INDIAN INSTITUTE OF MANAGEMENT ROHTAK

Sales and Distribution Management

Term Project- Interim Report

SUBMITTED TO: SUBMITTED BY- Group 3

Prof. Parantosh Banarjee

Aditi Sirkek (PGP09127)

Aishwarya BS (PGP09128)

Ayushi (PGP09144)

Bhavya Jain (PGP09145)

Esha Soni (PGP09145)

Rumi Hajong (PGP09169)

Britannia Industries
Britannia Industries Limited is an Indian food-products corporation which is headquartered in
Bengaluru, Karnataka. It sells Britannia and Tiger brands of biscuit throughout India. This company
has the legacy of 100 years and claims to have a revenue of more than 9000 crores.

Britannia’s product portfolio includes Biscuits, Bread, Cakes, Rusk, and Dairy products. The main
products produced by Britannia industries are Good Day,Tiger, Marie Gold, 50- 50, Choco-chips,
Choco-nuts, Little Hearts, Bourbon, NutriChoice, NiceTime, Pure Magic, Milk Bikis, Cream Treats,
Time Pass, Jim-Jam, Digestive, etc.
Brand Britannia has been listed as one of the most trusted, valuable and popular brands in various
surveys conducted by various prestigious organizations like Millward Brown, IMRB, WPP Group and
Havas Media Group to name a few.
Britannia has 38% of the market share. They have recorded a revenue of 9829.5 crore in 2018. The
company’s revenue grew by 10%, because of the 3% increase in product prices and 7% increase in
volume. However, its net profit grew by 12% only due to a 29% increase in other expenses’.

Indian Biscuits Market

Indian subcontinent is the 3rd largest manufacturer of biscuits following USA and China, produces
5000 tons of biscuits every day. The organized biscuit sector accounts for the 70% of the value share
and the unorganized sector accounts for the 30% of the total industry volume. Indian biscuit market
stood at $3.9 billion in 2016 provides an enormous opportunity for growth in India. The industry in
India has been growing at a CAGR of 10 per cent for the last 3 years and is projected to grow at a
CAGR of 11.27%, in value terms, during 2017-2022, to reach $ 7.25 billion by 2022.
There is a substantial market of biscuits in India. Biscuits have a enormous demand all over India
with the maximum consumption in Maharashtra and West Bengal. The industry has been there in
India for many years now and is still growing remarkably. The 12,000 crores biscuit industry provides
an enormous opportunity for growth in India. The varieties in the biscuits like cholesterol free,
healthy, tasty and easiness to carry at a reasonable cost has attracted lots of consumers making the
industry grow at a higher pace. Seeing all this, the manufacturers are providing the best products at
lower costs.
The industry has several players, the topmost being the Britannia and Parle which accounts for 70%
of the industry’s volume and revenues. Other companies include Sara, Heinz, Excelsia (Nestle),
SmithKline Consumer, United Biscuits, Brakeman’s, Champion, Kwality and Priya.
The regulation of Biscuit industry in India is done by FBMI (Federation of biscuit Manufacture of
India). Their main objective is to guard the interests and development by having a systematic and
hygienic Biscuit manufacturing Industry in India.
As per FBMI, growth of 15 % per year in the coming 10 years will be attained by the biscuit industry
of India. Besides, the export of biscuits will also surpass the target and hit the global market
successfully.
The quantity of biscuits has increased greatly to 12-15% over the last few years. To sustain in this
competitive industry with future growth prospects many players are trying to modernize and invent
various options.

Distribution system of Britannia

 Britannia products are available in 5 million retail store and mark their presence in 18 crore
households which makes 50% of Indian households. They have over 4,000 distributors, 30,000
salesman and 900 vendors across India.

Their distribution handles short shelf life and long shelf life products. They manage chilled and
ambient distribution and Works with small kirana shops to giant modern trade stores. Their 100%
orders are through hand held devices.

Britannia has 4 production or manufacturing outlets which are in Delhi, Calcutta, Chennai, Rudrapur
in Uttaranchal, Gwalior which are owned by Britannia.

