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SOAPS (FMCG) bnmqwertyuiopasdfghjklzxcvbnm qwertyuiopasdfghjklzxcvbnmqwe rtyuiopasdfghjklzxcvbnmqwertyui opasdfghjklzxcvbnmqwertyuiopa sdfghjklzxcvbnmqwertyuiopasdfg hjklzxcvbnmqwertyuiopasdfghjklz xcvbnmqwertyuiopasdfghjklzxcv bnmqwertyuiopasdfghjklzxcvbnm qwertyuiopasdfghjklzxcvbnmqwe rtyuiopasdfghjklzxcvbnmrtyuiopa
PRATEEK GOEL

ABOUT THE COMPANY:
ITC is one of India's foremost private sector companies with a market capitalisation of nearly US $ 14 billion and a turnover of over US $ 5 billion.* ITC is rated among the World's Best Big Companies, Asia's 'Fab 50' and the World's Most Reputable Companies by Forbes magazine, among India's Most Respected Companies by BusinessWorld and among India's Most Valuable Companies by Business Today. ITC ranks among India's `10 Most Valuable (Company) Brands', in a study conducted by Brand Finance and published by the Economic Times. ITC also ranks among Asia's 50 best performing companies compiled by Business Week. ITC has a diversified presence in Cigarettes, Hotels, Paperboards & Specialty Papers, Packaging, Agri-Business, Packaged Foods & Confectionery, Information Technology, Branded Apparel, Personal Care, Stationery, Safety Matches and other FMCG products. While ITC is an outstanding market leader in its traditional businesses of Cigarettes, Hotels, Paperboards, Packaging and Agri-Exports, it is rapidly gaining market share even in its nascent businesses of Packaged Foods & Confectionery, Branded Apparel, Personal Care and Stationery. In 2005, ITC expanded its FMCG business by launching a range of personal care products which included soaps, shampoos, conditioner under brand name of Fiama d wills , Vivel and Superia ITC's diversified status originates from its corporate strategy aimed at creating multiple drivers of growth anchored on its time-tested core competencies: unmatched distribution reach, superior brand-building capabilities, effective supply chain management and acknowledged service skills in hoteliering. Over time, the strategic forays into new businesses are expected to garner a significant share of these emerging high-growth markets in India.

THE PRODUCT
Vivel Di Wills and Vivel are high quality ranges of soaps and shampoos for the upper-mid and midmarket consumer segments. All products offer a unique value proposition of bringing together

ingredients that provide the benefit of Nourishment, Protection and Moisturisation through one product, hence providing the ever discerning consumer complete care, which makes her beautiful and confident.

DISTRIBUTION CHANNEL OF VIVEL SOAP FROM ITC

NEED:
Distribution channels are sets of interdependent organizations involved in the process of making a product or service available for use or consumption. From the point of view of making available products and services, the existence of intermediaries between the products and the ultimate end users is inevitable. This inevitability is primarily due to the fact that producers can exploit the economies of scale only if they produce in bulk, which in turn results in the production function getting concentrated in a single location. It is noticed that channels are created for reaching out to different customers who are spread wide across territories. Each channel addresses the needs of the customer. The mass retail and key retail segments address the convenience aspect as they are located in proximity to residential areas. The Modern Retail outlets might address the same customer but provides a different value proposition. It addresses a different need of providing a wide array of products under one roof when the customer values a shopping experience, and would like to have an experience of picking up his groceries and personal care products. For example in case of VIVEL soap, ITC towards making this product reach the end user had to employ the right channel, and ensure proper strategies are in place towards maximizing the off take of the product through the channel by the target customers. Now the availability of the same product at different channel members is different. The product may be available in boxes and in large quantity at the wholesalers point targeting the retailers whereas the same product is available in the base pack with the retailers, here targeting the retailers. Even at this part of the channel, there is a difference. The product at a local kiryana shop may be available with no offer whereas the same product at a big

departmental store might be available with an offer. This is how each channel member acts differently with the same motive of increasing sales and profit.

DISTRIBUTION CHANNEL STRUCTURE:

DISTRIBUTION CHANNEL PLAYERS

1) Factories: ITC Limited has two manufacturing facilities of soaps in India. These are located one each at Bangaluru and Haridwar. Apart from these two there are four other units which manufacture soaps and other personal care products for ITC. The goods from the factories goes directly to the Wholesale service providers. These factories are well connected with the branch offices. From here exchange of information takes place which guides the flow of products to the Wholesale service providers.

