Sales and Distribution Management Group 7 LBSIM, New Delhi

Flow of Presentation
Company Overview Product Specifications Business Model Market Classification, Segmentation Sales Organization Structure Sales Force Motivation Forecasting, Distribution Model Coke vs. Pepsi Logistics, Product Flow Performance Management Promotional Schemes Margins & Financials Recommendations

Company Overview
Coke re-entered India in 1993 Coke India comprises of:
Coca-Cola India Hindustan Coca-Cola Beverages Franchisee bottling operations

Coke globally serves 500 brands in 200 countries @ 1.7 billion servings per day Operates a franchised distribution system 1889 Market Cap: $167.25 Billion (Global) Revenues: $46.542 Billion (Global) Employees = 25K direct & 150K indirect (India)

Product Specifications

Contd.

Promotional Schemes
Soft drinks:
600ml 1case + 2x500ml soda free
600ml 2case + 5x500ml soda free 2 litre 1case + 2x500ml soda free 1.25litre 1case + 1.25litre Limca free (1.5litre out of stock)

Juice:
1.25litre 1case Mazaa + 1.25litre Mazaa free

Water:
5box (15x5) + 1box free

Energy drink:
1box (24pcs) + 4pcs free

Business Model
Manufactures & distributes
Concentrates Syrups

Bottlers make the final beverage through

COBO FOBO

Each bottler has an exclusive territory Actual formulations are tightly held trade secrets

Business Model
Coca-Cola India Manufactures Concentrate, Beverage base and Syrup

Regional Bottlers COBO/FOBO

Manufactures finished Bottles/Cans/Fountain Syrup

Customers

Consumers

Market Classification
Market Classification

Geographical Area

Competition

Geographical
Internationally Coke segments its product
Country & region wise Variations as per tastes & income

Competition
Presence of players such as:
Pepsi RC Cola

Segmentation Model
Outlet Type Channel Clustering Based on Consumption Occasion

Grocery

Market Clustering Based on Income Level of Locality

Restaurant Convenience Outlet Clustering

Outlet Volume

<200

200-499

500-799

>800

Consumer Choice

Organizational Structure
Chair Person G.M. Marketing Manager Factory Manager Marketing Manager Production Manager Accounting Dept. Shipping Deptt.

Quality Control
Sales Manager O/S Sales Officer Sales Supervisor Sales Man Sales Manager (Base) Sales Officer Sales Supervisor Sales Man

Mechanical Engineer
Shipping Manager Shipping Officer Shipping

Personnel Manager

Distribution Officer

Sales Organization Structure

AGM

Sales Manager

Area Sales Manager

Sales Executives

Market Development Executive / Pre-sellers

Recruitment & Selection

Coca-Cola recruitment process is well established, they give ads in newspaper, companys website, institutions,etc.
Coca-Cola recruits MTs from premier B schools. They mostly offer PPOs to the Summer Interns.

SELECTION PROCESS INVOLVES:

Group Exercise Interview Presentations Psychometric tests Situational Exercises

Training
Coca-Cola India partners with Indian School of Business (ISB) to launch the Coca-Cola ISB Retail Academy

The Parivartan program

Training small town retailers. Cokes new strategy involves training retailers (around 6,000 of them) in a program launched by the Coca-Cola University

Performance Ratings
Exceptional performance EP Contributions significantly exceed the stated objectives in terms of quality, quantity and timeliness Successful performance SP Contributions meet and sometimes exceed the objectives, which are based on challenging goals Developing performance DP Contributions meet some / most but not all of the objectives and performance improvement is necessary No Performance NP

Contributions frequently do not meet the stated objectives

Sales Force Motivation

Incentives based on quarterly performance No. of units and/or total revenue, work as a base for incentives Every executive needs to add new outlets every year to get UNIT incentives Target achievers are recognized by giving:
TV, Fridge, etc. Certificates / trophies Lunch / outing with senior management, etc.

Foreign trips for managerial level & above

Rewards at Coke
Yearly Basis
Employee salary increment Grade Jump, Designation change Annual incentive Plan (AIP) (for business performance, but fixed) Personal Progress report (PPR) (Annual Appraisal)

Monthly Basis

Making the move (MTM, sales target achieve) Monthly turn hall (extraordinary performance)

Quarterly Basis

Employee of the Quarter (EOQ, non sales) Sales Dangle context Gold Context

Forecasting
Combination of top down and bottom up approach

Forecasts based on factors such as:

Historical data Economic parameters

Seasonal variation
Festivals, ceremonies, etc. Weekly reviews to adjust monthly forecasts

Forecasts are region-wise, they are further broken down into cities, towns and villages by sales managers

