For Office Use:

Grade

Marketing Channel Management

Case Analysis

on

“AN IRATE DISTRIBUTOR: THE QUESTION OF

PROFITABILITY”

Submitted by:

Group No.: 6
Manish Kumar (131326)

Prateek Sabharwal (131339)

Saumya Ranjan Biswal (131346)

MBA –FT (2013-2015)

Institute of Management, Nirma University

Date of Submission: 17th March 2015

Executive Summary
The case deals with a distribution issue between the profitability of a distributor and the

demand for increasing investment by the company. The problem identified is increasing the

market share equivalent to the Competitors in Jalgaon Market. There exist three alternatives

which are as - Mr. Kumar should leave the situation as it is, Mr. Kumar should disallow the

distributorship of Sachin Agency, Mr. Kumar should convince Mr. Sachin Mandore for

further investments, and continue with the agency. The decision is to go with the third

alternative as it is mutually beneficial to both the parties.

Problem statement-

Increasing the market share equivalent to the Competitors in Jalgaon Market.

Evaluation of Alternatives-

1. Mr. Kumar should leave the situation as it is

Pros – This would not hamper the relationship between Nutripack and Sachin

Agency. As this relation has been going on for long, it would allow the relationship to

stay intact.

Cons – Nutripack could not tap the potential market share, also this would lead to

decline in the market share in the future.

2. Mr. Kumar should disallow the distributorship of Sachin Agency –

Pros – Disallowing the current distributor would give Mr. Kumar to look out for new

distributors who are willing to work extra and invest more.

Cons – Searching for new distributor would take time. Moreover, the relationship

with Sachin Agency has been long so breaking it might not be a suitable idea. Sachin

Agency has been the biggest distributor in the Central Maharashtra.

 3. Mr. Kumar should convince Mr. Sachin Mandore for further investments, and

continue with the agency –

Pros – This alternative would allow Mr. Kumar to maintain relationship with the

current distributor as well as increase the investment of the same.

Cons – In future, Mr. Sachin Mandore can have similar issues with Nutripack.

Decision-

The third alternative that is “Mr. Kumar should convince Mr. Sachin Mandore for further

investments, and continue with the agency” is the most proffered alternative.

Reasons –

If we consider Mr. Kumar’s Perspective –

 Low Margins High Volumes

o Have a wide reach so as to cover as many villages as possible

 2nd most populous district in Central Maharashtra

o 16% volume share but 8% contribution

 Interior markets need to be serviced well in terms of-

o Extending the credit

o Uniform discounts and schemes

o Regular market visits

Considering Mr. Sachin Mandore’s Perspective –

 Largest distributor in Central Maharashtra

 Veteran in the FMCG distribution business

 Content to meet company’s targets

  Maintains good relationship with major retailers

 Would like certain issues to be addressed before making further investments-

o Pending secondary claims

o Low distributor margin

Convincing Mr. Mandore can be done by the below table –

Monthly Expenses
Unit
Particulars Nos Price Total
Motor Vehicle 2 18000 36000
Salesman
Salary 3 4000 12000
Salesman
Bonus 3 1000 3000
Driver 2 3000 6000
Delivery boy 2 3000 6000
Godown
Keeper 1 3000 3000
Helper 1 3000 3000
Operator 1 7000 7000
Computer 1 500 500
Printer 2 1000 1000
Internet 1 450 450
Telephone 1 500 500
Admin Exp 1 500 500
300
Godown rental 0 7 21000
TOTAL 99950
119940
Annual Expense 0

Monthly Income
Particulars Gross Net
5157000
Turnover 54000000 CP 0
141287.
Margin 4.50% 7
243000
Net Margin 0 3390904
Security Deposit 1000000 4216024
Return 8%
 Net return 80000
251000
Total Return 0

6415424
return 39.12%

 Hence, the return he gets by staying with nutripack is 39.12% as compared to 10.5% from
people’s bank.

 Increased reputation.

 To reduce the problems between Sachin Agency and Retailers, following steps could be
followed –

o Uniform schemes and cash discounts across all outlets of similar value.
o Increase personal visits to retailers.