Mondelez

Sales and Distribution Report

1. Distribution structure of Mondelez

Fig 1: Represents the distribution structure of Mondelez

 The company has categorized its brand in 3 categories namely P1, P2 and P3 for better
distribution
 Each retail shop is being served by each type of distribution once a week
 Therefore, each retail shop is being served by the company thrice a week
 Each sales man covers around 50-60 shops each day
 To focus on the sale of premium products company runs ‘Stick Packs units’ in some selected
locations
 Distribution & Sales Executives and Sales Officers are appointed to monitor the sales
activities in designated areas. They report to Area Sales Managers

1.1 Company Policy and Guidelines

 Earlier the company used to keep all the products with the distributor however later they
divided their products into groups P1, P2, P3. All the three groups have non-conflicting
products. This happened because small retailers could not buy the same type of products
twice a week. They looked upon the products as substitutes. Thus, to solve this problem and
to keep product flow they divided their product portfolio
 When it started, a distributor could hold all the three types of products
  However, supplying all the goods to a single distributor would mean a monopoly of the
distributor in the particular region. Thus, they are now allowing only a maximum of two
product portfolio with a single distributor
 In goa region P1 and P2 is being distributed by Aditya Marketing while P3 was being
distributed by another distributor
 Slowly and gradually MONDELEZ is moving towards only one product line per distributor
 A representative of each distributor goes to the various outlets, once a week (depending
upon the area), takes the order and then delivers the goods the next day.
 The larger shops are extended credit of 3-4 days. While the smaller shops buying smaller
quantities are not allowed any credit and are asked to pay by cash when the delivery takes
place

2. Selection of distributors
The criteria are mentioned as below:
 Capital investment- Every distributor is supposed to keep at least eight lakhs worth of
inventory at any time
 Relevant experience- The distributor is expected to have a prior experience in FMCG sector,
however it is not mandatory. They should not be distributing competitors’ product
currently. The distributor we met was also a distributor of Godrej and has been distributing
MONDELEZ products for almost 7 years now
 Infrastructure- He must have sufficient and appropriate infrastructure to hold the volumes
of stock that he brings. Following are some of the infrastructural requirements mandated by
the company
 Godowns / storage space
 Delivery vehicles: Must have a big enough vehicle to transport goods
 Salesmen: Must have at least 2 salesmen
3. Incentives
 Margins

MARGIN LAYOUT

Company

5%
Distributor

14.5% 12.5 %

Wholesalers Retailers

Fig 2: Represents the margin details of distributors, wholesalers and retailers of MONDELEZ

 Schemes spread over 1-2 months- These schemes encourage specific target achievements.
Targets are given as indexed growth rates based on weights. Mondelez targets mostly small
retailers and their incentives are mostly targeted at them
 Certificates & Memento- Certificates and mementos are also given to distributors as an
acknowledgement for achieving the targets. They frame them and display them in their
offices
 Ranking- The retailers and wholesalers are ranked into tiers based on their performance.
This ranking is done once in a quarter and incentives are structured differently for different
ranks. Targets are set based on past sales data and New Wholesaler added can be put in any
tier basis the potential to sell

Platinum Gold Tier Silver Tier Bronze

Tier Tier
Avg. Monthly Avg. Monthly Avg. Monthly Avg. Monthly
Target Rs Target Target Target of Rs
75,000 or Rs 25,000 – Rs 10,000 – 10,000 or less
More in H2, 75,000 in H2, 25,000 in H2, in H2, 2016
Fig 5: Represents the tier based ranking of the retailers and wholesalers
  Loyalty Program (MITR)- Depending on the tier of the wholesalers the MITR loyalty program
is structured as below. This has been a very successful program for Mondelez in terms of
sales growth. It requires distributor to keep high amount of safety stock

