The Channel Members of the Parle Distribution Network 10.2.1. The Parle G Distribution Network 9. The Distribution Channel Network: Parle 9. The Distribution Channel and Parle 13. Parle Biscuits 3. Conflicts and Co-Operation 11. Porter‟s Value Chain: Parle G The Perceptual map 7. Acknowledgement History of the company 3.1.b. Suggestions for the Parle Distribution Channel Marketing Management 2 Trimester 2 FMG XVIII A . The Macro-environmental Factors 5. Motivation of Channel Members 10. The Channel Members and Logistics 9.a. The Parle Distribution Network Logistics 10. and Management – a Report 2 3 4 6 6 6 6 7 7 8 9 10 10 11 12 12 12 12 12 13 13 14 14 14 15 15 16 16 16 17 18 Table of Contents 1. The Channel Members of the Distribution Network of Parle 9.1 About Parle 3.2. Evaluation of the Channel Members 11. Parle Annual Production (Biscuits) in Million Metric Tonnes 4. About the „Biscuit‟ Industry 3. Product Life Cycle 8. Co-operation among the Channel Members 12.3. Intensive Distribution 9. Logistics.3.4. The Retailers 10. The Production Units of Parle 3. The Distributors 10.Parle: Distribution.4. Selection of Channel Members for Parle 10. Parle: History and More 3.1 Conflicts among the Channel Members 11. Channel Dynamics 10.

Kolkata. Thanking All Aakriti Kakkar Gaurav Sharma Gourab Kundu Marketing Management 2 Trimester 2 FMG XVIII A . West Bengal. Subsidiary of Parle Agro. Logistics. He was really kind to share details of the distribution channel prevalent therein. and Management – a Report 3 Acknowledgement Parle: Distribution. Quality Control. Thank you. Parle Agro Foods. Quality Control Division. Garia. Logistics and Management – a Report would not have been possible without the support of the various distributors and Channel Members who were interviewed in the due course. Keventor Agro. Debanjan Sengupta. teaching us the vital concepts of Channel Design and Logistics. Bizeet Kumar. to Mr. Production.Parle: Distribution. Kolkata. We would like to acknowledge the valuable feedback from the factory unit of Parle: Parle Agro Foods in Garia. We‟d sincerely like to acknowledge all the help that we got from various domains in the successful execution of this project report. Kolkata. A Special mention needs to be made for Mr. He was very helpful in furnishing the intricate details of how the distribution logistics of Parle actually work. Nalin Jain. Production Executive. A special mention for Prof.

The organized sector is unable to compete at the lower price range due to the excise advantage enjoyed by the informal sector. medium and large biscuit manufacturers located in all zones and all states of the country.5%. The sentiments are sedate in lieu of the economic downturn that has hit the entire country. besides the 15 units in the organized 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10* Marketing Management 2 Trimester 2 FMG XVIII A . the industry is widely dispersed also due to the reservation policies (relating to the small scale industries) of the government. 3000 Crores. account for 82% of all bakery production. The biscuit industry is been experiencing steady growth of 14-15% annually. the growth exceeded 16% mark on account of exemption from Central Excise Duty on biscuits. 20 18 16 14 12 10 8 6 4 2 0 2003-04 Data courtesy: scribd. and others. The last includes pastries. which are relatively less pricesensitive. and Management – a Report 4 2. The biscuits are becoming quite popular in rural areas as well.Parle: Distribution. which gravitates to the markets and caters to the local tastes. The biscuit industry in India comprises of organized and unorganized sectors. The unorganized sector accounts for about half of the total biscuit production estimated at 1. Nearly 55% of the biscuits are consumed by rural sectors. The two major bakery products. Biscuits are estimated to enjoy around 37% share by volume and 75% by value of the bakery industry. About the ‘Biscuit’ Industry The Indian bakery industry is dominated by the small-scale sector with an estimated 50. Bakery industry in India is the largest of the food industries with annual turnover of about Rs. In 2008.5 million tons. biscuits and bread. conforming broadly to the growth rate of GDP. The FMCG sector on its part too is reeling under this slump. The Industry estimates project a 17+% growth of the industry. The FBMI represents the organized biscuit industry consisting of small scale. It also accounts for 85% of the total bread production and around 90% of the other bakery products estimated at 0.000 small and medium-size producers. cakes. Apart from the nature of the Industry.6 million tons. buns. The organized segment in biscuits has witnessed a steady growth of about 7. Logistics. The organized sector caters to the medium and premium segments.

and Management – a Report 5 Even today the Indian Biscuit Industry is dominated by the unorganized sector with a composite market share of 55%. Logistics.Parle: Distribution. Indian Biscuit Industry as on 2009-10 Unorganize d Sector 55% Organized Sector 45% Indian Biscuit Industry market share as on 2009-10 (in %) Priyagold 12% Sunfeast 9% Others 9% Britania 30% Parle 40% Data courtesy: Major industry players Organized Indian Biscuit Industry Marketing Management 2 Trimester 2 FMG XVIII A .

