SDM FinalPdf

ROUTE TO MARKET
1
CAVEATS - I
 MY COURSES IN THIS FORMAT HAVE

GONE AT LEAST 25% SLOWER THAN
CLASSROOM SESSIONS, ALBEIT ON A
VERY SMALL SAMPLE.
2
CAVEATS - II
 GIVEN THE ABOVE, THE TENTATIVE

SESSION PLAN WILL GO AWRY AND
THERE WILL BE AMENDMENTS ON
THE FLY.
 PLEASE TRY NOT TO LAUGH IF OUR
DOG BARKS. I’M DOING THIS FROM
HOME.
3
GROUND RULES - I
 MANY SLIDES WILL END WITH A

QUESTION – YOU ARE ENCOURAGED TO
RESPOND AS THIS ENHANCES MY
LEARNING. AND HOPEFULLY, YOURS.
 PLEASE USE THE CHAT FEATURE TO
RESPOND OR HAND RAISE FEATURE IF
YOU WISH TO SPEAK.
4
GROUND RULES - II
 WHENEVER EXCEL SHEETS ARE BEING

USED, THEY WILL BE MAILED IN ADVANCE
AS WELL AS SHARED IN THE SCREEN.
 THE COURSE OUTLINE HAS LINKS TO
SEVERAL ARTICLES AND VIDEOS. THESE
HAVE BEEN CHOSEN WITH CARE – SO
PLEASE GO THROUGH THEM. AND THE
OUTLINE TOO!
5
WHAT?
 WHAT IS THE ROLE PERFORMED

BY A DISTRIBUTION CHANNEL?
6
THE ROLE
 PRODUCTS OR SERVICES REACH THE

CUSTOMER/CONSUMER. AND
INFORMATION GOES BACK TO THE
ORGANIZATION.
 DATA CAPTURE IS GETTING BETTER
EVEN AS WE SPEAK.
7
THE WAY WE BEHAVE
 LET’S TAKE ITC & TRY AND

UNDERSTAND HOW WE BUY OR
USE THEIR PRODUCTS.
 WHAT ARE THEIR CONSUMER
PRODUCT OFFERINGS?
8
CONSUMER PRODUCTS OF ITC
 CIGARETTES.
 FOODS.
 PERSONAL CARE.
 EDUCATION & STATIONERY.
 MATCHES & INCENSE STICKS.
 LIFESTYLE RETAILING.
9
VIVEL?
 LET’S TAKE A BRAND FROM THEIR

PERSONAL CARE BOUQUET.
 WHAT ARE THE DIFFERENT
SOURCES FROM WHICH WE CAN
BUY OR USE VIVEL SOAP?
10
HOW CAN WE BUY VIVEL?
 THE KIRANA STORE / GENERAL STORE /

PAN SHOP. [GENERAL TRADE]
 A MODERN TRADE STORE – WHAT DOES
THIS MEAN? [MODERN TRADE]
 ORDER IT ONLINE – [E-COMMERCE].
FROM ITCSTORE.IN. OR AMAZON.
11
HOW CAN WE BUY VIVEL?
 USE IT IN THE HOTEL WE ARE STAYING

IN OR EATING IN OR THE CANTEEN /
REST ROOM WE VISIT OOH. [B2B SALES].
THIS CONTRIBUTES A LOT TO THE SALES
OF SPICES, SUGAR, SAUCES, BEVERAGES.
 A PUSHY “FRIEND” PUSHES [NETWORK
MARKETING] – NOT YET FOR VIVEL!
12
HOW WE CAN’T BUY VIVEL!
 THERE IS ANOTHER METHOD BY WHICH

SOME PRODUCTS CAN BE PURCHASED,
BUT DOES NOT APPLY TO VIVEL.
 THE METHOD IS CALLED FRANCHISING.
 WHICH CATEGORIES USE THIS?
13
RTM
 EACH OF THESE ARE CHANNELS WHICH

CAN BE USED TO REACH THE
CONSUMER. HENCE ARE A ROUTE TO
MARKET [RTM].
 MANAGING EACH CHANNEL REQUIRES
DIFFERENT SKILLS. WHAT ARE THESE
SKILLS? LET’S TRY AND WORK IT OUT.
14
PURCHASING STYLES – B2C
 TO UNDERSTAND THESE SKILLS, WE

FIRST NEED TO ANSWER AN IMPORTANT
QUESTION: WHAT ARE THE
DIFFERENCES IN OUR PURCHASING
METHOD OR STYLE IN GENERAL TRADE
VS. MODERN TRADE VS. E-COMMERCE?.
15
 OUR STYLES ARE SHAPED BY ACCESS.

 HENCE, OUR PURCHASE STYLES ARE:
– ASK [GT] VS.
– PHYSICAL BROWSE [MT] VS.
– SCREEN BROWSE [E-COMM].
 ERGO?
16
 ROLE OF TOP OF MIND.

 ROLE OF RETAILER ADVOCACY.
 TENDENCY AND INCLINATION TO
COMPARE.
17
DIFFERENT SKILLS – GT
 GT: REACH + VISIBILITY = COVERAGE.

 RETAILER ADVOCACY IS OVERT.
 TOM RECALL AND VISUAL
MERCHANDISING: VERY IMPORTANT.
18
DIFFERENT SKILLS – MT/E-COMM
 MT AND E-COMMERCE: THE CONSUMER

HAS A HIGHER CHANCE TO COMPARE.
HENCE, VISIBILITY, BRAND STRENGTH,
OFFERS.
 RETAILER ADVOCACY IS COVERT. SEO:
E-COMMERCE. SHELF LOCATION IN MT.
19
PURCHASING STYLE – B2B
 WHAT IS THE MOST SIGNIFICANT

DIFFERENCE BETWEEN A B2B
TRADER AND A B2C BUYER?
20
 IN B2C THE BUYER BUYS FOR

HERSELF/HIMSELF OR SOMEBODY
KNOWN. USUALLY A FAMILY MEMBER.
 FOR INSTANCE, A MOBILE HANDSET IS A
WAY OF EXPRESSING YOURSELF.
WHATEVER THAT MEANS.
21
 A B2B TRADER BUYS TO RE-SELL. VERY

LITTLE SPACE FOR EMOTION.
 A MOBILE HANDSET IS A “DABBA”
WHICH IS TO BE SOLD QUICKLY.
 ERGO?
22
 A B2B TRADER PAYS ENORMOUS

ATTENTION TO:
– TRADE TERMS [MARGINS / CREDIT /

DELIVERY]
– QUALITY OF SERVICE.
23
DIFFERENT SKILLS – B2B
 B2B: KEY ACCOUNT MANAGEMENT FOR

LARGER BUYERS. WHO BUYS THE
LARGEST QUANTITY OF TEA BAGS IN
INDIA?
 B2B E-COMMERCE FOR SMALLER
BUYERS [HORECA]. WILL BE COVERED
IN A FEW SLIDES FROM NOW.
24
DISTRIBUTION FOCUS
 THE DISTRIBUTION FOCUS FOR EACH

BRAND SOLD BY ITC DEPENDS ON THE
RELATIVE IMPORTANCE OF EACH
CHANNEL BY WAY OF CONTRIBUTION
TO SALES [SHORT TERM AND LONG
TERM]. THIS ALSO DICTATES THE
ALLOCATION OF FUNDS.
25
DISTRIBUTION FOCUS
 FOR INSTANCE, HOW WILL THE FOCUS

OF DISTRIBUTION AND FUND
ALLOCATION TO DIFFERENT CHANNELS
VARY BETWEEN AASHIRVAAD ATTA
AND CANDYMAN – TWO FOOD BRANDS
OF ITC?
26
DISTRIBUTION FOCUS
 AASHIRVAAD ATTA: PREDOMINANTLY

GT [ABOUT 85% - MAINLY KIRANA AND
GENERAL STORES]
 MT & E-COMM [B2C] WILL ACCOUNT FOR
MOST OF THE REST – BUT GROWING.
 VERY LITTLE FOR B2B.
27
DISTRIBUTION FOCUS
 CANDYMAN – ALMOST 95% IN GT – WITH

MORE THAN HALF IN PAAN SHOPS.
 MOST OF THE REST IN B2B E-COMMERCE
[FOR B2B IN HORECA]. COVERED LATER!
 A VERY SMALL PORTION IN MT AND B2C
E-COMMERCE.
 THIS MIX WILL BE CONSTANT!
28
THE E-COMMERCE LANDSCAPE
 LET’S LOOK AT THE E-COMMERCE

LANDSCAPE.
 AS MENTIONED EARLIER, THESE CAN BE
B2C OR B2B.
 WHAT ARE THE TWO TYPES OF B2C E-
COMMERCE?
29
B2C E-COMMERCE LANDSCAPE
 THIRD PARTY E-COMMERCE [AMAZON,

FLIPKART, BIG BASKET, GROFERS +
SPECIALTY STORES SUCH AS MYNTRA.
EXPECT MORE ACTION HERE IN THE
SPECIALTY STORES].
30
 CAPTIVE E-COMMERCE [TEABOX,

HUMARASHOP OF HUL, ITCSTORE.IN,
BOMBAY SHAVING COMPANY].
 PROS AND CONS OF THE TWO OPTIONS?
31
 THIRD PARTY E-COMMERCE: YOU ARE

ONE AMONG MANY BRANDS. IN A
MEDIUM WHERE COMPARISON IS EASY.
 BUT CHANCES OF MUCH HIGHER
EYEBALLS.
 POTENTIAL FOR WIDER COVERAGE.
32
 CAPTIVE E-COMMERCE: YOUR BRANDS

ONLY, BUT MUCH LOWER EYEBALLS.
 MUCH LOWER COVERAGE AREA.
PLEASE SEE ARTICLE SPECIFIED FOR
SESSION 14, PAGES 48-50]. THIS
DESCRIBES THE HUL E-COMMERCE
MODEL [HUMARASHOP].
33
B2B E-COMMERCE LANDSCAPE
 WHAT IS CASH & CARRY? [PLEASE SEE

VIDEO SPECIFIED FOR SESSION 4].
34
 CASH & CARRY IS A WHOLESALE

FORMAT [METRO, WALMART].
 CASH & CARRY FORMATS ARE B2B AND
CAN ONLY SELL TO BUSINESSES.
 THIS INCLUDES RETAILERS IN
GENERAL TRADE.
35
 FDI IN CASH & CARRY: OK IN INDIA.

ALSO FOR SINGLE BRAND RETAIL [IKEA]
BUT NOT FOR MULTIBRAND RETAIL. WE
WILL DISCUSS THIS IN A FEW SLIDES
FROM NOW.
 B2B E-COMMERCE IS A LOGICAL
EXTENSION FOR CASH & CARRY.
36
 PURE PLAY B2B COMMERCE PLAYERS

[INDIAMART] ARE USUALLY IN SPECIFIC
VERTICALS. ALIBABA IS AN EXCEPTION.
 WE ALSO HAVE AMAZON AND
WALMART [OTHER THAN METRO].
 HERE TOO, WE HAVE CAPTIVE AND
THIRD PARTY E-COMMERCE.
37
MODERN TRADE LANDSCAPE
 WE NOW MOVE TO MODERN TRADE.