Fig 5: Represents the tier based loyalty program for wholesaler

4. Motivation of Channel Partners

The company consistently comes up with schemes for it channel partners to motivate them.
They have divided the territories into 3 categories: GOTM (Urban), Rural and ROU (Rest of Urban). The
incentives are different in each of these territories as the KPI’s are also different. The DBSM (distributor
sales man) who works with distributors but are on company payroll are allocated in GOTM/ROU
territories. Mondelez employs a PSR in rural territories and offers same incentive program. The
incentive for a DBSM in a month is shown as below:-
 (RETAIL/ WS) GOTM DBSM INCENTIVE

GOTM DBSM EARNING

INCENTIVE PARAMETER
POTENTIAL

Secondary Value Target 2000

Focus Brand ECO/ Volume/ Value Target 1000

DBSM STAR Recognition Program 2000

Total Max Earnings 5000

Table 2: Represents the DBSM incentive in a month

 Star Recognition- DBSM’s and PSR also have a star recognition program which is different in retail
and wholesale channel.

KPI for Wholesale DBSM in GOTM territory is shown as below:

WS DBSM STAR RECOGNITION PROGRAM
Max Earning
KPI Benchmark Criteria
Potential
Mandays 22 days per month
WS ECO 30 90%
Rs.2000
WS ECO 60 95%

Avg Lines Per Billed WS O/L City/DB Slabs

Table 3: Represents the WS DBSM star recognition program

DBSM will be ranked on the above KPI’s using the below mentioned criteria:-

Fig 6: Represents the KPI based ranking of DBSM

KPI for Retail DBSM in GOTM territory is shown as below:
DBSM STAR RECOGNITION PROGRAM
Max Earning
KPI Benchmark Criteria
Potential
22 days per month
Mandays (Botree man-days/ Pro-rated man-days
whichever is lower)
City-wise Slab (With Drop Size Banker) Rs.2000
PC
(min Botree working days to be 15)
DBSM Targets = 75% (3-Way) | 85% (2-
Retail ECO 30
way/ 1-way)
Table 4: Represents the Retail DBSM star recognition program

*botree = software for sales and marketing data

DBSM will be ranked on the above KPI’s using the below mentioned criteria: -

Fig 6: Represents the KPI based ranking of DBSM

KPI for PSR is shown as below: -

PSR STAR RECOGNITION PROGRAM

Max Earning
KPI Benchmark Criteria
Potential
Mandays 22 days per month
BE 30 90% (Banker- Min 10K per mth)
Rs.2000
BE 60 100%

MSS BE 60%

Table 5: Represents the PSR star recognition program

 PSR will be ranked on the above KPI’s using the below mentioned criteria: -

Fig 7: Represents the KPI based ranking of PSR

 Bonus Plan- There is a special quarterly bonus plan for Area sales managers and Area sales
executives and it is shown as below: -

Fig 8: Represents the special quarterly bonus plan for Area sales managers and Area sales executives

Also, special bonus and incentives are provided for meeting the targets in focus products/brands.

5. Competition Analysis
Following table highlights the competition analysis: -

Company

Outlets/beat
50 50 30 40 30 40
s
Loyalty Perfect7
Parivar
Program for No No No First Club +QPS(gift
Program
retailer )
Model Order Order Order Order Order
RSU
(delivery) Booking Booking Booking Booking Booking
 Top Convenienc
DBSM
Stores=2 e
frequency/w 3 1 1 1
Normal= (pan)=daily
eek
1 Grocery=1
Retailer
12.5 12.5-15 12.5-15 12.5-15 12.5-15 12.5-15
Margin (%)
Range >20 3 >20 6 5 5

6. Evaluation
In general, once a distributor is appointed the company does not take away business from him,
except when the underperformance has been observed over long periods.
While evaluating the performance, his targets performance is studied relative to that of other
distributors in the nearby area.
C&S agents as well as distributors are evaluated on the following areas
 Good Warehousing Practices
 Quality maintenance Practices
 Good Distribution Practices

