customers

Sometimes the territories are estimated according to individual consumer preferences

which changes due to demographic variables ( age, gender, income) , Life style variables(

middle aged, young unmarried, teenage, old age) and behavioral variables ( frequency of

buying, buying patterns, loyalty). The territories are made considering each segment and

number of customers in each segment. As the company addresses whole island market, it

serves about 20 million of consumers.

Ex: When considering “Velvet” soap products:

Rose & Pomegranate for soft,youthful skin

Milk & Almond for soft, nourished skin

Sandalwood & Venivel for soft, radiant skin

Kohomba & Aloe for soft,clear skin

Purple Lotus & Lavender for soft, glowing skin

4.1.3 Combination Basis

Sometimes the territory sizes are estimated by concerning both of above facts;

geographical basis and customer basis. In this situation first, customer preferences are

estimated according to each geographical area and secondly territories are sub divided

considering the number of customers in each segment.

Ex:

When considering skin care category, first it concerns about how the market demand

spread for “ Cheramy Touch”, “Paris” and “Goya” . Then the demand is fulfilled according to

each district or territory.

Skin Care Products

Cheramy Touch Paris Goya

No. of

customers

(‘00)

No. of

Territories

No. of

customers

(‘00)

No. of

Territories

No. of

customers

(‘00)

No. of

Territories

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Colombo 1256 120 981 90 1456 140

Kandy 876 80 768 70 998 100

Ratnapura 543 50 432 40 765 70

Badulla 412 40 301 30 523 50

Galle 765 70 595 60 897 90

Chapter 5 DECIDING SALES TERRITORY SIZE AND SALES FORCE

SIZE

5.1 Deciding Sales Territory Size

After selecting basic control unit for creating sales territories, sales potential for each

selected control unit is estimated. Sales potential of selected control units will help to frame

sales territories. In this step, prospective customers are identified and contacted to have the

idea of estimated sales by them. This is done with the support of data collected through

research bureaus. Basically the planners of Hemas Holdings plan these territories with the

purpose of reducing the travelling time of sales force as they provide FMCG products. In

this step, planner decides the number, size and shape of the sales territory.

Ex: Number of sales territories for each district for personal care products ( Clogard, baby

Cheramy, Goya, Paris, Capri, Pro, Kumarika, Gold, Dandex)

District No. of Sales territories

Colombo 32

Gampaha 25

Kandy 12

Ratnapura 12

Badulla 10

This each territory includes 300 of outlets within the area.

5.2 Deciding Sales Force Size

Table 4.1

Table 5.1

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As earlier emphasized, the company serves more than 75000 outlets all around the

country. An efficient sales force has been assigned to each territory to fulfill this task. There

are about 250 sales reps in FMCG category. The concept, “Store Keeping Units” (SKU) has

been introduced to simplify the task of sales force and it gives the opportunity to easily

identify the each sales rep’s task.

5.2.1 SKU (Store Keeping Units)

This is used to bundle the whole market outlets in to fragments. There are 3 types of SKUs

which are used by the company. They are:

- 70 outlets= 1 SKU

- 40 outlets = 1 SKU

- 120 outlets = 1 SKU

When considering this, 120 outlets sets are used as 1 SKU mostly in high populated areas

such as Colombo and Gampaha. Moreover, 40 outlet sets are used in low population areas

and 70 outlet sets are used in medium population range area. To decide these numbers, they

usually concerns about

- Population of the area

- Customer trends ( Trend towards cosmetic items than food items within youngsters

and teenagers)

- Seasonal trends (New Year, Christmas, Ramazan and Deepawali)

Then these SKUs are distributed among the sales force to reach the consumers. Usually a

one sales rep should serve 30 -40 outlets per day and 15 to 20 SKU’s per month in high

populated areas. This will be changed according to seasonal trends as demand increases in

those time periods.

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Reference:

Annual Report, 2012/2013, Hemas Holdings Plc

http://www.hemas.com/

Sales Management Decisions, Strategies and Cases, Richard R Still, Edward W

Cundiff, Norman A P Govoni, 5thEdition, 1998, AsokeK Ghosh,Prenticehallof India

(pvt) ltd, M-07, Connaught Circus, New Dilhi

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Special Thanks:

Our special thanks to Sales Manager Mr. Ramesh Baghavan , Planning Department and

Hemas Holdings staff for their great corporation to gather information.

Group Members:

10/MS/017 B.S.Chathuranga

10/MS/051 W.H.A.Imesh

10/MS/122 W.M.G.L.Weerasingha

10/MS/154 R.B.B.H. De Silva

10/MS/178 K.N.S.Jayasekara

10/MS/201 W.M.N.Lakmali

10/MS/222 E.G.R.W.Nissanka

10/MS/217 N.P.Wanninayaka