 WHAT ARE THE DIFFERENT MODERN
TRADE FORMATS?
38
 MODERN TRADE HAS TWO PARTS AND

NO, I AM NOT A RELIANCE AGENT, BUT
CAN’T FIND BETTER EXAMPLES!:
– F&G [FOOD & GROCERIES:RELIANCE

FRESH] – ABOUT 35% OF SALES.
– SPECIALTY – EVERYTHING ELSE
[RELIANCE TRENDS, FOOTPRINT, JEWELS,
DIGITAL ETC.]
39
 PLEASE READ THE FIRST ARTICLE

SPECIFIED FOR SESSION 12. THIS GIVES
AN IDEA OF THE MODERN TRADE
LANDSCAPE IN INDIA – A SOMEWHAT
MACRO VIEW.
40
GENERAL TRADE LANDSCAPE
 THIS IS THE HEART AND SOUL OF

DISTRIBUTION IN INDIA TODAY – BUT
CHANGING QUICKLY.
 THESE ARE WHAT ARE CALLED MOM
AND POP STORES IN USA.
 OR STORES WHICH ARE CLOSE TO YOU
[PHYSICALLY AND MENTALLY].
41
GENERAL TRADE
 THE MOST COMPLEX, BEWILDERING &

FASCINATING OF CHANNELS. IT HAS THE
FOLLOWING COMPONENTS, JUST LIKE
MODERN TRADE:
– F&G [FOOD & GROCERIES – MORE ON THIS,

ABHI PICTURE BAKI HAI!] – ABOUT 55%.
– SPECIALTY – SAME AS MODERN TRADE.
42
GENERAL TRADE [F&G]
 THIS IS THE BOUQUET FROM WHICH WE

BUY OUR FOOD & GROCERIES:
– KIRANA SHOPS [AS WELL AS VARIETY

STORES].
– CHEMIST STORES OR MEDICINE SHOPS.
– PAAN SHOPS.
– HTS [OR HOT TEA SHOPS]. [CCD – CHACHA’S
CHAI DUKAN]
43
GENERAL TRADE [SPECIALTY]
 THIS IS THE BOUQUET FROM WHICH WE

BUY EVERYTHING OTHER THAN FOOD &
GROCERIES:
– WATCH STORES, CLOTHING SHOPS,

CONSUMER ELECTRONICS STORES, MOBILE
STORES, FURNITURE SHOPS, VEHICLE
ACCESSORIES, GIFT SHOPS ETC.
44
THE GT CHALLENGE (F&G)
 WHY IS GENERAL TRADE FOR FOOD

& GROCERIES – OR FMCG - A REAL
CHALLENGE IN INDIA?
45
INDIAN GT (F&G)
 THE TOTAL NUMBER OF FOOD &

GROCERY OUTLETS IN GENERAL TRADE
IN INDIA IS 7.88 MILLION [2012 –
NIELSEN DATA] CATERING TO A
POPULATION OF 1,210 MILLION [2010 –
CENSUS DATA].
46
INDIAN GT (F&G)
 IN OTHER WORDS AN OUTLET CATERS

TO 154 PERSONS. EVEN IF YOU ADJUST
FOR POPULATION GROWTH FROM 2010-
12, THE NUMBER WILL BE MARGINALLY
HIGHER.
 ERGO?
47
INDIAN GT (F&G)
 SMALL IS A BIG WORD TO DESCRIBE

THEM!
 80% OF THESE RETAIL OUTLETS HAVE A
TURNOVER OF LESS THAN RS. 20,000
PER MONTH. THIS ACCOUNTS CLOSE TO
90% OF F&G OR FMCG SOLD IN INDIA.
 WHY IS THIS HAPPENING?
48
INDIAN GT (F&G)
 IN INDIA, FOR MANY, OPENING A RETAIL

OUTLET IS THE LAST REFUGE OF THE
OTHERWISE UNEMPLOYABLE.
 ERGO, FAIL IN EVERY COMPETITIVE
EXAM AND THEN SETTLE DOWN TO
OPENING A RETAIL OUTLET.
49
INDIAN GT (F&G)
 WHICH IS WHY FDI IN MULTIBRAND

RETAIL IS VIRTUALLY IMPOSSIBLE IN
INDIA.
 AS THIS WOULD CONVERT DISGUISED
UNEMPLOYMENT TO COMPLETE
UNEMPLOYMENT – WITH GRAVE SOCIAL
IMPLICATIONS.
50
INDIAN GT (F&G)
 THE CURRENT DARLING OF THE WORLD

– CHINA – HAS ABOUT 2 MILLION
COMPARABLE OUTLETS. WITH A
SIMILAR POPULATION [NOT
ACCOUNTING FOR THOSE LOST IN THE
LATEST SKIRMISH BY BOTH SIDES]
 ERGO? AND WE ARE NOT TALKING
ABOUT BORDER SKIRMISHES!
51
INDIAN GT (F&G)
 THE TWO MOST IMPORTANT COSTS OF

DISTRIBUTION IN GT ARE SALARIES OF
LAST MILE SALESMEN AND THE LAST
MILE TRANSPORTATION COST (ALSO
CALLED SECONDARY FREIGHT)
52
INDIAN GT (F&G)
 THIS WILL BE 4 TIMES HIGHER IN INDIA

VS. CHINA DUE TO THE LOWER
TRANSACTION TICKET SIZES.
 WHAT IS THE OTHER CHALLENGE?
53
INDIAN GT (F&G)
 DUE TO LOW CASH IN HAND (OR

ANYWHERE!), RETAILERS ARE HUGE
CREDIT RISKS.
 HENCE, GETTING AVAILABLE IS IN ITSELF A
DIFFICULT TASK.
54
BACK TO ITC!
 LET’S GO BACK TO ITC AND EXAMINE

THEIR CHALLENGES FOR GT.
 CONSIDER THE FOLLOWING PRODUCTS:
SAVLON ANTISEPTIC, CLASSMATE TEXT
BOOKS, AIM MATCHBOXES AND DARK
FANTASY BISCUITS. WHAT ARE THE GT
CHANNELS?
55
BACK TO ITC!
 SAVLON ANTISEPTIC: MEDICAL AND

KIRANA/GENERAL STORES.
 CLASSMATE TEXT BOOKS: STATIONERY
STORES AND KIRANA/GENERAL STORES.
56
BACK TO ITC!
 AIM MATCHBOXES: PAAN SHOPS –

CLOSE TO 98%.
 DARK FANTASY BISCUITS: HIGHER END
KIRANA/GENERAL STORES. UNLIKE, SAY
PARLE G [WHICH WOULD HAVE PAAN
AND HTS SHOPS]
 AND EVERYBODY TRIES TO GET INTO
PAAN SHOPS!
57
THE NEW THORN IN THE FLESH
 MODERN TRADE AND E-COMMERCE

[BOTH B2C AND B2B] HAVE POSED A
DIFFERENT PROBLEM TO TRADITIONAL
MARKETERS.
 WHAT IS THIS PROBLEM?
58
THE NEW THORN IN THE FLESH
 PRIVATE LABELS OR STORE BRANDS.

 THESE ARE BRANDS LAUNCHED BY THE
MODERN TRADE OR E-COMMERCE
COMPANIES [LOOK NO FURTHER THAN
KINDLE OR RELIANCE NOODLES].
59
THE TRAJECTORY
 PLEASE READ THE SECOND ARTICLE

PRESCRIBED FOR SESSION 1.
 THIS ARTICLE TRACES THE IMPACT OF
COVID ON SHOPPER HABITS – AND THE
CORRESPONDING IMPACT ON THE
TRAJECTORY OF THE DIFFERENT
ROUTES TO MARKET.
60
THE END...
 DECK 1 IS OVER AND A BIG THANK YOU

FOR YOUR PATIENCE!
 THIS WILL BE SENT TO ALL OF YOU.
61
VARIABLES IMPACTING
SALES AND DISTRIBUTION
1
THE FOUNTAINHEAD
 LIKE ANY OTHER MARKETING

DECISION, DISTRIBUTION
DECISIONS FLOW FROM A
DOMINANT VARIABLE. AND THAT
IS: CONSUMER BUYING BEHAVIOR.
2
ANCILLARY FACTOR
 GIVEN THAT THIS IS DISTRIBUTION,

WHAT OTHER VARIABLE WILL
AFFECT DISTRIBUTION DECISIONS?
3
ANCILLARY FACTOR
 SINCE DISTRIBUTION INCLUDES

LOGISTICS AND TRANSPORTATION
THE PHYSICAL NATURE OF THE
PRODUCT BECOMES IMPORTANT.
4
VARIABLES
 LET US LOOK AT SOME VARIABLES

WHICH AFFECT DISTRIBUTION
[CONSUMER BUYING BEHAVIOR
AND PRODUCT DIMENSIONS] – AND
THE IMPACT OF EACH VARIABLE.
5
VARIABLES 1& 2
 NUMBER OF CONSUMERS AND

THEIR GEOGRAPHIC DISPERSION.
 EXAMPLES OF CATEGORIES WHICH
HAVE LARGE NUMBER OF
CONSUMERS WHO ARE WIDELY
DISPERSED?
6
VARIABLES 1& 2
 SOAPS.
 INSTANT NOODLES.
 PREPAID TELECOM SERVICES.
 SCHOOL UNIFORMS.
 TWO WHEELERS [21 MILLION UNITS IN
2018-19. SOURCE: STATISTA]
 DISTRIBUTION IMPLICATIONS?
7
IMPACT OF VARIABLES 1& 2
 LARGER THE NUMBER AND GREATER

THE DISPERSION, MORE IS THE
NECESSITY TO USE INTERMEDIARIES.
 APOLLO TYRES: OEM VS. REPLACEMENT
 THE CHANNEL WILL, THUS, HAVE MANY
LAYERS.
 TRANSPORTATION & LOGISTICS NEED
TO BE WELL ORGANISED.
8
VARIABLE 3
 HIGHER FREQUENCY OF
PURCHASE.
HAVE HIGHER FREQUENCY OF
PURCHASE?
9
VARIABLE 3
 TOOTHPASTE VS. T SHIRTS VS. COLOR

TV?
 WHY ARE FMCG PRODUCTS CALLED
THUS?
 WITHIN FMCG, 5 KG. EDIBLE OIL VS.
CIGARETTE (BY A STICK BUYER)?
 DISTRIBUTION IMPLICATIONS?
10
IMPACT OF VARIABLE 3
 THE HIGHER THE FREQUENCY OF

PURCHASE, MORE IS THE TRANSPORT
INTENSITY IN THE “LAST MILE”.
 THE HIGHER THE FREQUENCY, HIGHER
IS THE TENDENCY TO USE A GT OUTLET
RATHER THAN MT OUTLETS/E-COMM
[LOW VOLUME SKUS ARE AN EXAMPLE]
11
VARIABLE 4
 TENDENCY TO POSTPONE
PURCHASE (EXTENT OF FELT
NEED).
 EXAMPLES OF CATEGORIES WITH
LOW AND HIGH FELT NEED?
12
VARIABLE 4
 LOW FELT NEED:

– LIFE INSURANCE POLICY.
– FIRE EXTINGUISHER.
 HIGH FELT NEED:
– ANY ADDICTION [CONNECTIVITY,
CIGARETTES, ELECTRICITY] [HAND
SANITISERS – 5TH P OF MARKETING!]
– DISTRIBUTION IMPLICATIONS?
13
 FOR CATEGORIES WITH LOW FELT NEED:

 REGULAR REINFORCEMENT.
 FIELD FORCE BECOME CRITICAL.
 ATTEMPT BY MARKETER TO USE “EXPERTS”
AS FIELD FORCE – LIKE BANCASSURANCE,
NETWORK MARKETING.
 WHAT ABOUT HIGH FELT NEED?
14
 FOR CATEGORIES WITH HIGH FELT

NEED:
 DISTRIBUTION IS NOT A CONSTRAINT AS

THE CONSUMER SEEKS YOU OUT!
BRANDING IS MORE CRITICAL.
15
VARIABLE 5
 LOW LEVEL OF FAMILIARITY /

KNOWLEDGE ABOUT THE PRODUCT
(OF THE BUYER).
 EXAMPLES OF SUCH CATEGORIES?
16
VARIABLE 5
 DEHUMIDIFIER VS. AIR CONDITIONER.