Carrying and Authorized

Manufacturing Retailer
forwarding distributor and
plant
agent wholesaler

 The first rung in the distribution network for Britannia is the transport of the goods from the
manufacturing plants to the carrying and forwarding agents.
o They maintain the inventory on behalf of the company
o When the goods are supplied from Britannia to agents it is not considered a sale but a
transfer and therefore there is no change in ownership.
 The second rung in the distribution network for Britannia are the authorized distributors and
authorized wholesalers as termed by a company rep.
o Distributors have their own sales force labor transportation facility.
o Distributor’s salesperson is the one who takes orders from the retailer and wholesaler.
o He goes once a week to all the retailers and wholesalers in his territory to take the
orders and gives that order to the distributor.
o Distributor assesses his stock situation and all short stock is ordered keeping in mind the
minimum order limits.
 They have also adopted some unusual delivery system in different parts of the country which
includes boats in the backwaters of Kerala, bullock carts in the interiors of Madhya Pradesh,
camel carts in Rajasthan and hand-pulled carts all over the country.
 Britannia along with selling biscuits through traditional platforms like the ones mentioned above
has taken up step like:
o Tie ups with tea shops, kiosks
o Special dedicated stores at railway stations and bus stops
o Offering smaller size packs in corporate canteens.
o Available on e-grocery platforms.
o Sponsoring biscuits in events like world’s largest tea party (indore)
o Tie-up with Amazon India to launch only super premium range of Choco Chunkies
Biscuits
 To understand the distribution system of Britannia, we had an in depth conversation with
the distributor of the company located in Delhi. A series of questions were asked and the
discussion that followed helped us understand the distribution system.
Majorly, the following questions were asked
1. How does the distribution channel work for Britannia and what is your role in the channel?
2. Who are your immediate contacts in the channel- i.e. who do you buy from and who do you
sell to?
3. What are the margins that you work on and the margins and incentives you offer down the
channel line?
4. Apart from the margins, what other incentives and schemes does the Company run?
5. What are the challenges that you face as you perform your supply chain functions?
6. Any suggestions that you have that can improve the sales and distribution channel and its
working?

The discussion around these gave us deep insights about how the distribution works and what
are the strengths of the system, the challenges faced and the working of the system. Following
is our understanding from the research conducted

 The Distributors

 One of the main factors, which keep the distributors motivated, is the margin. Usually the
margins offered by Britannia are 8%. Now-a-days it has been raised to 8.5%.
 Volume wise this comes out to be a big figure since demand in the market, volume wise it
comes out to be a big figure. But the very fact that Britannia’s products have good demand
in the market motivates the distributors to stock it.
 In order to keep the Channel members motivated in the long run, Britannia has built on the
concept of “Trade Marketing” which makes the dealers and the distributors believe that the
company’s products are worthy of being pushed in the market.
 The company is organizing various Total Quality Management initiatives and workshops.
Here various counseling measures are undertaken by the company to improve the overall
working of the distribution network.

 Other Benefits
 Glow boards: the company puts up glow boards at the retailer and pays the major portion of
the cost.
 Schedule of the salesmen: they provide the retails with this schedule, so the retailers can
pre-estimate the quantities of the various products needed.
 Infrastructure facilitation: the company facilitates the retailers to buy beautiful stalls by
formulating an easy payment program and a commitment to buy back the equipment at a
reasonable price when the value of the equipment has depreciated.
 Target versus achievement: the performance and the targets are compared and therefore
the gaps are identified which help in evaluating the wholesalers and the distributors and
planning for the next year as well. This is done for each of the product category.
  Strengths of Distribution channel at Britannia
 Britannia has loyal cooperatives that provide products only to them, over time the
relationship of trust has built up with these people that Britannia leverages now.
 The transport channel is another strong point for Britannia. As these transporters have
grown with the company overtime; the bonding with them enables the company to give
least margins when it comes to the distributors in the industry, lowering the costs.
 Britannia is able to provide products at the least price in the industry, and is able to give
least channel margins as the channel members earn through volumes and not through high
margins.
 Because of the strong relationship that Britannia shares with the constituent channel
members, it forces the channel members to carry all its new products.