 Stocking:

 First in First out (FIFO) basis of Inventory management should be maintained

 Stocks should be kept in pallets away from the walls
 Godown stacking should be done in an orderly fashion and the different batches are
visible
 There must be moving space between various stacks
 Warehousing Practices:

 Security of the godown should be provided all the time

 Proper ventilation and required provisions to handle emergency because of any fire
should be available
 Cleanliness and Pest Control should be followed
 Effective, reliable and quick transport is available to and from the warehouse
 The labors have been properly trained to ensure that no damage to the goods take
place at the time of loading / unloading
 Proper book keeping with regard to Sales tax and exemption certificates.
 The bad goods are separated and marked “saleable” or “unsaleable” clearly
  Accounting:

 A stock register is kept to record receipts and dispatches with details of

accompanying documents
 Shortages are accounted for separately.
 GST is handled by C&S
 A separate register is maintained for materials which are meant for free distribution
 All the related expenses that are incurred are paid by C&S and are subsequently
reimbursed by the company

7. Channel Conflicts
Division of the territory is done into routes (1 route=6 beats) and categorization of brands as P1, P2,
P3. The outlets are served once in a week and currently a single distributor cannot hold more than
2 portfolios of brands (out of P1, P2, P3) as per company’s norm. There is clear earmarking of the
brands as well as markets for each distributor by the company.
However, there are a few sources of conflicts within the channels like-
 Supply late by distributor- Distributors collect the orders from the retailers but do not serve
them well within time due to lack of stock maintenance, manpower shortage etc.
 Undercutting- Wholesalers passes some portion of his extra margin, which he receives,
from the distributor, to the retailers. This brings the willingness in the retailers to buy from
the wholesalers thus undercutting the volume of the distributor
 Secondary schemes not passed to retailers- The distributor does not pass on few schemes,
which are designed by the company for the retailers and the consumers. Say the company
gives a bottle free with a jar of Mentos but the distributor keeps the bottle and does not let
the scheme penetrate to the retailer and the customer
 Botree bill not provided- The distributor does not use company’s software instead uses
their own software for billing purpose hence any discount schemes for the retailers is not
passed totally to them by the distributors. Moreover, retailers do not even get to know
about those schemes. Thus, wrong data/ information flows to the company
8. MONDELEZ Distributor Survey
The distributor has two clusters each of 6 beats as follows
Bicholim- Agarwada
Sanquelim- Morjim
Valpoi- Keri
Arambol- Keri
Pernem- Dhargal
Colvale- Karaswada.
Each beat is served once in a week. In a day, the distributor serves 2 beats. The distributor has two
sales people. For wholesalers, the divisions are Bicholim, Sanquelim, Valpoi, Pernem, Poirem-Keri.
The products are divided into 3 heads namely:
 P1
 P2
 P3
All the 3 brands cannot be taken up by a single distributor for any territory. Maximum of 2 portfolio
of brands can be given to any distributor. Distributor supplies the retailers once in a week. The
order booking takes place one day prior to delivery. The collection of cash is done by the same sales
person then and there for the goods supplied for small retailers. For pharmaceuticals and large
retailers/supermarkets the collection is done order to order. The margin given to the retailers is
12.5 % as per company’s norm.
The distributor also serves the wholesalers once in a week. The purpose behind catering to
wholesalers is just to increase the reach, and let the supply go beyond premises after which
distributor himself cannot serve. The distributor pays a margin of 14.5 % to these wholesalers, an
extra of 2% from his pocket.
 Credit Policy:
 MONDELEZ: The distributors are termed as Cash Distributors because the company
charges the distributors before the stock is delivered. The company has connected the
distributor online and the transactions happen online
 The Distributor: The distributor sells goods on credit for large retailers and allows no
credit for small retailers. The period of credit is order to order i.e. 1 week
 Stock Policy:
 As per the company regulations the distributor is supposed to maintain a stock worth of 8 lakhs
which is around maintaining a stock of 3 weeks in volume. The stock is formalized by the
company. The distributor pushes the slow-moving SKU’s, clubs them with fast moving SKU’s for