 WATER PURIFICATION OVER THE YEARS.
 QUINOA, VEGETABLE SMOOTHIES AND
PROBIOITIC FOODS.
 TUITION TEACHER VS. BYJU’S.
 IMPACT OF PROMOTION IS KNOWN, BUT
WHAT’S THE IMPACT ON DISTRIBUTION?
17
 QUALITY OF FIELD FORCE BECOMES

CRITICAL HERE. THIS CAN BE:
– SALES PROMOTERS IN MODERN TRADE AND

LARGER GT STORES.
– USING SHOP IN SHOP. EBO VS. MBO.
– DOOR TO DOOR SALES [BYJU’S. PURE IT].
18
 THE IMPLICATION OF THIS VARIABLE IN

B2B PURCHASES WILL BE DEALT WITH
IN DETAIL IN THE SESSIONS DEDICATED
TO B2B SALES & DISTRIBUTION.
19
VARIABLE 6
 DEGREE OF BRAND LOYALTY.

 EXAMPLES OF CATEGORIES WITH
HIGH BRAND LOYALTY?
20
VARIABLE 6
 CIGARETTES.
 NEWSPAPERS.
 EDIBLE OILS.
 SHAMPOOS.
 INDIVIDUAL BRANDS ALSO EXIST
[APPLE, COLGATE, GILLETTE]
 IMPACT ON DISTRIBUTION?
21
 TRADE TERMS AND INCENTIVES TO

CHANNEL MEMBER / FIELD FORCE
RESPECTIVELY.
 IMPORTANCE OF POINT OF SALE VISUAL
MERCHANDISING [VM]. [GT AND MT].
AND POSITION ON THE SHELF [MT].
 FOR FMCG, ROLE OF WHOLESALER [GT].
22
VARIABLE 7
 PURCHASED ON IMPULSE.
 EXAMPLES OF SUCH CATEGORIES?
23
VARIABLE 7
 COOL DRINKS.
 TOFFEES, CANDIES AND CHEWING GUM.
 CHIPS AND SAVOURIES.
 ACCESSORIES.
 SOCKS AND COMPLIMENTARY GOODS!
 IMPACT ON DISTRIBUTION?
24
 LOWER TENDENCY IN E-COMM, SO THEY

TRY AND FORCE IT.
 IMPORTANCE OF AVAILABILITY. [GT]
AND VISIBILITY. JO DIKHTA HAI WOH
BIKTA HAI. EYE LEVEL = BUY LEVEL.
25
 IN MODERN TRADE, CASH IN WHEN THE

CONSUMER IS IDLE.
 TRANSPORTATION AND LOGISTICS FOR
LAST MILE BECOME CRITICAL. AS COST
OF STOCKOUT IS VERY HIGH.
26
VARIABLE 8
 LEVEL OF INVOLVEMENT [LOI].

 WHAT IS LOI A FUNCTION OF?
 EXAMPLES OF HIGH AND LOW LOI
CATEGORIES?
27
VARIABLE 8
 IN A PHRASE: RISK AVERSION. AND

HENCE, INFORMATION SEARCH.
 LOW LOI: LOWER VALUE AND LOW
MEAN TIME BETWEEN PURCHASES –
FMCG, CONSUMER NON DURABLES.
28
VARIABLE 8
 HIGH LOI: HIGHER VALUE AND HIGH

MEAN TIME BETWEEN PURCHASES –
CONSUMER DURABLES, LUXURY
CATEGORIES.
 IMPACT ON THE DISTRIBUTION
CHANNEL?
29
 HIGHER THE LOI, THE LOWER THE

IMPORTANCE OF AVAILABILITY.
 THE KEY HERE IS WORD OF MOUTH
– WHICH IS A PROMOTION ISSUE.
30
 FOR HIGH LOI CATEGORIES, SUPPLY

OF INFORMATION BECOMES
IMPORTANT AS CONSUMER GOES
THROUGH ELABORATE INFORMATION
SEARCH. HENCE, QUALITY OF FIELD
FORCE AND THEIR CONSTANT
RESKILLING.
31
VARIABLE 9
 PURCHASED AS A “BASKET OF
GOODS”.
 EXAMPLES OF CATEGORIES
FALLING IN A BASKET?
32
VARIABLE 9
 PAINTS, NAILS, LOCKS, TILES AND PIPES.

 SOAPS, KETCHUP AND PULSES.
 WHERE DO WE BUY BABY SOAPS?
 ANTACIDS, GLUCOSE AND KARELA JUICE.
 GREETINGS CARDS, PERFUMES AND FANCY
CHOCOLATES.
 IMPACT ON THE DISTRIBUTION CHANNEL?
33
 WE HAVE TO BE AVAILABLE
WHEREVER THE OTHER ELEMENTS
OF THE BASKET ARE AVAILABLE.
34
VARIABLE 10
 SPEED AND COMPLEXITY OF

DECISION MAKING PROCESS –
MAINLY FOR B2B SITUATIONS.
 EXAMPLES OF SITUATIONS WHICH
HAVE A COMPLEX DECISION
MAKING PROCESS WHICH IS SLOW?
35
VARIABLE 10
 STRAIGHT VS. MODIFIED REBUY VS. NEW

TASK.
 FOR AN EDUCATIONAL INSTITUTION,
PURCHASE OF ANSWER SHEETS VS. A NEW
TYPE OF PROJECTOR VS. AN AIS
INTEGRATING ALUMNI.
36
 LOWER THE SPEED AND HIGHER THE

COMPLEXITY OF DECISION MAKING
PROCESS, GREATER THE IMPORTANCE
OF THE FIELD FORCE.
 B2B E-COMMERCE HAS MADE INROADS
INTO STRAIGHT REBUYS [HORECA
EXAMPLE]. DITTO FOR B2C E-COMM.
37
VARIABLE 11
 PRESENCE OF EXPERT INFLUENCER

IN THE DECISION MAKING PROCESS.
 EXAMPLES OF SITUATIONS WHICH
HAVE AN EXPERT INFLUENCING THE
CONSUMERS BUYING DECISION?
38
VARIABLE 11
 MEDICINES.
 HOUSE WIRING.
 ENGINE OIL.
 INVESTMENT ADVICE.
 FLOOR TILES.
39
 ROLES AND PROFILES OF FIELD

FORCE VARY.
 HENCE, WE MAY NEED TO HAVE
TWO SETS OF FIELD FORCE.
40
VARIABLE 12
 ELEMENT OF RISK AVERSION EXISTS

– A COROLLARY OF HIGH LOI. A
SPECIAL CASE FOR CONSUMER
DURABLES SOLD IN MBO.
 WHAT ARE EXAMPLES OF EBO?
41
VARIABLE 12
 WORLD OF TITAN.
 STUDDS HELMETS AND ACCESSORIES.
 LEVI’S.
 CEAT SHOPPE.
 AMUL PARLOUR.
 VIVO.
 WHICH BRANDS CAN DO THIS? UPSIDES
AND DOWNSIDES FOR RETAILER?
42
VARIABLE 12
 BRANDS WHICH HAVE STRONG LOYALTY

AND CAN GENERATE ADEQUATE REVENUE
FOR THE RETAILER [FRANCHISEE]
 DOWNSIDE FOR RETAILER IS THAT ONLY
LOYAL CONSUMERS WILL COME – NO
FENCE SITTERS. UPSIDE IS BETTER TRADE
TERMS AND MARKETING SUPPORT.
43
VARIABLE 12
 LET’S LOOK AT A MBO SELLING CONSUMER

DURABLES SUCH AS CONSUMER
ELECTRONICS, WHITE GOODS, MOBILE
HANDSETS ETC.
 MODERN TRADE SUPERMARKETS [IN THE
FLOOR BELOW THE FOOD COURT, WHICH IS
ON THE TOP FLOOR] ARE A GOOD EXAMPLE.
44
 CHANNEL MEMBER IN CASE OF A

MULTI BRAND OUTLET (MBO) CAN
“UNSELL” A BRAND AND HENCE, IS
A HYGIENE FACTOR.
45
VARIABLE 13
 PERISHABILITY.
ARE HIGHLY PERISHABLE?
46
VARIABLE 13
 DAIRY PRODUCTS.
 MEAT PRODUCTS.
 ID BATTER.
 FRUITS & VEGETABLES.
 BREAD.
 NEWSPAPERS! NO REFRIGERATION!!
47
 THE DIMENSION OF “SPEED” IN THE

TRANSPORTATION & LOGISTICS
NETWORK ASSUMES GREAT
IMPORTANCE.
 USAGE OF IT AND ANALYTICS IN
DEMAND FORECASTING. THIS AFFECTS
PRODUCTION AND INVENTORY
MANAGEMENT.
48
VARIABLE 14: PREAMBLE
 WHICH CATEGORIES HAVE

SEASONALITY ASSOCIATED WITH
IT? WHAT IS SEASONALITY?
49
 SEASONS OF THE YEAR AND FESTIVALS

SPIKE DEMAND FOR SPECIFIC
CATEGORIES.
 JEWELLERY, COOL DRINKS, GIFT ITEMS
UMBRELLAS, WARM CLOTHES, FOOD &
AIR COOLERS ARE EXAMPLES.
50
 THIS GIVES A SALES SKEW TAKING THE

YEAR AS THE UNIT OF TIME.
 WHAT IF WE TAKE THE MONTH AS THE
UNIT OF TIME?
51
 THE FIRST WEEK OF THE MONTH

TYPICALLY ACCOUNTS FOR MUCH MORE
THAN 25% OF SALES IN MANY CATEGORIES
[FOOD & GROCERIES] AND GEOGRAPHIES
[HIGH PERCENTAGE OF SALARIED
MEMBERS].
 WHAT IF WE TAKE THE DAY AS THE UNIT
OF TIME?
52
VARIABLE 14
 TIME BAND ASSOCIATED WITH

THE PURCHASE OF THE PRODUCT.
 WHICH CATEGORIES HAVE A TIME
BAND ASSOCIATED WITH THE
PURCHASE?
53
VARIABLE 14
 BREAD.
 MILK.
 NEWSPAPERS.
 PLEASE NOTE THAT THESE ARE ALSO
PERISHABLE ITEMS.
54
 VERY HIGH TRANSPORTATION AND

INFRASTRUCTURE REQUIREMENTS
NEEDED FOR THE LAST MILE [GT – AND
THESE ARE PREDOMINANTLY GT
PRODUCTS]. THIS GETS MODERATED IN
MT.
55
 CONSUMERS WANT DOOR DELIVERY.

 POSSIBILITY OF IDLE CAPACITY USAGE
EXISTS.
56
VARIABLE 15
 NEGATIVE OR POSITIVE REINFORCING?

 EXAMPLES OF NEGATIVE AND
POSITIVE REINFORCING PRODUCTS?
57
VARIABLE 15
 A NEGATIVE REINFORCING PRODUCT

IS PURCHASED TO REDUCE OR AVOID
A PROBLEM [DETERGENT, MOSQUITO
REPELLANT, CAR BATTERY, WASHING
MACHINE, DISH WASHER].
58
VARIABLE 15
 A POSITIVE REINFORCING PRODUCT

IS PURCHASED FOR SENSORY
GRATIFICATION [AC, PLASMA TV,
PERFUMES, MOBILE HANDSET,
CHOCOLATES].
59
VARIABLE 15
 THIS IS A FUNCTION OF TIME [MARUTI 800].

