A Study on ITC Limited With Reference To

Its Sales Management

SALES AND DISTRIBUTION

MANAGEMENT
PROJECT PART-l
Submitted By
MBA 2018-20 (Batch – B)

GOVIND N V

Submitted To
DR. LATHA. K
SENIOR ASSISTANT PROFESSOR

Date of Submission: 25 /09/2019

INTRODUCTION
Products which have a quick turnover, and relatively low cost are known as Fast Moving
Consumer Goods (F.M.C.G.). F.M.C.G. products are those that get replaced within a year.
Examples of F.M.C.G. generally include a wide range of frequently purchased consumer
products such as toiletries, soap, cosmetics, tooth cleaning products, shaving products and
detergents, as well as other non-durables such as glassware, bulbs, batteries, paper products,
and plastic goods. F.M.C.G. may also include pharmaceuticals, consumer electronics,
packaged food products, soft drinks, tissue paper, and chocolate bars. India’s F.M.C.G.
sector is the fourth largest sector in the economy and creates employment for more than
three million people in downstream activities. Its principal constituents are Household Care,
Personal Care and Food & Beverages.
Growing awareness, easier access and changing lifestyles have been the key growth drivers
for the sector. The urban segment (accounts for a revenue share of around 55 per cent) is the
largest contributor to the overall revenue generated by the FMCG sector in India However,
in the last few years, the FMCG market has grown at a faster pace in rural India compared
with urban India. Semi-urban and rural segments are growing at a rapid pace and FMCG
products account for 50 per cent of total rural spending.
The industry is highly competitive due to presence of multi-national companies,
domestic companies and unorganized sector. A major portion of the market is captured by
unorganized players selling unbranded and unpackaged products. More than 50 per cent of
the total revenues of FMCG companies come from products worth Rs 10 or less1 .This has
made the proliferation of localized brands which are offered in loose form in small towns
and rural part where brand awareness is low. In last 10 years domestic players are giving
tough com-petition to multinationals; in fact they have outstripped many MNCs in growth
and market cap. Between 2005- 2014 the profit of domestic companies increased by 24%
against 14% increase of multinational companies. Urban India accounts for 66% of total
FMCG consumption, while rural India accounts for the remaining 34%. However, rural
India accounts for more than 40% of the consumption in major FMCG categories such as
personal care, fabric care and hot beverages. As per the analysis by ASSOCHAM,
companies like Hindustan Unilever Ltd and Dabur India generate half of their sales from
rural India while Colgate Palmolive India and Marico constitute nearly 37% respectively.

1|Page
History of F.M.C.G. in India

In India, companies like ITC, H.U.L., Colgate, Cadbury and Nestle have been a dominant
force in the F.M.C.G. sector well supported by relatively less competition and high entry
barriers (import duty was high). These companies were, therefore, able to charge a premium
for their products. In this context, the margins were also on the higher side. With the gradual
opening up of the economy over the last decade, F.M.C.G. companies have been forced to
fight for a market share. In the process, margins have been compromised.

COMPANY OVERVIEW:

ITC is one of India's foremost private sector companies with a market capitalization of
nearly US $ 15 billion and a turnover of over US $ 4.75 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 Business World and
among India's Most Valuable Companies by Business Today. ITC also ranks among India's
top 10 `Most Valuable (Company) Brands', in a study conducted by Brand Finance and
published by the Economic Times.

ITC has a diversified presence in Cigarettes, Hotels, Paperboards & Specialty Papers,
Packaging, Agri-Business, Packaged Foods & Confectionery, Information Technology,
Branded Apparel, Greeting Cards, 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 and Greeting Cards.

As one of India's most valuable and respected corporations, ITC is widely perceived to be
dedicatedly nation-oriented. Chairman Y C Deveshwar calls this source of inspiration "a
commitment beyond the market". In his own words: "ITC believes that its aspiration to
create enduring value for the nation provides the motive force to sustain growing

2|Page
shareholder value. ITC practices this philosophy by not only driving each of its businesses
towards international competitiveness but by also consciously contributing to enhancing the
competitiveness of the larger value chain of which it is a part."
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.

ITC's Agri-Business is one of India's largest exporters of agricultural products. ITC is one
of the country's biggest foreign exchange earners (US $ 2.8 billion in the last decade). The
Company's 'e-Choupal' initiative is enabling Indian agriculture significantly enhance its
competitiveness by empowering Indian farmers through the power of the Internet. This
transformational strategy, which has already become the subject matter of a case study at
Harvard Business School, is expected to progressively create for ITC a huge rural
distribution infrastructure, significantly enhancing the Company’s marketing reach ITC's
wholly owned Information Technology subsidiary, ITC InfoTech India Limited, is
aggressively pursuing emerging opportunities in providing end-to-end IT solutions,
including e-enabled services and business process outsourcing.

ITC's production facilities and hotels have won numerous national and international awards
for quality, productivity, safety and environment management systems. ITC was the first
company in India to voluntarily seek a corporate governance rating.

ITC employs over 21,000 people at more than 60 locations across India. The Company
continuously endeavors to enhance its wealth generating capabilities in a globalizing
environment to consistently reward more than 4, 46,000 shareholders, fulfill the aspirations
of its stakeholders and meet societal expectations. This over-arching vision of the company
is expressively captured in its corporate positioning statement: "Enduring Value. For the
nation. For the Shareholder.”