the retailers
 Dumping:
 The company does not significantly dump on the distributors; the distributor has to
manage the supply by the company
 The Undercutting:
 The wholesalers are providing higher margins to the retailers because of which the
retailers have willingness to buy from the wholesalers instead of distributors. Keri being
the border of Maharashtra the wholesalers have influences to sell to the retailers
present there at a higher margin, thus leading to undercutting
 Lead Period
 Wholesaler: The lead periods in providing stocks to the wholesalers is 1 day
 Company: The lead periods in providing stocks to the dealers differs from the SKU and
quantity ordered. Normally the lead time of 3 days are maintained as per company’s norm.
The stock from the company is provided every month but company keeps replenishing
stocks at the requests of the distributors.
 Return Policy: The company follows a policy of paying 50% of the amount to the retailers
and the distributors, when the product has passed its expiry date, damaged or has a defect.
The distributors are asked to collect the expires from the market as well as his own
warehouse expires and the entire thing is burnt
 Return on Investments: The company does not give any guarantee to the distributor with
regard to returns on his investment which is in line with the market credentials of the
company. The distributor gets a return of around (2.5- 3) % on his investment per month
 Storage Policy: The distributor maintains room temperature Storages for the products. The
investment in infrastructure is considerable for the company to maintain such infrastructure
 Sales Force: The company does not have a policy to train the staff of the distributor, the
distributor trains his own sales force. The remuneration and all other expenses are borne by
the distributor
 Promotion Policy: The company follows a policy for both consumer promotions as well as
trade promotions. The promotions put in extra pressure to push more quantity. The
problem of maintenance of the promotional item is not way too high and does not take in
huge energies and money
9. Distributor ROI
The revenue of average Marketing Distributor is approximately INR 12 lakhs/month. Out of which
around 25% is generated by wholesalers, and rest 75% from retailers. Following is the calculation
for the ROI of the distributor:
 Investment= INR 1000000
 Total Revenue= INR 1200000
 Revenue from Retail= INR 900000
 Revenue from Wholesaler=INR 300000
 Total Margin= 54000
 Margin from Retail=0.05*900000=INR 45000
 Margin from Wholesaler=0.03*300000=INR 9000
 Total Cost/Spent= INR 33300
 Salary of 2 salesman= INR 20000
 Godown Rent= INR 5000
 Supply and Billing cost=INR 7400
 Miscellaneous=INR 900
 Total Operational Cost Subsidy= INR 6250
 Operational Cost subsidy =125 per salesman per day
 Total Profit=INR 26950
 Total Profit=Total Margin-Total Cost/Spent+ Total Operational Cost Subsidy
 ROI=2.7% per month (ROI= Total Profit/Investment)

10. Retailer Survey- Goa

For the purpose of this project we had visited retailers. Given below are some of the details
which we have gathered from them.
 Bicholim
 Retailer: This retailer gets his supplies from Distributor of MONDELEZ. He is satisfied
with the distributor as he gets his supplies from the distributor at his doorstep and does
not need to travel for the supplies which he is sure he will sell during the week. The
distributor comes once in a week for supplying the ordered stock. The stock order is
taken a day before the supply is made. The salesperson of the distributor comes with
brochure of P1, P2 brands and shows the various products to the retailers and as per
retailer’s wish, he/she puts his order. The salesperson also tries to influence the retailers
to buy more variants and push the products to the retailers. The distributor also explains
the consumer and trade promotion strategies by the company to the retailers and ask
them to utilize it to expedite their sales
 Wholesaler
 This wholesaler has a different point of view all together, he serves those places and
caters preferably to retailers whose reach is not covered by the distributor himself. The
distributor visits the wholesaler once a week and gets his supplies in bulk. The whole
 seller gets a higher margin for himself from the distributor and passes some percentage
of it on to the retailers he caters
 Sanquelim
 Retailer: The retailer of Sanquelim was a pharmaceutical shop. The attitude of the
retailer is totally different here, he intends to keep the products as a means to give
change to the customer. He is not interested in the variants of the products but just
wants it to be placed at the front space visible to the customer.
 Contacts:
 Urvashi Sinha- Area Sales Manager, MONDELEZ (through Linked in)