 WHAT IS THE IMPACT OF THIS ON PRICE
ELASTICITY?
 DEOS AND SHAVING GEAR.
60
 SHOPPING “EXPERIENCE” BECOMES

MORE IMPORTANT (AMBIENCE ETC.)
FOR POSITIVE REINFORCING PRODUCTS–
OF RELEVANCE IN MODERN TRADE.
 5 STAR RESTAURANT VS. DHABA.
61
VARIABLE 16
 VALUE/VOLUME RATIO OF THE

PRODUCT.
 EXAMPLES OF BRANDS WITH LOW
VALUE/VOLUME RATIO?
62
VARIABLE 16
 NIRMA DETERGENT.
 LOCAL ATTA.
 BUDGET VALUE RICE.
CHANNEL FOR LOW VALUE /
VOLUME PRODUCTS?
63
 TRANSPORT COST SENSITIVITY IS

HIGHER.
 COST OF STORAGE IS HIGHER.
64
 ROI PER SQUARE FT. FOR RETAILER

IS LOWER – AND WILL DETERMINE
HIS AFFINITY FOR THE PRODUCT.
 DIAMONDS TO LONDON!
 È-COMMERCE: ATTA VS. DOMINO’S.
65
VARIABLE 17
 HIGH BRAND PARITY INDEX (OR

COMMODITY PRODUCTS).
 EXAMPLES OF COMMODITY
CATEGORIES?
66
VARIABLE 17
 CANDLES.
 MATCHBOXES.
 DUST BINS.
 BUCKETS AND MUGS.
CHANNEL?
67
 DISTRIBUTION AND PRICE ARE

THE DIFFERENTIATORS FOR
COMMODITIES. HENCE, ALL
ASPECTS OF THE CHANNEL
BECOME CRITICAL.
68
VARIABLE 18
 TARGET AUDIENCE IS SHARPLY

DEFINED .
69
 SALES AND MARKETING ARMS

HAVE TO WORK CLOSELY USING
DIGITAL MARKETING.
70
SHARPLY DEFINED
TARGET GROUPS
1
A CASE STUDY
 LET’S TAKE A CASE STUDY OF A

COMPANY WHICH HAS DEVELOPED AN
APP USING PREDICTIVE ANALYTICS FOR
FORECASTING INVENTORY.
 THIS WORKS FOR COMPANIES WITH
MANY SKUS ACROSS SEVERAL
GEOGRAPHIES USING A MULTI LAYERED
CHANNEL.
2
A CASE STUDY
 YOU’RE IN CHARGE OF THE SALES TEAM

FOR THIS APP.
 WHICH INDUSTRIES WILL BE THE
LIKELY BUYERS?
3
THE TARGET COMPANIES
 CONSUMER PRODUCT COMPANIES.

 YOU’RE UNLIKELY TO HAVE A
COMPANY MAKING NUCLEAR
REACTORS AS A BUYER!
4
TARGET AREA
 LET’S ASSUME THAT MARKETING AND

SELLING OPERATIONS ARE TO START IN
MUMBAI.
 AND YOU’RE USING LINKEDIN AS THE
MEDIUM FOR YOUR MARKETING AND
SALES.
5
THE MODUS OPERANDI
 LET’S HAVE A LOOK AT THE LINKEDIN

CAMPAIGN MANAGER DASHBOARD.
 AND ANALYSE HOW IT CAN BE USED
FOR THE ENTIRE SALES FUNNEL.
6
Understanding the
Indian Consumers
A look at the Indian demographics
Traditional definition of “Rural” as per Census:

POPULATION of INDIA AS PER 2011 CENSUS • “Rural”
125.03 crs
 75% of earning population is involved in
“agriculture-related” occupation
URBAN  Population density is below 5000 per sq km

RURAL
(~69%) (~31%)
 Under Panchayats
POPULATION OF INDIA AS OF TODAY (Apr 12, 2021):
139.07 crs Definition of “Urban” as per Census:
Source: https://www.worldometers.info/world-
population/india-population/
• Whatever is “NOT Rural” is Urban!
A look at the Indian demographics
13% Purchase pattern, by

• GT??
18%
• MT??
• E-Comm??
69%
Volume of FMCG sold by GT, MT, E-Comm at
an “All India” level
This is what we were used to, till a few years back
2016-17
General Trade 95%
Modern Trade ~5%
E-Comm Negligible
Now
2019-20 2020 2020-21
(Pre-lockdown) (During lockdown) (Post-lockdown)
General Trade 88.5% 94% 88%
Modern Trade 10% 2.5% 8.5%
E-Comm 1.5% 3.5% 3.5%
Volume of FMCG sold by GT, MT, E-Comm at
an “All India” level
Currently
General Trade 88%
Modern Trade 8.5%
E-Comm 3.5%
The E-Comm delivery logistics will be negligible in Rural India
So, in Urban India, Volume of FMCG sold through E-Comm > 10%
So, in large metros, Volume of FMCG sold through E-Comm… even greater
Metrics related to GT, MT, E-Commerce
Data and Metrics with the Brand teams
Brand teams would have the following data with them
• Offtake volumes, Shares & Distribution-related data (Source: Nielsen’s Retail Audit)
• Brand penetration, Retention, Brand switching (Source: Kantar World Panel)
• Brand Awareness, Preference, Imagery at Consumer-level (Source: Brand Health
tracking done by MR agencies like Nielsen, Kantar, Ipsos, GfK)
• Primary Sales, Secondary Sales & Salesmen Productivity data (Source: Company’s
Internal data)
• TRP, Reach, GRP, SOV and other data related to advertising and media (Source:
BARC and Media planning/buying agencies)
However, with change in RTM there is a need to
measure Offtake, Distribution, Visibility differently
Traditionally, Nielsen’s audit would measure the following metrics for General Trade
• Volume Offtake, Volume Share, Value Share
• Per Dealer Offtake (PDO), Share Among Handlers (SAH)
• Numeric Distribution, Weighted Distribution
Now, Nielsen covers the Modern Trade also. POS data from MTs are taken weekly
• Traditional metrics are reported
• The coverage is much more robust compared to GT. Of a “Universe” of 18,000 MTs,
all “Banner Stores” (~10,000) are covered and the standalones are sampled
• Because it is actual “transactional data”, some measures like “Price paid by
Consumer” can be reported
However, there will be other measures or
metrics that can be important to know for MTs
WHAT DO YOU THINK WILL BE SOME OF THOSE?
• No robust, publicly available data on any “Shelf Visibility” related metrics yet
• One has to go for a “Customised” research on it – expensive, time-consuming and data
will not be very robust
• Several tech-related work is happening on this – “Image Recognition” models using AI /
ML  Time-consuming to create such models as they need to be “Trained” and
“Tested”  Will eventually lead to robust measures on metrics like “Share of Facings”
What does “Training” and “Testing” of such Image
Recognition models mean?
Lets take a classic example…
Millions of such pics will be shown to depict what are “Cats” vs “Non-Cats”  “Training” phase
CATS
NON-CATS
What is this picture of?
What is this picture of?
This would be the “Testing” phase

and the accuracy of the predictions
will be calculated
FOR THE MODEL TO DO WELL, THE AMOUNT AND QUALITY OF DATA (PICTURES OF
SHELVES FROM MTs IN OUR CASE) ARE IMPORTANT FACTORS
What are the available metrics in E-Commerce?
Again, Nielsen has started covering the prominent 3rd party E-Commerce platforms
• Reporting only on Volume and Value Offtake and Shares
• Monthly reporting at “All India” and “All Large Metro” level
IMMENSE POSSIBILITIES BUT DEARTH OF DATA ON TIME-TESTED METRICS

What are the available metrics in E-Commerce?
IMMENSE POSSIBILITIES BUT DEARTH OF DATA ON TIME-TESTED METRICS
• Lot of “Work-In-Progress” using tech-enabled platforms
• Important measures being considered
• % of times my Brand appears on Page 1 of the E-Commerce platform, when
searched by category (eqv to NumD in GT)
• How many SKUs of my brand appear on Page 1 of the E-Commerce platform,
when searched by category (eqv to WtdD in GT)
 Quite a challenge, as Page 1 of the search would vary by Time, by Place, by
person/device searching the product category
ISSUES IN GT SALES AND
DISTRIBUTION FOR FMCG
PRODUCTS AND CHANNEL
PARTNER FINANCIALS.
1
THE RELEVANCE OF GT
 GENERAL TRADE PLAYS A CRUCIAL

ROLE FOR FMCG AS MORE THAN 85%
OF SALES HAPPENS THROUGH GT FOR
MOST CATEGORIES.
 WHICH ARE THE EXCEPTIONS?
2
THE EXCEPTIONS
 NICHES IN MOST CATEGORIES

[ORGANIC, HEALTHY, UPMARKET,
WESTERNISED].
 THESE HAVE HIGHER SALES FROM MT
AND E-COMMERCE.
 WHAT ARE THE RTMs FOR LÓREAL
SHAMPOOS?
3
LÓREAL RTM
 SACHETS: PREDOMINANTLY GT.

 BOTTLES: GT/MT/E-COMMERCE.
 SALONS: FRANCHISING.
 ALSO: B2B E-COMMERCE [HORECA].
 PLUS B2B – KEY ACCOUNTS.
4
FMCG CHARACTERISTICS
 CONSUMER BUYING BEHAVIOR

CHARACTERISTICS AND PHYSICAL
FEATURES OF PRODUCT DRIVE
DISTRIBUTION DECISIONS.
 WHICH OF THE ABOVE WILL APPLY TO
FMCG?
5
FMCG CHARACTERISTICS
 LARGE NUMBER OF CONSUMERS.

 GEOGRAPHICALLY DISPERSED.
 HIGH FREQUENCY OF PURCHASE.
 PERISHABLE/TIME BAND [SOME].
 LOW VALUE/VOLUME RATIO.
 LOW LOI + BASKET OF GOODS.
 HENCE: WHAT’S THE IMPLICATION?
6
IMPLICATIONS
 THE KEY PERFORMANCE METRICS IN

FMCG GENERAL TRADE ARE:
– AVAILABILITY.
– VISIBILITY.
 THESE SEPARATE THE GOOD
COMPANIES FROM ORDINARY ONES.
7
IMPLICATIONS
 OBJECTIVE FUNCTION IS TO INCREASE

AVAILABILITY [DEPTH AND WIDTH] AS
WELL AS VISIBILITY. WHAT ARE THESE?
 CONSTRAINT LINE: LARGE NUMBER OF
OUTLETS + LOW TRANSACTION TICKET
SIZE. ERGO?
8
IMPLICATIONS
 THE FMCG GT CHANNEL USES SEVERAL

INTERMEDIARIES AND IS A MULTI
LAYERED CHANNEL.
 THE COST OF GT DISTRIBUTION IS HIGH
DUE TO HIGH COSTS OF LAST MILE
DISTRIBUTION. THIS GETS
ACCENTUATED DUE TO THE LOW
VALUE/VOLUME RATIO.
9
THE CHANNEL - I
 COMPANY GODOWN TO C&FA OR

COMPANY WAREHOUSE/GODOWN.
 C&FA/COMPANY WAREHOUSE TO
SUPER STOCKIST OR
STOCKIST/DISTRIBUTOR.
10
THE CHANNEL - II
 STOCKIST TO WHOLESALER OR
RETAILER.
 WHOLESALER TO RETAILER.
 RETAILER TO CUSTOMER.
11
THE NEW ENTRANTS - I
 RETAILERS PRE 2005 HAD TWO OPTIONS

OF BUYING MERCHANDISE: COMPANY
STOCKIST OR WHOLESALER.
 THEY NOW HAVE TWO OTHER OPTIONS:
MODERN TRADE OUTLETS AND B2B E-
COMMERCE [IF ACCESSIBLE].
12
THE NEW ENTRANTS - II
 B2B E-COMMERCE HAS STARTED

