Selling and Distribution:

some perspectives………
Generic Opportunities
The main 2 opportunities lie in :

• Category penetration (No of people who “consume” the category)

• Per capita consumption ( Quantity they consume)

Category Penetration
Category % Penetration
Toilet Soaps 96
Washing Powder 92
Detergent bar 88
Hair Oil 74
Toothpaste 66
Shampoo 56
Talcum powder 52
Fairness cream 17
Antiseptic cream 1.7
Cold cream 1.3
 Penetration – Urban vs Rural
Category Urban Pen % Rural Pen %
Shampoo 57 37
Hair Oil 80 67
Skin cream 32 18
Mosquito 59 18
repellent
Instant noodles 19 3
Floor cleaner 26 4
Hair Dye 5 2
Toothpaste 77 42
Urban – Rural divide
An Urban town is defined as:
1. All places with a municipality, corporation, cantonment board
etc….
Or
2. a) Popn. > 5000
b) 75 % of Popn. engaged in Non-Agri activities
c) Popn. density > 400/ sq km
India: the land of dispersion…….
Population Range No of Towns % Population
Urban

> 10 million 3

1 -10 million 50
22%
100K – 1million 415

< 100 K 5698 10%

Total Urban 6166 32 %

Rural ~ 630,000 68%

Census Of India : 2011

India … the land of shopkeepers
Country No. of Retail outlets No. of Retail
(millions) outlets / million
Popn.
UK 0.30 4900

USA 0.95 3150

Japan 1.00 7300

Brazil 1.20 6200
Indonesia 2.70 11500

China 4.50 3500

India Estd.15.0 12000

Source: Euromonitor, 2007 with extrapolation

……….Infrastructure bottlenecks
• Road density (Km/ 000 people) India: 2.75
World Avg: 6.70

• % of Rural Popn within 2 Kms of a motorable road : 60 %

• National Highways as % to Total roads : 2%

• % Traffic in National highways : 40 %
• % of National Highways which are 4 laned : 14%
• % of State highways which are 4 laned : 1%

• Availability is not automatic, but needs to be created……….

• Physical distribution beyond the top 468 big towns is a challenge that
requires planning and proper design…….
• Rural distribution is another ballgame....esp. given the density of
demand !
• In smaller markets : Supply side economics works!
Deliverables of a S & D System
• Availability
• Not automatic, but needs to be created……….
• Physical distribution beyond the top 468 big towns is a challenge that
requires planning and proper design…….
• Rural distribution is another ballgame....esp. given the density of
demand !
• In smaller markets : Supply side economics works!

• Sustained Availability : Supply Chain planning + implementation

• Quality : Supply chain practices + Trade storage / FIFO

• Visibility :Planning and good implementation

• Trade Advocacy : Relationship building and servicing excellence.

• Channel partner health and motivation : Policies + implementation .

Retail environment challenges
• Traditional Retail environment is sub optimal:
• Buying patterns are haphazard
• Inventory holding is low / inconsistent
• SKU range is low / inconsistent
• Storage conditions are poor
• Display is poor
• Stock rotation is poor
• Advocacy is absent

• Modern Retail is in its infancy but growing……..

Channel partnership……..
• Trade channels can be your best friend or your worst enemy –
depending on how you partner them……

• A good S & D system can deliver huge competitive advantage……..

 The not so ‘dark side of the moon’…..
• Marketing creates demand…….
• S &D fulfils demand…….
• S &D also
• creates trials……
• develops new consumers and markets…..
• retains consumers……
• introduces new products…..
• delivers share and growth……
S & D Tasks
• Task of Sustained Availability + Visibility + Inventory +
Advocacy: strategic + operational………..
• Direct + Indirect Availability = Total Availability
(> 630,000 markets; 15 mln retailers; >500 K wslrs)
• Design of the Channel structure + Tasks +
Remuneration structures : strategic
• Smooth running of system : Operational excellence…….
• Results in sustained availability + Trade advocacy
• Results in competitive advantage = share + growth =
sustained profits
Areas of learning
• Strategic: Design of the S & D system:
• Distribution footprint
• Channel footprint and structure
• Direct vs Indirect Distribution
• Channel Tasks and Margins
• Outlet classification and servicing
• Trade Servicing – logic and deliverables, cost – benefit
• Supply Chain, Logistics and Inventory planning
• BOP / Rural: sales & distribution
• Distributor Mgt: selection, training, motivation, performance mgt
• Sales force: structures, selection, training, performance mgt systems
• Modern Retail: TOT, Supply Chain, Servicing, Activation, CRM,
Category / SKU mgt.
Areas of learning
• Operational: smooth running of the system
• Channel Mgt: collaboration + conflict
• Servicing and Inventory optimization
• Trade Pricing, Discounts and Trade offer mgt
• Territory Mgt
• Sales planning, targets and performance mgt
• Sales force Mgt
 Influences / Competencies……….

• Contributions from:
• Business Economics
• Behavioral sciences
• Optimization techniques
• Data analytics and CRM
• HR and people management

• Leadership practice school: planning, communication, performance

mgt, environment mgt, partnership mgt………
• S&D is both a science and an art……

…….enjoy