AN ASSIGNMENT ON SALES MANAGEMENT

DISTRIBUTION SYSTEM OF DABUR

Submitted By: -

Submitted to:-

Hitesh R. Sharma (ISBE-A/SS/2010-12) Roll No.:- 11

Prof. Amit Vij

TABLE OF CONTENT

TOPICS
Company Profile Timeline History of Dabur Distribution Channel

PAGE NO.
3 4 5

COMPNY PROFILE
Dabur India Ltd is one of Indias leading FMCG Companies with Revenues of about US$750 Million (over Rs 3416Crore) & Market Capitalization of over US$3.5 Billion (over Rs 16,000Crore). Building on a legacy of quality and experience of over 125 years, Dabur is today Indias most trusted name and the worlds largest Ayurvedic and Natural Health Care Company. Dabur India is also a world leader in Ayurveda with a portfolio of over 250 Herbal Ayurvedic products. Dabur's FMCG portfolio today includes five flagship brands with distinct brand identities -- Dabur as the master brand for natural healthcare products, Vatika for premium personal care, Hajmola for digestives, Ral for fruit juices and beverages and Fem for fairness bleaches and skin care products. Dabur today operates in key consumer products categories like Hair Care, Oral Care, Health Care, Skin Care, Home Care and Foods. The company has a wide distribution network, covering over 2.8 million retail outlets with a high penetration in both urban and rural markets. Dabur's products also have a huge presence in the overseas markets and are today available in over 60 countries across the globe. Its brands are highly popular in the Middle East, SAARC countries, Africa, US, Europe and Russia. Dabur's overseas
3

revenues stand at over Rs 500Crore in the 2008-09 fiscal, accounting for about 20% of the total turnover. The 125-year-old company, promoted by the Burman family, had started operations in 1884 as an Ayurvedic medicines company.

TIME LINE HISTORY

1884 1896 Early 1900s 1919 1920 1936 1972 1979 1986 1992 1993 1994 1995 1996 1997 1998 2000

: : : : : : : : : : : : : : : : :

Birth of Dabur Setting up manufacturing plant Ayurvedic medicines Establishment of research laboratories Expands further Dabur India (Dr. S.K. Burman) Pvt. Ltd. Shift to Delhi Sahibabad factory / Dabur Research Foundation Public Limited Company Joint venture with Agrolimen of Spain Cancer treatment Public issues Joint Ventures 3 separate divisions Foods Division / Project STARS Professionals to manage the Company Turnover of Rs. 1,000 crores 2003
4

2005 2006 2007 2008 2009

: : : : : :

Dabur demerges Pharma Business Dabur aquires Balsara Dabur announces Bonus after 12 years Dabur crosses $2 Bin market Cap, adopts US GAAP Approves FCCB/GDR/ADR up to $200 million Celebrating 10 years of Real Foray into organized retail Dabur Foods Merged With Dabur India Acquires Fem Care Pharma Dabur Red Toothpaste joins 'Billion Rupee Brand' club

DISTRIBUTION CHANNEL
Through the nineties, the FMCG markets grew at almost 15% per annum in value. Suddenly, in 2000 FMCG market growth stalled and then declined for the next four years. The rapid opening up of the economy resulted in many new avenues of expenditure for the consumers growing income. A sharp drop in interest rates from 18% to 8% led to explosive demand for consumer durables like white goods, two wheelers and automobiles. Mobile phone ownership and usage exploded due to its amazing lifestyle and convenience benefits as well as lower prices. Entertainment, leisure and travel sectors also boomed. The lure of new avenues of expenditure in products and services led to consumers restricting their spending on FMCG. Consumers downgraded to lower priced substitutes from higher quality brands. As a result of this shift in spending patterns, the FMCG market declined in value in the last four years creating a major challenge for growth. The FMCG sector has had a much better time in recent months, with market showing signs of broad revival. It accounts for about 6.4% of total market capitalization, and is up, compared to 6.1% in December04. The situation continues to be tough in the home and personal care segments. Rising raw material costs in the
5

petro-based intermediaries used in shampoos and detergents have resulted in cost pressures and a competitive market means companies have not been able to pass on these costs fully to consumers through price hikes. The FMCG sector is witnessing demand growth again, driven by improving reach, organized retail and innovative channels, higher usage driven by affordability and rising incomes driving aspiration levels. As a result, we see an improvement in sales growth for the FMCG industry.