INVESTING IN LAST MILE SALESMEN.
[PLEASE SEE VIDEO FOR SESSION 4.]
13
C&FA OR COMPANY GODOWN
 THIS IS THE FIRST MOVEMENT OF

STOCK FROM THE COMPANY.
 C&FA IS A THIRD PARTY WAREHOUSE
OR GODOWN.
14
 HENCE, WILL A CONSIGNMENT

SENT TO A C&FA AMOUNT TO A
SALE IN THE P&L OF THE
COMPANY?
15
 C&FA IS A THIRD PARTY WAREHOUSE

OR GODOWN – AND HENCE DOES NOT
TAKE TITLE OF GOODS. HE MERELY
STORES IT.
16
 HENCE, STOCK HELD BY THE C&FA

DOES NOT CONSTITUTE A SALE BY
THE COMPANY. IT IS STILL FINISHED
GOODS INVENTORY IN THE
COMPANY’S BOOKS.
17
C&FA TERMS - I
 USING A C&FA IS A MAKE OR BUY

DECISION FOR THE COMPANY
REGARDING WAREHOUSING.
18
C&FA TERMS
 THE C&FA DOES NOT PARTICIPATE IN

THE SELLING ACTIVITY – HE MERELY
HANDLES STORAGE AND
TRANSPORTATION. HENCE, HE IS PAID
RENT AND COSTS INCURRED FOR
TRANSPORTATION.
 HE CAN HANDLE COMPETING
COMPANIES.
19
WHY USE A C&FA/WAREHOUSE?
 ASSUME THAT A COMPANY HAS 5,000

STOCKISTS IN INDIA AND 250 C&FAs. EACH
C&FA SERVICES 20 STOCKISTS.
 THE COMPANY HAS THE OPTION OF SENDING
STOCK DIRECTLY TO THE 5,000 STOCKISTS.
 WHY USE A C&FA/WAREHOUSE AT ALL –
ADDING TO COSTS? WHAT VALUE DO THEY
ADD?
20
WHY USE A C&FA/WAREHOUSE?
 TWO IMPORTANT VALUES ADDED BY THE

C&FA/WAREHOUSE ARE:
– HAVING A STOCK POINT ENSURES THAT ERRORS

IN DEMAND FORECASTING DO NOT LEAD TO
LOST SALES. MORE SKUS=MORE ERRORS!
– TRANSPORTATION COSTS ARE REDUCED BY
BULK BREAKING AS C&FA GETS SCALE
ECONOMIES IN TRANSPORTATION [SECONDARY
FREIGHT] FROM MULTIPLE LINES.
21
GST IMPACT
 C&FA WHO WAS USED ONLY FOR

TAX SAVINGS IS NO LONGER
NEEDED POST THE GST REGIME.
 THEY CONTINUE TO BE USED FOR
THE REASONS MENTIONED
EARLIER.
22
THE STOCKIST
 THIRD PARTY BRANCH OFFICE WHO

BUYS FROM YOU. AN OXYMORON –
AS HE CARRIES OUT ALL ACTIVITIES
OF RE-DISTRIBUTION OF THE ENTIRE
LINE AS WELL AS ENSURES
VISIBILITY. BUT IS A THIRD PARTY.
23
THE STOCKIST
 ON A COMMERCIAL CONTRACT
FOR A SPECIFIC TERRITORY.
 DISTRIBUTION REACH = STOCKIST
REACH.
24
THE TRADITIONAL STOCKIST
 UNDER SIEGE NOW AS THE

RETAILER HAS LOWER COST
SOURCES FOR MERCHANDISE – A
COMPETITOR FOR THE STOCKIST.
25
 HENCE, WE ARE SEEING A

CONSOLIDATION HERE. RESULT: NEW
AGE STOCKISTS.
 FOR GT, THE DISTRIBUTOR REMAINS
THE KEY FOR THE COMPANY. HENCE,
QUALITY OF GT DISTRIBUTION
NETWORK = QUALITY OF STOCKIST
NETWORK.
26
 PLEASE READ BOTH ARTICLES

GIVEN FOR SESSION 3 AS THEY
TRACE WHAT WE ARE DISCUSSING
NOW – AND TAKE A PEEK INTO THE
GT LANDSCAPE OF THE FUTURE.
27
STOCKIST AGREEMENT
 A STOCKIST IS APPOINTED AS A SOLE RE-

DISTRIBUTION AGENT FOR A TERRITORY.
 THIS TERRITORY HAS A SALES POTENTIAL.
 THE STOCKIST INVESTS KEEPING THE
WEIGHTED AVERAGE MARGIN IN MIND.
28
STOCKIST TERRITORY
 TERRITORY SIZE VARIES WIDELY FROM

COMPANY TO COMPANY [P&G VS. HUL. VS.
ITC]. WHAT ARE THE TRADE OFFS FOR
BOTH PARTIES?
 PAYMENT OF LAST MILE MANPOWER
SALARIES ALSO VARY FROM COMPANY TO
COMPANY. LATELY, THE TREND IS
TOWARDS THE COMPANY PAYING. WHAT
ARE THE TRADE OFFS FOR BOTH PARTIES?
29
STOCKIST INVESTMENTS
 GIVEN THE ABOVE, WHAT WOULD BE

THE TYPICAL INVESTMENTS MADE BY A
STOCKIST WHEN HE TAKES UP A
COMPANY’S LINE?
 IMAGINE THAT YOU ARE TO DISTRIBUTE
MARICO’S PRODUCT LINE IN UDAIPUR.
30
STOCKIST INVESTMENTS
 TYPICAL STOCKIST INVESTMENTS BY WAY

OF WORKING CAPITAL ARE:
– INVENTORY.
– RECEIVABLES.
 INVESTMENTS BY WAY OF CAPEX [AND
THIS CAN BE OPEX AS WELL] ARE:
– GODOWN AND OFFICE SPACE [INCLUDING IT]
– VEHICLES.
– INITIAL DEPOSIT.
31
STOCKIST OPEX
 WHAT WILL BE THE TYPICAL OPEX OR

OPERATING EXPENSES INCURRED BY A
STOCKIST FOR RE-DISTRIBUTING STOCK IN
THE TERRITORY ASSIGNED?
 IN OTHER WORDS, TO RE-SELL THE STOCK
OVER SOME 1,800 TO 2,400 GT OUTLETS,
WHAT INFRASTRUCTURE WILL YOU NEED
AND HENCE, WHAT ARE THE COSTS?
32
STOCKIST OPEX
 SALARIES OF LAST MILE SALESMEN.

 TRAVEL OF LAST MILE SALESMEN.
 STOCK DELIVERY TO OUTLET.
 OFFICE OVERHEADS.
 BAD DEBTS.
 UNSOLD OR EXPIRED STOCK.
 PLUS: INTEREST ON WORKING CAPITAL.
33
THE TYPES OF SALES
 PRIMARY SALES IS THE SALES MADE BY

THE COMPANY TO THE STOCKIST. THIS
IS WHAT COMES IS IN THE P&L OF
COMPANY.
 SECONDARY SALES IS THE SALES MADE
BY THE STOCKIST TO RETAILER OR
WHOLESALER.
 OFFTAKE IS SALES TO CUSTOMER.
34
THE TYPES OF SALES
 DATA ON PRIMARY SALES AND

SECONDARY SALES IS PART OF YOUR
INTERNAL RECORDS. THIS IS ACCURATE
AND REAL TIME.
 OFFTAKE DATA NEEDS TO BE
PURCHASED. THE SELLER OF THIS DATA
HAS A NEAR MONOPOLY: NIELSEN.
35
THE PRICING TERMS
 MRP = PRICE PAID BY CONSUMER.

 PTD = PRICE TO DISTRIBUTOR.
 PTR = PRICE TO RETAILER.
 WHICH OF THESE IS PRIMARY SALES?
 WHICH OF THESE COMES AS TOTAL
INDUSTRY SALES IN INDUSTRY REPORTS?
 WHICH ARE DISTRIBUTOR AND RETAILER
MARGINS?
36
THE BEAT PLAN
 FMCG GT CONSISTS OF BEAT PLANS.

OUTLETS ARE COVERED EVERY WEEK.
ORDERS ARE TAKEN IN THE DAY
[TYPICALLY BEFORE LUNCH] AND STOCK IS
DELIVERED IN THE EVENING.
 CREDIT IS TYPICALLY ONE WEEK, SO WHEN
STOCK IS DELIVERED, PAYMENT OF THE
PREVIOUS CONSIGNMENT IS TAKEN.
 A SALESMAN IS EXPECTED TO COVER
BETWEEN 400 TO 750 OUTLETS A MONTH.
37
A SAMPLE TERRITORY
 LET’S TAKE A SAMPLE TERRITORY TO TRY

AND UNDERSTAND HOW THE GT STOCKIST
NETWORK WORKS.
 LET’S TAKE AN FMCG TERRITORY WITH
1,500 OUTLETS AND A MONTHLY
TURNOVER OF Rs. 90 LAKHS FOR THE
COMPANY.
 MRP = RS. 35, PTR = RS. 31.50, PTD = RS. 30.
 WHAT ARE THE MARGINS? HOW MANY
UNITS ARE SOLD?
38
TERRITORY FINANCIALS
 LET’S TRY AND CONSTRUCT THE STOCKIST

P&L AND ROI FOR THIS TERRITORY. THIS
SAME METHOD CAN BE USED FOR ALL
CHANNEL PARTNERS, NOT JUST FMCG.
 TO DO SO, WE NEED THE FOLLOWING DATA:
– TOTAL REVENUE.
– TOTAL EXPENSES.
– TOTAL INVESTMENT.
39
TERRITORY REVENUE
 GIVEN THAT 3 LAKH UNITS ARE SOLD

PER MONTH AND MARGIN PER UNIT IS
RS. 1.50, THE TOTAL REVENUE OR TOP
LINE FOR THE STOCKIST IS [3 LAKHS
UNITS * RS. 1.50 MARGIN] = RS. 4.50
LAKHS FOR THE MONTH.
40
TERRITORY COSTS
 WE NOW NEED THE FOLLOWING COSTS:
– LAST MILE SALESMEN COST [SALARY +

INCENTIVE + TRAVEL]
– DELIVERY COSTS OF STOCK.
– OTHER OVERHEADS.
41
MANPOWER COSTS
 ASSUME THAT A SALESMAN IS

REQUIRED TO COVER 600 OUTLETS A
MONTH AND CTC IS RS. 20,000 PER
MONTH [INCLUDING TRAVEL].
 WE NEED [1500*4/600] = 10 SALESMEN
COSTING RS. 2 LAKHS PER MONTH.
42
OTHER COSTS AND EBITDA
 ASSUME THAT DELIVERY COSTS OF

STOCK AND OTHER OVERHEADS WORK
OUT TO RS. 90,000 PER MONTH.
 HENCE, THE EBITDA WORKS OUT TO RS.
4.50 LAKHS – RS. 2.00 LAKHS – RS. 0.90
LAKHS = RS. 1.60 LAKHS PER MONTH.
43
INVESTMENTS AND ROI
 IS THIS EBITDA GOOD, BAD OR UGLY

[CLINT EASTWOOD!] DEPENDS ON THE
RETURNS THE STOCKIST HAS GOT ON
HIS INVESTMENT. AND HOW THIS
COMPARES WITH OTHER INVESTMENTS.
 A STOCKIST’S INVESTMENTS ARE
TYPICALLY IN WORKING CAPITAL.
44
INVESTMENTS AND ROI
 LET’S LOOK AT THE EXCEL SHEET TO

GET AN IDEA. TO MAKE IT SIMPLE, LET
US ASSUME THAT THERE IS NO SKEW IN
SALES AND IT’S UNIFORM ACROSS THE
MONTH.
 AS MENTIONED, THIS METHOD CAN BE
USED FOR ANY CHANNEL PARTNER.
 OVER TO THE EXCEL SHEET.
45
INVESTMENTS AND ROI
 FROM THE EXCEL SHEET, WE CAN SEE

THAT THE EBITDA ROI FOR THE
STOCKIST WILL BE ABOUT 27% PA.
 THIS IS ASSUMING NO CAPEX [WHICH
WILL INCREASE OPEX AS HE WILL PAY
RENT AND VEHICLE HIRE COSTS].
46
P&L. AND MARKETING
 AS A MARKETING PROFESSIONAL,
NEVER FORGET THAT EVERY ITEM IN
THE P&L IS AFFECTED BY THE
DISTRIBUTION AND MARKETING
ACTIONS TAKEN BY YOU.
 WE WILL BE LOOKING AT THIS ASPECT
THROUGH THE DURATION OF THE
COURSE.
47
P&L. AND MARKETING
 LET’S START NOW! BACK TO THE EXCEL

SHEET AND LET US LOOK AT THE WAYS
BY WHICH WE CAN INCREASE ROI OF
THE STOCKIST? WHAT WILL BE THE
IMPACT OF EACH OF THESE STEPS ON
OUR P&L? THE IDEA IS A WIN-WIN
SITUATION.
 LET’S LOOK AT THE ROI COMPONENTS.
48
P&L. AND MARKETING
 ROI = NET MARGINS * CAPITAL ROTATION.