Distribution
Distribution Routes
Key Accounts Examples: Clubs, fine dine restaurants, hotels, Corporate houses etc. Future Consumption Examples: Departmental stores, Super markets etc. Immediate Consumption Examples: Small sized bars and restaurants, educational institutions etc. General

Distribution
Area wise distribution & promotion schemes Focus on high traffic locations
Railway stations Bus stand

Coke India distributes using 2 routes

Direct Indirect

Direct Route

Market

Plant

Warehouse Indirect Route Distributor Market

Cont.
3 COBO Regions 27 COBO units 1 FOBO Region 12 FOBO units

COBO

Company owned bottling operations

FOBO Franchisee owned bottling operations

Distribution Structure

Direct

Indirect

Manufacturing Plant Primary Company Owned Depot On Order & Ready Stock
(Diamond / Gold / Bronze)

COBO

Direct

3 Day Inventory Home Delivery Agent

FIFO

Secondary Retailers

Tertiary Customers

Distribution Structure

Direct

Indirect

Manufacturing Plant

FOBO

Indirect
Secondary Distributors cover: 500-600 outlets

Distributors
Secondary Retailers

Requirements to become distributor:

Capacity to hold 5 days stock FDA license Shop establishment certificate Electricity bill Address proof Bank statement

(Diamond / Gold / Bronze)

Tertiary
Customers

Pepsi India
COBO

COMPANY

FOBO

WAREHOUSE

C&F

DISTRIBUTOR

SALESMEN

SALESMEN

WHOLESALER

SLUMS

RETAILER

RETAILER

CUSTOMER

CUSTOMER

Delhi-NCR

Full Coverage - 59 Routes

No return Retailers Loss

Owned & contracted vehicles 56 Owned Vehicles

Retailer Handling 45 Pre- sellers

Transporting Vans 1 Driver + 2 Loaders

Distributors Functions
PARAMETER Bulk Breaking Warehousing Transportation Market Information Sourcing Maintaining
a) Visual Merchandising b) Banners, posters, etc. Depends upon location Storage & safety Distributor to retailer

Customer Intelligence Competitor Intelligence Consumer tastes & preferences a) Signage b) Interior ambience c) Overall environment

Problems faced by distributor

From company : discounts/incentives given at the end of the month From retailer : bad debts/run away

Logistics
PARAMETERS
1) Average order size
Based on Demand, Season

a) Distributor to company b) Retailer to Distributer

2) Order placement
a) Distributor to company b) Retailer to distributer

Phone Distributor Representative 2 Days Daily

3) Transit Time 4) Order frequency

Logistics
PARAMETERS 5) Inventory Maintained 6) Unsold/Damaged Merchandise
1 day Replaced a) A/C Keeping b) Stock keeping c) Complaint Handling Company vehicle

7) Technology
8) Mode of Transportation
(company to distributor)

9) Transportation Expenses
a) Company to Distributor b) Distributor to retailer

Company Distributor Minimum 30 m2 Owned / Rented Stock keeper

10)Warehousing
a) Storage Capacity b) Ownership

11) Stock keeping responsibility

Flow of The Product

Pre-seller goes on his route and books the orders

Order is registered on the server through GPRS on the spot

Order is processed Load sheet is released

Loading the vehicles is done by the C&F people

On a tablet or Blackberry

Contd.
First vehicles leaves at 6am All vehicles leave by 9.30am Trucks return to depot Unloading takes place

Product delivery Empty bottles are collected

Records are tallied Cash submission

Cannot take more than order

Only cash except for a few

Performance Management
RED Strategy Right Execution Daily Tool to measure the performance of the distributor in the outlet by setting some standard or parameter of execution. RED
Check Visi-Cooler Management Availability of the product in the outlet Check the activation in the outlet

Market Developer checks 25 outlets a day and report to HCCBL on the score of 100.

Margins
Margins per crate (comprising 24 bottles of 300 ml each) is Rs 20. On the 200 ml pack size, margin is Rs 16 per crate. Sales of the more affordable 200 ml pack size account for about 60 per cent of its total carbonated soft drink (CSD) sales. Non-CSD business accounts for 15 per cent. Outsourced distribution so that trucks and other equipment needed for the purpose are no longer owned by the company.

Financials
Coco-Cola
Profit Margin a) To distributors b) To retailers a) to company b) for refrigerators 1-1.5% 2-3% Advance payment 1,00,000 5,000

Credit terms and policies i) Credit amount a)Company to distributor N/A b)Distributor to retailer Can provide. ii) Credit period One month(for retailers)

Learnings
The real time order processing system through use of technology helps reduce the lead time 24hrs working i.e. the loading cases in the night saves valuable time

Recommendations
Pre-sellers shouldnt be looked at as an extra cost. On the contrary, since their inception sales have risen
Order devices at Diamond outlets can facilitate quicker order placement

thank you