 Retailers List (Bicholim and Sanquelim): The list is mentioned as below: -

Bicholim Sanquelim
AMONKAR STORE SAI STORE (TISK)
AMONKAR SWEET MART SHAFI GEN STORE
ANANDI GENERAL STORE A & A ENTERPRISE
ANANTA MEDICAL AL MADINA GENERAL STORE
ANNAPURNA STORE ANKUSH STORE
BALKRISHNA ALVI AVADHOOT STORE
BARDEZ BAZAAR BALKRISHNA GENERAL STORE
BHAIYA SNACK CORNER BHAGWATI STORE
BHAVANI SWEET MART BHAGYALAXMI STORE
BHIKAJI STORE BHAGYALAXMI SWEET MART
DARSHANA STORE CAFE CENTRAL
DHANLAXMI SWEET MART CHAITANYA MEDICAL
HANUMAN SWEET MART CHANDRAKANT NARVEKAR
HARMALKAR DAIRY CHANEKAR STORE
HEERA DISTRUBUTOR DADA ENTERPRISE
HOTEL KAMAT DANGUI STORE
JAI HANUMAN SWEET MART DATTAKRUPA (MONTANA BAKERY)
JAI SHREE KITALJI SWEET MART DATTAPRASAD STORE
JANTA STORE DATTARAJ GEN STORE
MAHALAXMI STORE DAULATARA MEDICAL
MAHALAXMI SWEETS DEEPBALA STORE
MOZAVAR STORE DINESH STORE
R.Y. MALGAOKAR G STORE FATIMA GENERAL STORE
RAGHUNATH KADKADE GAJANAN STORE
RAHUL BAKERY GET REFRESHED
RAJ STORE GOA BAGAYATDAR
RAJA'S COLD DRINKS GURUDATTA GENERAL STORE
RAJESHWAR SWEET MART HANUMAN COLD DRINK
RAMAKANT ALVI HANUMAN SWEET MART
 RAMDAS GENRAL STORE
SHRI RAM PRAKASH STORE
SHRI SAI STORE
SHRI SAINATH STORE
SHRI SWAMI SAMARTH
SIDHIVINAYAK
SUVIDHA GENERAL STORE
TANAI SUPER MARKET
VIJAYALAXMI GENERAL STORE
VINAYAK KARPE
YESHWANT GENERAL STORE

11. Observations
The points mentioned below were the significant observation noticed during the beats with the
distributor and they are as follows: -
\

 The product portfolio brochure was an important tool to push the products to the retailers
and also, helped them browse through new products or products that they have not
ordered previously. Even though they did not buy those products, it did create awareness
among the retailers.

Fig 10: Retailers browsing through product portfolio brochure

 Fig 12: Products along with their PTR and MRP details in the brochure

 There was no displayer provided by MONDELEZ for their products to the retailers, since last year
(2016). Due to this, shops which lacked/congested shelf space could not accommodate/display the
products well enough resulting into loss of sales.

Fig 14: Displayer provided by competitor (tic tac)

 Distributor himself trained his sales force and was very meticulous in making sure that they
used the product portfolio brochure for receiving the orders from the retailers and also
provided them with backpack to carry the same.
 The selection of Distributors is a very crucial decision for the company. A lot of time and
effort is spent to train them. Also, they are not frequently changed.
Fig 15: Aditya Marketing Distributor