 AS CAN BE SEEN IN THE EXCEL SHEET, THE
CAPITAL ROTATIONS ARE 1.31 AND NET
MARGINS ARE 1.69%, GIVING AN ANNUAL
ROI OF 26.7%.
 WHICH ARE THE MARKETING &
DISTRIBUTION INTERVENTIONS BY WHICH
WE CAN INCREASE CAPITAL ROTATIONS?
49
CAPITAL ROTATION - I
 CAPITAL ROTATIONS CAN BE INCREASED

BY FASTER SALES – OR BRAND PULL. IF 3
LAKH UNITS ARE SOLD IN 10 DAYS INSTEAD
OF 15, OUR ROTATIONS INCREASE BY 1.5
TIMES. ERGO: ADVERTISING / BRAND
BUILDING.
 NEXT METHOD?
50
CAPITAL ROTATION - II
 SALES PROMOTION TO CONSUMER IS USED

IF THE OFFTAKE IS SLUGGISH.
 SALES PROMOTION TO RETAILER IS USED IF
THE SECONDARY SALES IS SLUGGISH.
 SALES PROMOTION IS JUDICIOUS IS WHEN
IT’S USED FOR SHORT TERM AND TACTICAL
PURPOSES. AND NOT A REGULAR CRUTCH.
 NEXT METHOD?
51
CAPITAL ROTATION - III
 FASTER SALES CAN ALSO BE ACHIEVED BY

A DISCIPLINED AND DEDICATED SALES
EFFORT.
 WHAT DOES THIS TYPICAL MBA SOUNDING
STATEMENT [HIGHLY GLOBAL AND FULL
OF HOT AIR] MEAN?
52
 A DISCIPLINED SALES EFFORT MEANS YOUR

LAST MILE SALESMEN:
– ADHERE TO BEAT PLANS.
– ARE PUNCTUAL.
– HAVE A GOOD RAPPORT WITH THE RETAILER.
– ARE CONSTANTLY LOOKING FOR NEW OUTLETS.
 WHAT DOES THIS RESULT IN?
53
 THIS RESULTS IN THE FIVE MANTRAS OF

GENERAL TRADE:
– AVAILABILITY.
– VISIBILITY.
– RETAILER ADVOCACY.
– BLOCKING REAL ESTATE - SHELF CAPTURE.
– MINIMAL BAD DEBT.
54
CAPITAL ROTATION - IV
 CAPITAL ROTATIONS CAN BE INCREASED

BY GIVING CREDIT TO THE STOCKIST. THIS
WILL BRING DOWN HIS INVESTMENT. IF
YOU LOOK AT THE EXCEL SHEET, THE
STOCKIST WAS FINANCING THE WORKING
CAPITAL COMPLETELY TILL END OF DAY 7.
 BECAUSE OF WHICH HE HAD TO PUMP IN
ABOUT RS. 23 LAKHS MORE ON DAY 14.
55
NET PROFIT MARGIN
 CAPITAL ROTATIONS ARE DONE.

 NOW WE COME TO THE SECOND PART
OF THE EQUATION: NET MARGINS.
 HOW CAN WE IMPROVE NET
MARGINS?
56
NET PROFIT MARGIN
 NET PROFIT MARGIN CAN BE INCREASED

TWO WAYS:
– INCREASE MARGIN GIVEN BY

COMPANY.
– REDUCE COSTS OF DISTRIBUTION.
57
SUMMARY
 PLEASE GO THROUGH ALL OUR RAMBLINGS

THUS FAR AND LIST ALL THE POSSIBLE
WAYS WE CAN INCREASE THE STOCKIST’S
ROI. AND LIST THE DEPARTMENTS WITH
WHICH THEY INTERFACE.
 THEN, WE WILL EXAMINE THE
IMPLICATIONS FOR THE COMPANY.
58
SUMMARY OF FINDINGS/INTERFACES
 INCREASE BRAND PULL. [BRAND]

 USE SALES PROMOTION. JUDICIOUSLY!
[BRAND]
 DISCIPLINED MARKET COVERAGE. [S&D]
 INCREASE CREDIT TO STOCKIST. [A&F]
 INCREASE MARGINS TO STOCKIST. [A&F]
 REDUCE DISTRIBUTION COSTS. [S&D]
59
THE A & F INTERFACE
 LET’S FIRST LOOK AT THE IMPACT OF

THE TWO A & F INTERFACES:
– INCREASE CREDIT.
– INCREASE MARGINS.
60
COMPANY IMPLICATIONS - I
 LET’S TAKE ITC – SLIDES 51 AND 52. PLEASE

LOOK AT THEIR LATEST REPORT FOR FMCG
[OTHERS]. HOT FROM THE OVEN!
 TOP LINE = RS. 12,505 CRORES = RS. 34.26
CRORES/DAY.
 EBITDA = RS. 688 CRORES = 5.5% OF SALES
 IMPLICATIONS ON CREDIT AND MARGIN
INCREASE?
61
 A ONE DAY INCREASE IN CREDIT MEANS AN

ADDITIONAL WORKING CAPITAL OF RS.
34.26 CRORES FOR ITC. INTEREST ON THIS?
 A ONE PERCENT INCREASE IN MARGIN
MEANS A DECREASE IN EBITDA FOR ITC OF
RS. 125 CRORES [1/5.5*688]. OR, ABOUT 125
HIGHLY ROTTEN TOMATOES THROWN BY
SHAREHOLDERS AT THE CFO AT THE AGM.
 ERGO: ZIP YOUR MOUTH ABOUT THIS!
62
 SALES = RS. 100

 EBITDA = RS. 5.50
 IF MARGIN AS AN INCENTIVE IS UPPED BY
1% FOR A MONTH, EBITDA = RS. 4.50.
 HENCE, IF SALES DOES NOT GO UP TO RS.
100/4.5*5.5 = RS. 122.22 OR 22.22%, THIS IS
NOT JUSTIFIED.
63
 FROM THE SUMMARY, 2 DOWN. 4 TO GO.

 LET’S LOOK AT THE BRAND MANAGER’S
INTERFACE. BRAND PULL.
 INVESTING IN BRAND PULL IS ALWAYS
RECOMMENDED. FROM DEEP CONSUMER
INSIGHTS LEADING TO STRONG STP, HIGH
COST MASS MEDIA TO LOW COST DIGITAL.
BUT OUR COURSE IS ON SALES &
DISTRIBUTION!
64
 THAT LEAVES THE TWO DISTRIBUTION

INTERVENTIONS [ATMANIRBHAR!], WHICH
ARE:
– DISCIPLINED MARKET COVERAGE.
– REDUCING DISTRIBUTION COSTS.
65
STOCKIST ROI – OTHER ISSUES
 ONE OF THE ASPECTS OF DISTRIBUTION

DISCIPLINE IS TO ENSURE TERRITORIAL
INTEGRITY [NOW A TRENDING TOPIC!] OF
THE STOCKIST.
 WE SAW IN THE EXCEL SHEET THAT HIS
TOP LINE WAS RS. 94.50 LAKHS.
 ASSUME THAT THE TERRITORY HAS
POTENTIAL. BUT THE TARGET ISN’T MET.
 POSSIBLE REASONS?
66
 STOCKIST IS INEFFICIENT AND THE SALES

EFFORT IS NOT LEVERAGING BRAND
POTENTIAL.
 OR, STOCK SHOULD NOT COME IN FROM A
NEIGHBOURING TERRITORY.
67
 THIS IS CALLED “POACHING” – INTER

TERRITORY STOCK MOVEMENTS.
 SHOULD YOU AS AN ASM BOTHER? AFTER
ALL THE COMPANY TARGETS [WHICH ARE
ON PRIMARY SALES], OF WHICH YOU ARE
THE CUSTODIAN ARE BEING MET ANYWAY?
68
 WHILE THE COMPANY TARGETS ARE BEING

MET, THE STOCKIST WILL START TO LOSE
MONEY/ROI. THIS BY ITSELF IS NOT
ETHICAL. HE INVESTED IN YOUR FIRM.
 PLUS, HE MAY RETALIATE OR JUST GIVE UP.
BOTH ARE BAD. THE FORMER LEADS TO A
MARGIN WAR. THE LATTER LEADS TO A
FRESH SEARCH FOR A STOCKIST.
69
 FOR ANY ORGANIZATION, CONTINUITY IS

GOOD. WHICH IS WHY ATTRITION IS BAD.
 THE SAME HOLDS GOOD FOR STOCKISTS.
INSTITUTIONAL MEMORY IS LOST.
 PLUS, IT’S NOT GOOD FOR ATTRACTING
FRESH TALENT.
70
SUPER STOCKIST
 SUPER STOCKIST IS GENERALLY USED IN

UPCOUNTRY MARKETS WHERE
STOCKISTS DON’T HAVE THE FINANCIAL
MUSCLE.
71
THE WHOLESALER
 WE HAVE DISCUSSED LARGE

WHOLESALERS SUCH AS METRO. THE
DISCUSSION HERE IS ON SMALL
WHOLESALERS.
 THIS IS AN INTERESTING CREATURE.
 FIRST, THE NUMBERS. INDIA HAS 2
LARGE WHOLESALERS. PATIA WILL
HAVE ABOUT 10 WHOLESALERS.
72
THE WHOLESALER
 THE WHOLESALER IS A FREE AGENT IN

THE CHANNEL – AND UNDER NO
CONTRACTUAL OBLIGATION WITH THE
COMPANY.
 HENCE, HIS LOYALTY IS FOR THE
IMMEDIATE TRANSACTION IN HAND.
73
THE WHOLESALER
 A WHOLESALER COMES INTO

EXISTENCE BECAUSE OF QUANTITY
DISCOUNTS [ALSO CALLED TRADE
LOADS].
 HE SPLITS THE DISCOUNT WITH THE
RETAILER, THUS ENABLING HIM TO
SUPPLY STOCK AT A PRICE LOWER
THAN THE STOCKIST.
74
REVENUE MODEL
 MRP = RS. 110. PTR = RS. 101. PTD = RS. 96