Consumer Demographics & Buying Patterns of Indian Consumers

FMCG is one sector which caters to the daily and more basic needs of consumers and therefore dont have a chance to run out of focus. From oral care products to packed food to detergents, soaps, mosquito coils, etc, are the various categories of products that FMCG market makes available to lakhs of consumers across the country. Initially, Indian buyers were a bit conservative partly due to lesser disposable income and partly due to fewer competitive and more variety of products. But since almost a decade, brands like Pepsodent, Pepsi, Coke, Mortein, various ITC brands, Dabur products, P & G products, etc, have made a stern attempts in providing higher quality products with relatively competitive prices, making Indian consumer enjoy brands which deliver high quality and adhere to global standards. The plethora of such brands was thrown open to Indian consumers during 1990s which witnessed a rise and growth in the FMCG industry. But from 2000 onwards a there has been a negative growth of this industry. The reasons are manifold; firstly, yesteryears amenities started becoming necessities like, mobile phones, cars, branded clothes, accessories, etc. Secondly, the disposable income of average Indian consumer rose sharply within the past 5 year and finally, availability of various financial aides made every reasonable and expensive purchase, easy thereby giving the Indian consumers an unlimited exposure to experience the same. But since December04, the sales of various brands belonging to key players and the overall FMCG industry performance have picked up and the intense sales promotional efforts, cut throat competitive strategies, stronger distributional efforts have helped various brands penetrate deeper into the markets and increased sales. Today, rural Indian consumers market has by far become the highest revenue generator for many of the FMCG product companies and availability of a wide variety of range has allowed todays Indian consumer to analyze and judge each product accurately and make an ideal purchase decision.

Mechanics of Distribution Channels of Sector

6

The supply chain of products in the FMCG market in India is one of the longest supply chains an industry could really have. There are as many as 5 levels of intermediaries involved in the entire supply chain through which a product passes before reaching the end consumer. What has been observed is that even though these FMCG companies are big multinationals and Indian but face a major challenge of making their products available in the market in the right quantities and in the right time. This is simply because these companies dont really have a wide network of sales agents and other force which is required and is ideal for catering their products to the markets. This aspect is taken over by distributors, wholesalers and retailer whose margins on these products actually double the price of these products when a final consumer buys it. The margins kept by these intermediaries range from 2% to 5%. The products in this industry are transported from manufacturing units via c & f agencies or warehouse to distributors who further sell the same to wholesalers or stockiest who finally sell it to the retailers in the market. These products are transported either via roadways or railways within the domestic markets and normally dont take more than a week to reach the retailers. FMCG products are normally a high volume ball game and products have to essentially DABUR be available in the market at all given points of time and at all given points of purchase and therefore the distribution activities are highly volatile and dynamic. The supply products Via C of &F agencies takes or place virtually on a daily basis in fixed quotas or otherwise, to retailers as per their warehouse requisitions and the anticipation of demand and the performance of products in the recent past. All such criteria are taken into consideration before the quantum of products being dispatched to the next level of intermediary. Since its a volume game, DISTRIBUTORS manufacturers make all possible efforts to boost sales and promote their distributors to earn more and more orders from the retailers and wholesalers. A close check is maintained on the flow of the products on a daily, weekly, fortnightly and monthly basis to determine the trend in the business and flow of products and consumption. This activity also helps to find out drawbacks of the distribution system, if any, and rectify them within time.

WHOLE SELLER

RETAILER
7

CUSTOMER OR CONSUMER

FIVE LEVEL DISTRIBUTION CHANNEL OF DABUR