 Issues faced by the distributors

 Promotion and incentive schemes- The company doesn’t have a number of attractive
schemes and incentives to push their products along the supply chain as compared to other
brands in the same product category
 Damaged goods in supply chain- A major concern of the distributor is the goods that get
damaged in transit since the goods are consumer durables and such losses can be large as
the commute takes place and thus receiving less order quantity, dealing with returns etc.
adds to the responsibilities of the distributor impacting their efficiency because of added
work

Maruti Suzuki India Limited

Company Overview

Maruti Suzuki India Ltd (formerly known as Maruti Udyog Limited) is India’s largest passenger car
company which accounts for over 50 percent of the domestic car market in the country. The
company is a subsidiary of Suzuki Motor Corporation of Japan. The Japanese car company held
56.21% stake in Maruti Suzuki as on 31 December 2017. The company’s product mix comprises of
cars ranging from simple entry level cars such as the Maruti Alto to stylish hatchback cars like Ritz,
Swift, Wagon R and sedans such as DZire, SX4 and SUVs like Grand Vitara.
The company is engaged in the business of manufacturing, purchase and sale of motor vehicles and
spare parts (automobiles). The company is also involved in various other related activities such as
facilitation of pre-owned car sales, fleet management and car financing. The company currently runs
four plants across the country, three located at Palam Gurgaon Road, Gurgaon, Haryana and one
located at Manesar Industrial Town, Gurgaon, Haryana and one located at Manesar Industrial Town,
Gurgaon, Haryana.

Industry Overview

The automobile industry in India is world’s fourth largest, with the country currently being the
world's 4th largest manufacturer of cars and 7th largest manufacturer of commercial vehicles in
2018. Indian automotive industry (including component manufacturing) is expected to reach Rs
16.16-18.18 trillion (US$ 251.4-282.8 billion) by 2026. Overall, Domestic automobiles sales increased
at 6.71 per cent CAGR between FY13-18 with 26.27 million vehicles being sold in FY19. Indian
automobile industry has received Foreign Direct Investment (FDI) worth US$ 20.85 billion between
April 2000 and December 2018.
Domestic automobile production increased at 6.96 per cent CAGR between FY13-19 with 30.92
million vehicles manufactured in the country in FY19.
In FY19, commercial vehicles recorded the fastest pace of growth in domestic sales at 17.55 per cent
year-on-year, followed by three-wheelers at 10.27 per cent year-on-year.
The passenger vehicle sales in India crossed the 3.37 million units in FY19, and is further expected
increase to 10 million units by FY20.
To understand the distribution strategies of the company, a questionnaire was used to ask questions
from a car dealer located in Delhi. Following are our learnings from the same regarding the
company’s distribution channel

The company has a large distribution & service network with more than 400 sales showrooms, over
600 dealer workshops, and 1900 Authorized Service Stations covering over 1190 unparalleled towns
across the nation. Most of the service stations are managed on franchise basis where Maruti trains
the local staff. To increase their reach to rural India, where setting up a complete dealership was
very difficult, they opened extension counters which are operated by some dealer in the city thereby
ensuring increased customer touch points without risking the viability of the dealers.

Distribution Channel:

Manufacturer Distributor/Stores Customers

 For maintaining the stock and ordering cars, distributors use online portal.
 Every distributor maintain a minimum and maximum inventory level in store depending on
the store location and size through an online portal.
 Stores are rewarded with incentives on reaching targets

 Strengths:

 The need for supply management contributes to projects for order-to-delivery. These give
two potential advantages: a decrease in the inventory of new cars throughout the supply
chain, and, perhaps more importantly, sharp cuts in the price of sales-incentive programs
over the sales cycle's inevitable highs and troughs. But these benefits cannot be fully
realized without inventories of used cars.

 The quantity and quality of information collected at the dealer interface level is key to
developing and maintaining an actionable customer database and accompanying marketing-
 decision support systems, replacing the somewhat primitive socio-demographic data that
most vehicle manufacturers rely upon today.

Questionnaire

Part A: Demographics

1. Which automobile company distribution do you handle?

2. What is your name?
3. What is your Designation?
4. How long have you been in your current position?

Part B: Effectiveness of the sales and distribution networks

1. How does your company measure the effectiveness of its distribution network?
2. How much time does it take for the product to reach the final consumer from the
production facility?
3. What roles does the following intermediaries perform to ensure competitiveness of your
company’s distribution network
i) Distributors
ii) Whole sellers
iii) Retailers

4. What is your distribution strategy?

 Visibility of strategy
 Conducting dealers meets
 Road shows and Exhibitions

5. How much time do you take to deliver if a customer asks for a model on demand?
 1month
 3month
 6months
 More
6. Does the company supply vehicles without order also?
7. Do you share cost of promotion with the company at local level?
8. How do you interact with suppliers?

Part C: challenges facing the sales and distribution network

1. What challenges currently face the sales and distribution network of your company?
2. What has the management of your company done to overcome these challenges?
In your opinion what else can be done to completely overcome these challenges