 BULK BUYING PTR = RS. 100. THIS IS
CALLED WHOLESALE RATE.
 WHOLESALER BUYS AT RS. 100. AND
SELLS TO RETAILER AT RS. 100.50.
 RETAILER MARGIN INCREASES FROM RS.
9.00 TO RS. 9.50.
75
REVENUE MODEL
 HE OPERATES ON THIN MARGINS BUT

HIGH ROTATIONS. HIS MARGINS IN THE
LAST TRANSACTION WAS 0.50%.
 HOWEVER, IF HE SELLS HIS ENTIRE
STOCK IN THE DAY, HIS ROI IS 0.50% FOR
THE DAY OR MORE THAN 182% FOR THE
YEAR.
76
REVENUE MODEL

 LET US ASSUME THAT THESE ARE THE
TRADE TERMS FOR A LOCAL COCONUT
OIL WHICH IS A COMPETITOR TO
PARACHUTE.
 WHAT CAN WE SAY ABOUT THE
COMPETITOR FROM THESE TRADE
TERMS?
77
REVENUE MODEL

 BULK BUYING PTR = RS. 86.
 WHAT CAN WE SAY ABOUT THE
DISTRIBUTION STYLES FROM THESE
TRADE TERMS?
78
DISTRIBUTION STYLES
 MARICO DEPENDS LESS ON THE

WHOLESALER – AND MORE ON THE
DISTRIBUTOR FOR MARKET COVERAGE.
 THE LOCAL COMPANY DEPENDS MORE
ON THE WHOLESALER AND LESS ON THE
DISTRIBUTOR FOR MARKET COVERAGE.
79
REVENUE MODEL
 HERE, THE WHOSALER GETS RS. 4/- PER

UNIT AS MARGIN. WITH MARICO IT WAS
JUST RS. 1/-.
 IF YOU WERE THE WHOLESALER, WHAT
WOULD BE YOUR STRATEGY?
80
REVENUE MODEL
 BUNDLES FAST MOVING ITEMS GIVING

LOWER MARGINS WITH SLOW MOVING
ITEMS GIVING HIGHER MARGINS.
 THIS MAKES THE PACKAGE MORE
ATTRACTIVE FOR THE RETAILER.
 WHAT ARE THE MERITS AND DEMERITS
OF USING WHOLESALERS?
81
MERITS OF USING WHOLESALERS
 WHOLESALERS CAN GIVE YOU REACH,

PARTICULARLY IF YOU HAVE A WEAK
GT DISTRIBUTION NETWORK.
 THEY LIFT LARGER QUANTITIES OF
STOCK, THUS ENSURING A HIGHER
TRANSACTION TICKET SIZE THAN
RETAILERS.
82
DEMERITS OF USING WHOLESALERS
 WHOLESALERS COMPETE WITH

STOCKISTS [IF YOU HAVE A STRONG GT
DISTRIBUTION NETWORK. THEY CAN
REDUCE STOCKIST ROI AND LEAD TO
INDIRECT POACHING.
 SHOULD THIS BE A CONCERN FOR THE
COMPANY?
83
DEMERITS OF USING WHOLESALERS
 A STOCKIST IS A COMPANY’S REP. A

WHOLESALER IS A TRANSACTIONAL
PARTNER WHO DEALS WITH OTHERS.
 WHOLESALERS WILL ONLY FOCUS ON FAST
MOVING ITEMS AND DO NO OTHER
ACTIVITY SUCH AS INCREASING VISIBILITY.
 YOUR LAST MILE SALESMEN LOSE THEIR
RAPPORT WITH RETAIL.
84
RETAILER
 SELLS TO THE END CUSTOMER.

 SMALLER RETAILERS HAVE VERY LOW
TURNOVERS AND ARE USUALLY
STRAPPED FOR CASH.
 LOW TRANSACTION TICKET SIZE.
85
DATA POINTS RECEIVED
 THERE ARE ONLY THREE OBJECTIVE

METRICS FOR EVALUATING THE
COMPANY’S COMMERCIAL AND
MARKETING PERFORMANCE.
 WHAT ARE THESE?
1
THE COMMERCIAL TANGIBLES
 SALES.
 MARKET SHARE.
 PROFITS – WHICH MEASURE DO WE
USE?.
2
THE TANGIBLES
 THE BEST METHOD OF MEASURING

OPERATIONAL EFFICIENCY IS
EBITDA.
 THIS REMOVES ALL VARIABLES
WHICH CANNOT BE CONTROLLED
BY THE OPERATIONAL MANAGER.
3
THE DATA SOURCES
 FROM WHOM CAN WE GET DATA

ON THE PERFORMANCE OF ANY
CONSUMER PRODUCT?
4
THE DATA SOURCES
 THE CONSUMER.
 THE CHANNEL PARTNER. OF WHICH
THE BEST JUDGE IS THE RETAILER.
WHY?
5
THE DATA SOURCES
 DATA FROM THE RETAILER

CAPTURES HISTORY. AND THE WHAT
HAS HAPPENED?
 DATA FROM THE CONSUMER
CAPTURES THE WHY DID IT HAPPEN?
AND HENCE LOOKS AT THE FUTURE.
6
USING THE DATA SOURCES
 DATA FROM THE CONSUMER IS

THUS USED BY THE BRAND TEAM.
 DATA FROM THE RETAILER AND
THE CHANNEL IS USED BY THE
SALES TEAM.
7
GOOD CO-ORDINATION
 SHARING OF INFORMATION
ENSURES GOOD COORDINATION.
 THIS ENSURES NO SILOS.
 THEN, SALES STRATEGY IS
ALIGNED TO BRAND STRATEGY.
8
BRAND INFORMATION
 DATA ON THE BRAND AND

CATEGORY IS RECEIVED FROM THE
MR AGENCY ON AWARENESS, BRAND
FUNNEL, LOYALTY, MEDIA HABITS,
STP, SOB, CATEGORY PENETRATION,
SHARE OF VOICE, DIGITAL ROI ETC.
 WE WON’T SPEND TIME ON THIS – WE
WILL FOCUS ON SALES DATA.
9
SALES
 SOURCES OF INFORMATION?
10
SOURCES OF INFORMATION
 PRIMARY AND SECONDARY SALES

IS INTERNAL DATA.
 OFFTAKE AND MARKET SHARE
DATA HAS TO BE PURCHASED.
11
INTERNAL SALES DATA - I
 INTERNAL SALES DATA IS OF TWO

TYPES. THE FIRST IS PRIMARY SALES
AND SECONDARY SALES.
 THIS, WITH OFFTAKE, GIVES US
STOCK IN THE PIPELINE.
 WHY IS THIS IMPORTANT TO KNOW?
12
 THE COMPANY AND YOU – AS THE ASM –

ARE JUDGED ON PRIMARY SALES.
 EXCESSIVE STOCK BUILD UP MEANS
THAT FUTURE PRIMARIES ARE LIKELY
TO TAKE A HIT.
 ERGO, WE NEED TO PLAN FOR THIS
PROACTIVELY.
13
 LET’S LOOK AT THE SECOND THING

STOCK IN PIPELINE TELLS US.
 WHAT IF THE STOCK IN THE PIPELINE
IS LOW?
14
 LOW STOCK IN THE PIPELINE MEANS

THAT THE SALES EFFORT IS WEAK AND
IS NOT LEVERAGING BRAND STRENGTH.
 THE SALES TEAM IS MAKING THE
CARDINAL SIN: VACATING THE SHELF
BY NOT BEING AVAILABLE.
15
 CASELET “KAHANI KIRANA KI – III”

WILL COVER THIS ASPECT OF
STOCKIST PERFORMANCE BY THE
ANALYSIS OF STOCK IN PIPELINE.
16
INTERNAL SALES DATA - 2
 THE SECOND INFORMATION IS

DATA ON THE LAST MILE SALES
EFFORT.
17
 THERE ARE FOUR PIECES OF

INFORMATION:
– TOTAL OUTLETS COVERED.
– TOTAL CALLS MADE [TC]
– PRODUCTIVE CALLS MADE [PC]
– TOTAL VALUE OF ORDERS BOOKED
[OVB = TR].
18
 CASELET “KAHANI KIRANA KI – II”

WILL EXPLAIN THE METRICS TO
MEASURE LAST MILE SALES
PERFORMANCE.
 WE WILL ALSO EVALUATE THE
LAST MILE SALES PERFORMANCE.
19
DATA FROM MR AGENCY - I
 THE DATA FROM THE MR AGENCY

SPECIFIES THE PENETRATION
LEVELS OF THE CATEGORY.
 THIS COULD BE THE HOUSEHOLD
OR THE INDIVIDUAL AS THE UNIT.
20
 WHAT INFORMATION DOES

CATEGORY PENETRATION DATA
GIVE US?
 AND WHY IS IT IMPORTANT FOR
THE SALES TEAM TO KNOW THIS?
21
 CATEGORY PENETRATION DATA

GIVES US THE STAGE OF THE
PRODUCT LIFE CYCLE.
 HENCE, FALLING SALES COULD BE
DUE TO NO FAULT OF THE SALES
EFFORT.
22
DATA FROM MR AGENCY - II
 THE MR AGENCY PROVIDES 3

DISTRIBUTION DATA POINTS:
– NUMERIC DISTRIBUTION (ND).

– WEIGHTED DISTRIBUTION (WD).
– PER DEALER OFFTAKE (PDO).
23
 NUMERIC DISTRIBUTION IS OUTLETS

WHERE OUR BRAND IS AVAILABLE
DIVIDED BY OUTLETS WHERE THE
CATEGORY IS AVAILABLE.
 WHAT DOES THIS MEASURE?
24
 THIS IS A MEASURE OF COVERAGE

AND BENCHMARKS AGAINST THE
COMPETITION.
 ALSO CALLED “E-CO” OR EFFECTIVE
COVERAGE.
25
 WEIGHTED DISTRIBUTION WEIGHTS

THE OUTLETS BASED ON THE SALES
MADE FOR THE CATEGORY.
26
 BRAND A: Y, Y, N, N, N
 BRAND B: N, N, Y, Y, Y
 WEIGHTS: OUTLETS 1 & 2 = 35+25.
 OUTLETS 3, 4, 5 = 20+15+5.
 WHAT IS THE ND/WD FOR THE 2
BRANDS?
27
 HENCE, WHAT IF ND/WD > 1?