2) Wholesale service providers (WSP): The role of the WSPs is to simply take delivery of the goods from the factories that the ITC have at six different locations across India and forward it to the Wholesale Dealers. They are almost the same as C&F agents in the other companies. They are given commissions for their handling of the goods. They in turn have to see that the goods reach the next point of the channel that is the Wholesale dealers in time and safely. They also have to maintain their stock level and see that the distributor is maintaining their stock as per the norms of the Company. The stock norms are maintained in ITC as a real time basis. ITC have software named SIFY Forum for the same. This is a real time software, by the use of which the WSP agent can know the stock level maintained by the Distributor and vice versa. It also helps in ordering of the stock for the Distributor and the other channel members.

3) Wholesale Dealer: A Wholesale Dealer is a channel member in the distribution system which plays a vital role in the reach of the products of a company to the customers. They buy the products from the company and in turn deliver to the further channel members at their own cost. They have to maintain their own Sales force as well all other necessary infrastructure or the manpower necessary for them so that the goods pass on smoothly and in time to the customers at the POP. The efficiency of the Distributors can be judged by the ROI that they achieve.ROI or Return on Investment is the net profit that a Distributor saves for himself. It is determined by the total Investments made divided by the total expenses. It takes into account all the expenses for a particular company including the cost of the stock norms that they have to maintain for a particular company. It also takes into account the rotation of the money made by the distributors, the working

capital maintained and the credit policy given by the Company and the credit policy they applies further. It also takes into account the Manpower that they have to keep for the smooth functioning of the channel members. In FMCG industry the healthy ROI is said to be anything between 18%-24%. But in some cases the Distributors can only maintain a ROI of <15%. It is mainly because of the inefficiency of the distributor in his distribution of the Goods from the company to the other members of the Distribution channel. A distributor reduces his ROI if he maintains a high credit period and his rotation of the working capital is very less. If the rotation is twice a month then the ROI is said to be 24%. This can be achieved by maintaining a credit period of 10-15 days. To carry out operations, a WD needs to recruit effective manpower. The manpower includes the salesman (DS), suppliers, supervisors and computer operators. The salesman goes to the market and represents the company, hence he needs to be smart and well mannered. It becomes essential for the WD point to recruit a staff which is capable of effective sell in. The WD point is also required to recruit suppliers for supplying the goods in the market. Again the suppliers must be well mannered with good knowledge of the market. The WD point must ensure enough storing place for the products at the point. The products from the WD point moves to the retailers and the secondary wholesellers.

4) Wholesalers: Any product category which is high selling will have wholesalers. Same is in the case of ITC. In the product category - cigarettes or the next family of product categories - Personal care products, all have a combination of wholesale and Retail Sale. The only difference between the two is the off take levels, financial capacity and sometimes infrastructure to deliver to retailers. Normally the rates for wholesale is cheaper than retail, as it is in bulk. This sometimes led to price cutting in market. Both retail and wholesale have a role to play. It’s always good to have high retail throughput (Total Retail Sales/ Total Sales) to have higher control of organization over the retailers. This will help the organization to launch new brands in future, increase visibility at the outlets, which is just because of relationship of organization salesman with Trade. At the other end, in case of insufficient supply from factories or WSPs, there will be sufficient stock to deliver to outlets to serve the conserve. Also, there are many markets which are practically and financially not possible for much organizations to cover like less than 10K markets, Here these small retailers in smaller markets get the stock from these wholesalers which are located at some distance from them.

5) Retailers These include the retail channels for Personal Care products under the General Trade category. Key Retail outlets are other large kirana shops which are not wholesalers. They too cater to residents largely and visitors and passerby’s. The average sale of these stores could vary between Rs 10000 per month and Rs 40000 per month. These again are serviced once or twice a week

depending on the BPM and the company and the range of products it deals with. The mass retail outlets are typically serviced once a week and cater to the local populace. Their reach & ability to cater to the occasional customer mandate their existence. They generally stock those products which are in demand from the customers and have a good consumer pull. The smaller SKU’s such as sachets are popular. The company replenishes the stocks on a fortnightly/ weekly basis and has little influence over the portfolio maintained by the retailers. These outlets are the largest in number and are key points for the company in terms of reaching the masses.

THANK YOU

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