3|Page
History and Evolution
ITC was incorporated on August 24, 1910 under the name Imperial Tobacco Company of
India Limited. As the Company's ownership progressively Indianised, the name of the
Company was changed from Imperial Tobacco Company of India Limited to India Tobacco
Company Limited in 1970 and then to I.T.C. Limited in 1974. In recognition of the
Company's multi-business portfolio encompassing a wide range of businesses - Fast Moving
Consumer Goods comprising Foods, Personal Care, Cigarettes and Cigars, Branded
Apparel, Education and Stationery Products, Incense Sticks and Safety Matches, Hotels,
Paperboards & Specialty Papers, Packaging, Agri-Business and Information Technology -
the full stops in the Company's name were removed effective September 18, 2001. The
Company now stands rechristened Limited, ‘where ‘ITC’ is today no longer an acronym or
an initialised form.

“ Sustain ITC's position as one of India's most valuable

VISION » corporations through world class performance, creating growing
value for the Indian economy and the Company's stakeholders “

“ To enhance the wealth generating capability of the enterprise in a

MISSION » globalising environment, delivering superior and sustainable
stakeholder value “

ITC Ltd - Business Segments

 Cigarettes
ITC Ltd sells 81% of the cigarettes in India, where 275 million people use tobacco products
and the total cigarette market is worth close to $11 billion. ITC's major cigarette brands
include Wills Navy Cut, Gold Flake Kings, Gold Flake Premium lights, Gold Flake Super
Star, Insignia, India Kings, Classic (Verve, Menthol, Menthol Rush, Regular, Citric Twist,
Ice Burst, Mild & Ultra Mild), 555, Silk Cut, Scissors, Capstan, Berkeley, Bristol, Lucky
Strike, Players, Flake and Duke & Royal.

4|Page
5|Page
6|Page
Sales Force structure of ITC

Sales organizational design refers to the formal and coordinated task of assigning territories
and establishing flows of communication and responsibilities of sales groups and individuals
to serve customers effectively. The developed structure helps the sales people in the
organization to identify their roles, responsibilities and command in the organization. A
proper organizational design helps in enhancing productivity, reduces conflicts, and improves
an individual’s quality of work by identifying the contents of the job, the qualifications and
experience required to undertake the job, and rewards associated with the performance of the
job. The organization of the sales department is based on the nature and size of the
organization, market coverage strategy, complexity of the product offered, and the external
condition of the market and the level of competition. The sales manager in the organization
is the head of sales department and is the representative of the top management in the chain
of command. Divisional, district, and branch heads are appointed to assist the sales manager
in the large organizations. They report to the sales manager and are accountable to the sales
manager for their responsibilities. So, organizational structure is relatively fixed, formally
defined set of relationships among jobs and within the organization. Though organization
structures look rigid, they should respond to the changes in the competitive environment and
should be adaptable to the changing situations.

7|Page
The Hierarchy being followed by ITC is Line structure In a pure line organization, the chief
executive does the decision making and decisions flow down the line for execution. The chief
executive has all the authority over the sales function. Many small sales firms have such a
structure. In these organizations, decisions are made faster, overhead costs are lower, and
sales people need to follow the command. These kinds of organizations are called one-man
show organizations or a typical line organization. But, this kind of person-centric
organization suffers from the daily firefighting operations of the executives, as they have no
time to do sales planning and are busy in achieving sales targets set at the top. As organization
grow in size, some degree of specialization occurs in most of the organizations. Organizations
are designed around geographic areas or territories, functions, products, customers, and a
combination design. The basic objective is to increase the sales force effectiveness and
enhance productivity and allow sales people to grow as customers experts. Specialization
brings challenges of coordination, integration, and higher expenses of sales realizations. Sales
force used here are all generalist and basically there is one district manager under whom there
is one assistant manager and they employ 4-5 area managers or executives and the number
of salesmen depends on the area that they have to cover.

WD employees: Recruitment and Compensation:

Recruitment:

The salespersons of distributors are appointed by the distributor himself in consultation

with ITC officials

Compensation:

• Their fixed salary is paid by the distributor but is reimbursed by the company

• The variable salary of salesmen is decided on his meeting of sales target

Salesmen Evaluation and Compensation:

• The compensation received by salesmen depends upon the target achieved by them

• Targets under consideration:

1. Monthly sales target

8|Page
 2. Product wise sales target

3. Category wise

Control mechanism:

• The performance and work of WD employees is evaluated by company’s officials

weekly

• Their daily sales order is monitored by Area Executive

• The salesmen is given a geographical territory which doesn’t consider sales potential

• Salesmen has to cover 30 outlets each day

• They are given a beat plan for each day

• If a WD employee is not performing then the company can sack him

Role of Salesmen:

• Prospecting- Searching for new outlets

• Targeting- Visiting potential outlets

• Communicating- Informing about products and offers

• An order taker- As per requirement in retail and convenience outlet

• Selling to retailers and convenience outlet

• Servicing- Removal of damaged/expired(DND)products

• Information gathering- About needs/ preferences of customers

• Allocating- Fixed time to each outlets

• Cash collection

9|Page
Role of Sales Management in the Marketing Strategy Development

10 | P a g e
Sales Quotas

Individual sales target figure assigned to each sales unit such a sales person, dealer,
distributor, region, or territory, as required minimum for a specified period (month, quarter,
and year).

Sales quotas may be expressed either in figures (monetary terms) or in number of goods or
services sold (volume terms).

11 | P a g e
12 | P a g e
 Effective Working of Channel Members

Score card for Measurement of WD Performance:

13 | P a g e