 AND IF ND/WD < 1?
28
 HENCE, IF ND/WD>1, OUR FOCUS IS

ON SMALLER OUTLETS.
 IF ND/WD<1, OUR FOCUS IS ON
LARGER OUTLETS.
 WHICH IS BETTER - AND WHEN?
29
 FOCUS ON SMALLER OUTLETS MAKES

SENSE FOR IMPULSE BUYS AND MASS
PRODUCTS.
 FOCUS ON LARGER OUTLETS MAKES
SENSE FOR PLANNED PURCHASES
AND PREMIUM PRODUCTS.
30
 PDO IS OFFTAKE DIVIDED BY

OUTLETS WHERE IT IS AVAILABLE.
 MEASURES SHARE OF WALLET
GIVEN BY OUR BRAND/CATEGORY.
31
 CASELET “KAHANI KIRANA KI – I”

WILL EXAMINE THE TRADE OFFS
BETWEEN NUMERIC AND
WEIGHTED DISTRIBUTION.
32
FRANCHISING
1
WHAT?
 WHAT IS FRANCHISING?
2
WHAT?
 FRANCHISING: WHEN A BRAND NAME

IS ALLOWED TO BE USED BY A
FRANCHISOR [WHO OWNS THE
BRAND] BY A FRANCHISEE [WHO
USES THIS BRAND NAME AND HIS
OWN INFRASTRUCTURE] TO
GENERATE REVENUE.
3
WHAT?
 LET’S EXAMINE THE DIFFERENT

TYPES OF FRANCHISEES.
 WHAT IS THE CORE DIFFERENCE IN
OPERATIONS BETWEEN A ITC
DISTRIBUTOR AND A KFC OUTLET
RUN BY A FRANCHISEE?
4
THE TYPES
 THE QUANTUM OF PARTICIPATION

IN THE DELIVERY PROCESS VARIES
– AND THESE GIVE US THE TYPES.
5
THE INVOLVEMENT LEVELS
 AN ITC DISTRIBUTOR.
 A HONDA CAR DEALER.
 A COOL DRINK BOTTLER.
 A KFC OUTLET.
 A HABIB’S HAIR CUTTING SALOON.
 A GD GOENKA SCHOOL.
6
THE IMPLICATION?
 WHAT IS THE IMPACT OF HIGHER

INVOLVEMENT IN THE DELIVERY
BY THE FRANCHISEE FOR THE
FRANCHISOR?
7
THE RELATIONSHIP
 THE HIGHER THE INVOLVEMENT IN

THE DELIVERY BY THE
FRANCHISEE, THE GREATER IS THE
LEVEL OF STANDARDIZATION AND
MONITORING BY THE
FRANCHISOR.
8
THE MODELS
 FOFO.
 FOCO.
 COFO.
 COCO.
9
THE MODELS
 FOFO – FRANCHISEE OWNS AND

OPERATES.
 PAYS ROYALTY.
 WHEN SHOULD THIS BE DONE?
10
THE MODELS
 FOCO – FRANCHISEE OWNS AND

COMPANY OPERATES.
 PROFIT SHARING BASIS.
11
THE MODELS
 COFO – COMPANY OWNS AND

FRANCHISEE OPERATES.
 PROFIT SHARING BASIS.
12
THE MODELS
 COCO – COMPANY OWNS AND

OPERATES.
 NOT, STRICTLY, FRANCHISING.
13
CATEGORIES?
 FOR WHAT CATEGORIES IS THE

LEVEL OF DELIVERY BY THE
FRANCHISEE HIGHER?
14
CATEGORIES
 THE SERVICE INDUSTRY.
15
THE FOCUS
 OUR FOCUS FOR THIS SESSION WILL

BE ON THE SITUATIONS WHERE THE
FRANCHISEE HANDLES A LARGE
PART OF THE DELIVERY.
 AND HENCE, THIS IS OUR ONLY
SESSION ON SALES & DISTRIBUTION
OF SERVICES.
16
THE SECTORS
 WHICH SECTORS HAVE BECOME

POPULAR FOR FRANCHISING IN INDIA
TODAY?
17
MAJOR SERVICE FRANCHISEES IN INDIA
 FOOD AND QSR.

 EDUCATION.
 HEALTH, BEAUTY AND WELLNESS.
 RETAIL – EMERGING.
 COURIER SERVICES.
18
BENEFIT TO FRANCHISOR?
 WHAT ARE THE BENEFITS TO THE

FRANCHISOR?
19
BENEFIT TO FRANCHISOR
 ASSET LIGHT EXPANSION.

 THE FRANCHISOR IS ABLE TO EXPAND
QUICKLY WITHOUT CAPEX AND
MANPOWER INVESTMENTS.
 INVESTMENTS ARE IN QUALITY
CONTROL OF SERVICE OPERATIONS.
20
 LOCATION ADVANTAGE.
 YOU ARE MORE LIKELY TO BE ABLE
TO GET LOCATIONS OF YOUR CHOICE
– GIVEN YOUR ANALYSIS OF
CATCHMENT.
21
 LOCAL KNOWLEDGE.
 YOU ARE ABLE TO GET PERSONS WHO
KNOW THE LOCAL MARKET WELL.
EXAMPLE: MASTER FRANCHISEES.
 WHAT ARE THE DISADVANTAGES?
22
DRAWBACK TO FRANCHISOR
 ALL OF THIS CAN COME UNSTUCK IF

THE LAST MILE DELIVERY IS POOR.
 AND THIS COULD BE YOUR FAULT AS
WELL AS THE FRANCHISEES’.
 CAUSING GREAT DAMAGE TO THE
BRAND.
23
BENEFIT TO FRANCHISEE
 WHAT ARE THE BENEFITS TO A

FRANCHISEE?
24
BENEFIT FOR FRANCHISEE
 NO INVESTMENT IN CREATING A
BRAND.
 LEVERAGE AN EXISTING BRAND –
THUS GUARANTEEING CUSTOMER
ACCESS. AND HENCE, FOOTFALLS.
25
 SCALE ECONOMIES FOR MEDIA

BUYING. AND, IN SOME CASES, RAW
MATERIAL.
 QUALITY OF RAW MATERIAL,
HARDWARE AND CONSUMABLES.
26
 ACQUIRE A SET OF STANDARD

OPERATING PROCEDURES WHICH
HAVE BEEN REFINED OVER TIME.
 THIS WILL IMPROVE SERVICE
QUALITY.
27
 ACCESS TO BETTER QUALITY

MANPOWER.
 QUALITY OF TRAINING – WHICH IS
TESTED BY TIME.
28
 MARKETING SUPPORT – BULK MEDIA

BUYING + QUALITY OF CREATIVES.
 HIGH QUALITY DIGITAL MARKETING
SUPPORT.
 ACCESS TO MARKETING ANALYTICS.
29
 EASIER ACCESS TO BORROWED

CAPITAL – PARTICULARLY FOR FIRST
GENERATION INVESTORS.
 WHAT ARE THE DRAWBACKS?
30
DRAWBACK FOR FRANCHISEE
 THE BRAND DOES NOT BELONG TO

YOU.
 HENCE, YOU MAY CREATE BRAND
VALUE FOR THE FRANCHISOR – BUT
THAT STAYS WITH THEM.
31
DRAWBACK FOR FRANCHISEE
 HIGH ROYALTY PAYOUTS.

 YOU DEPEND ON THE QUALITY OF
SERVICE GIVEN BY THE FRANCHISOR
32
A GOOD FRANCHISOR
 LET’S LOOK AT WHAT ASPECTS

SEPARATE A GOOD FRANCHISOR
FROM AN ORDINARY ONE.
 THIS IS FROM THE VIEW OF THE
FRANCHISEE AS WELL AS CUSTOMER
SATISFACTION.
33
A GOOD FRANCHISOR
 LET’S FIRST LOOK AT THIS FROM THE

POINT OF VIEW OF THE FRANCHISEE.
 WHAT ASPECTS WILL MAKE THE
OPERATIONS SMOOTHER AND
PROFITABLE FOR THE FRANCHISEE?
34
A GOOD FRANCHISOR
 TERRITORY POTENTIAL ASSESSMENT

 IF YOUR CATCHMENT AREA
POTENTIAL ASSESSMENT IS WRONG,
THE PROJECTED REVENUES WILL NOT
ACCRUE TO THE FRANCHISEE.
35
A GOOD FRANCHISOR
 QUALITY OF PROMOTION AND

MARKETING INPUTS, INCLUDING
DIGITAL MARKETING INPUTS.
36
A GOOD FRANCHISOR
 QUICK RESPONSE TO QUERIES AND

PROBLEMS.
 CREATING A FORUM FOR IDEA
EXCHANGE.
37
A GOOD FRANCHISOR
 NOW, LET US LOOK ASPECTS WHICH

WILL ENHANCE CUSTOMER
EXPERIENCE.
 WHAT WILL THE KEY PERFORMANCE
METRIC?
38
A GOOD FRANCHISOR
 THE QUALITY OF STANDARDIZATION

AND MONITORING TO ENSURE THIS
STANDARDIZATION.
 WHICH ASPECTS NEED THIS?
39
A GOOD FRANCHISOR
 STAFFING.
 SERVICE STANDARDS.
 RAW MATERIAL.
 EQUIPMENT AND HARDWARE.
 AMBIENCE PARAMETERS.
40
VIDEOS
 PLEASE SEE BOTH VIDEOS SENT BY

MAIL ON FRANCHISING.
41

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ROUTE TO MARKET

 MY COURSES IN THIS FORMAT HAVE

 GIVEN THE ABOVE, THE TENTATIVE

 MANY SLIDES WILL END WITH A

 WHENEVER EXCEL SHEETS ARE BEING

 WHAT IS THE ROLE PERFORMED

 PRODUCTS OR SERVICES REACH THE

 LET’S TAKE ITC & TRY AND

 LET’S TAKE A BRAND FROM THEIR

 THE KIRANA STORE / GENERAL STORE /

 USE IT IN THE HOTEL WE ARE STAYING

 THERE IS ANOTHER METHOD BY WHICH

 EACH OF THESE ARE CHANNELS WHICH

 TO UNDERSTAND THESE SKILLS, WE

 OUR STYLES ARE SHAPED BY ACCESS.

 ROLE OF TOP OF MIND.

 GT: REACH + VISIBILITY = COVERAGE.

 MT AND E-COMMERCE: THE CONSUMER

 WHAT IS THE MOST SIGNIFICANT

 IN B2C THE BUYER BUYS FOR

 A B2B TRADER BUYS TO RE-SELL. VERY

 A B2B TRADER PAYS ENORMOUS

– TRADE TERMS [MARGINS / CREDIT /

 B2B: KEY ACCOUNT MANAGEMENT FOR

 THE DISTRIBUTION FOCUS FOR EACH

 FOR INSTANCE, HOW WILL THE FOCUS

 AASHIRVAAD ATTA: PREDOMINANTLY

 CANDYMAN – ALMOST 95% IN GT – WITH

 LET’S LOOK AT THE E-COMMERCE

 THIRD PARTY E-COMMERCE [AMAZON,

 CAPTIVE E-COMMERCE [TEABOX,

 THIRD PARTY E-COMMERCE: YOU ARE

 CAPTIVE E-COMMERCE: YOUR BRANDS

 WHAT IS CASH & CARRY? [PLEASE SEE

 CASH & CARRY IS A WHOLESALE

 FDI IN CASH & CARRY: OK IN INDIA.

 PURE PLAY B2B COMMERCE PLAYERS

 WE NOW MOVE TO MODERN TRADE.

 MODERN TRADE HAS TWO PARTS AND

– F&G [FOOD & GROCERIES:RELIANCE

 PLEASE READ THE FIRST ARTICLE

 THIS IS THE HEART AND SOUL OF

 THE MOST COMPLEX, BEWILDERING &

– F&G [FOOD & GROCERIES – MORE ON THIS,

 THIS IS THE BOUQUET FROM WHICH WE

– KIRANA SHOPS [AS WELL AS VARIETY

 THIS IS THE BOUQUET FROM WHICH WE

– WATCH STORES, CLOTHING SHOPS,

 WHY IS GENERAL TRADE FOR FOOD

 THE TOTAL NUMBER OF FOOD &

 IN OTHER WORDS AN OUTLET CATERS

 SMALL IS A BIG WORD TO DESCRIBE

 IN INDIA, FOR MANY, OPENING A RETAIL

 WHICH IS WHY FDI IN MULTIBRAND

 THE CURRENT DARLING OF THE WORLD

 THE TWO MOST IMPORTANT COSTS OF

 THIS WILL BE 4 TIMES HIGHER IN INDIA

 DUE TO LOW CASH IN HAND (OR

 LET’S GO BACK TO ITC AND EXAMINE

 SAVLON ANTISEPTIC: MEDICAL AND

 AIM MATCHBOXES: PAAN SHOPS –

 MODERN TRADE AND E-COMMERCE

 PRIVATE LABELS OR STORE BRANDS.