competitors look upon Parle as an example of marketing brilliance. and a host of other very popular brands. With a 40% share of the total biscuit market and a 15% share of the total confectionary market in India. to manufacture sweets and toffees. since 1971. Marketing Management 2 Trimester 2 FMG XVIII A . Parle biscuits are indeed much more than a tea. the company has definitely come a very long way since its inception. Apart from the factories in Mumbai and Bangalore Parle also in Bahadurgarh in Haryana and Neemrana in Rajasthan. the Parle name symbolizes quality. but they decided to take the brave step. The intent was to spread joy and cheer to children and adults alike. Many of the Parle products . A decade later it was upgraded to manufacture biscuits as well. Parle G is a source of strength for both body and mind due to the sumptuous amount of milk and wheat. Parle provides one and all with a basket of biscuits which is not only satisfying but are also of good and reliable quality. Parle: History and More 3. History of the company In 1929 a small company by the name of Parle products emerged in British dominated India. Parle Products has 7 manufacturing units and 51 manufacturing units on contract. 3. 3.Parle: Distribution.1 About Parle Parle Products has been India's largest manufacturer of biscuits and confectionery. Parle biscuits cater to all tastes from kids to senior citizens. which are the largest biscuit and confectionery plants in the country. the Parle name has grown in all directions. nutrition and great taste. While to consumers it's a beacon of faith and trust. all over the country with its sweets and candies. A small factory was set up in the suburbs of Mumbai. Additionally. The company knew that it wouldn‟t be an easy task. Parle has grown to become a multi-million dollar company. It is the Largest selling Biscuit Brand in the world. won international fame and has been sweetening people's lives all over India and abroad. Since then. Logistics. they are considered by many to be an important part of their daily food.2.3. Parle-G. They have found their way into the Indian hearts and homes. for almost 80 years. Makers of the world's largest selling biscuit. Parle Biscuits Parle biscuits are linked with factors of power and wisdom providing nutrition and strength.time snack. and Management – a Report 6 3.biscuits or confectioneries. are market leaders in their category and have won acclaim at the Monde Selection. With a reach spanning even the remotest villages of India.

5 0 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 Data source: Parle official website Marketing Management 2 Trimester 2 FMG XVIII A . The Production Units of Parle The company also has plans to setup operations in Assam and Andra Pradesh in the near future. Logistics. and Management – a Report 7 3. Parle Annual Production (Biscuits) in Million Metric Tonnes 2 1.5.Parle: Distribution.5 1 0.4. Data source: Parle official website 3.

Value Added Tax the Political Factors Negatives Rigid „Standards and Measures‟ act. Economical Factors Increase in the purchasing power on Indians. Conformance to size. Boast to Research and Development. Rise in sugar prices manifold. mean heightened India is currently the largest producer of Biscuits in the world.Parle: Distribution. affluence and better perception about biscuits Social Factors „Health‟ consciousness consumers: some may move to healthier options. Logistics. Innovations in the sector. Helpful state governments in providing incentives towards infrastructural developments. Better lifestyle. Increase in per capita income of Indians. Marketing Management 2 Trimester 2 FMG XVIII A . (up by over 25% in six months) Slump in the country‟s GDP to 6% Huge gap between the Wholesale Price Index and the Consumer Price Index. and Management – a Report 8 4. The Macro-environmental Factors The factors enlisted below affect the eventual Marketing Strategy for Parle Positives Tax based incentives by government. Production and distribution licenses are difficult to attain. Technological Factors Better products competition.

 The distribution system is complex and difficult to duplicate. treats from substitute and new entrant and the internal rivalry are as follows: The threat of a new entrant in the organized biscuit industry for Parle is low:  The industry is capital intensive. The USP of Parle G has been „price‟. Intra-industry rivalry for Parle is high:  Even though Parle is a comfortable market leader with 40% of the market share. A biscuit pack at Rs. The power of buyers is very high:  Availability of many kinds of biscuits in the low and moderate pricing category.Parle: Distribution. This forced Parle G to come out with a Rs.  The traditional home cooked Indian snacks are always a threat. Marketing Management 2 Trimester 2 FMG XVIII A .  The unorganized sector is always an option for the buyers. But today this business model is being duplicated by the other industry members. there is immense competition among the existing players to capture the maximum market share.  Investments in promotions. and product establishment are very high. Logistics. 30 family pack of biscuits. prices of commodities is a worry. The Power of suppliers to affect Parle G is fairly low:  The basic commodities such as wheat. It also modified its distribution channel for the same purpose. Porter’s Value Chain: Parle G The Porter‟s Value Chain for Parle G has been assessed on the five parameters of power of suppliers and buyers. advertisements. This is for this reason that most members of this industry have ventured into the confectionary and packaged snack business as well. a new entrant would find it really difficult to establish it. with already so many existing players in the market. 3. Sugar especially is a bottleneck. The power of substitutes to affect the prospects of Parle G is also very high:  The growing packaged snack industry is become a real cause for concern for the biscuit industry. sugar are available. and Management – a Report 9 5. readily available in all pan-bidi shops made it such a success story. Though with the increasing gap between the WPI and CPI.

Parle G scores the best. and its no surprise that Britania has 30% market share only after Parle at 40%. have a higher price and a less intensive distribution strategy. Marketing Management 2 Trimester 2 FMG XVIII A . Parle G is in the maturity stage of its PLC. Logistics. Having said this. ITC‟s Sunfeast and Priya Gold are somewhere in between in price and distribution network.Parle: Distribution. 7. and Management – a Report 10 6. Product Life Cycle    Presently. the brand is going strong. Marino and Horlicks are niche players hence. A market share in the region of 10% is evidence to the fact. Intensive distribution employed. The Perceptual map The Indian Biscuit Industry Price v Distribution Data source:    As per the above perceptual map. Britania is the nearest to Parle. It also has the best „lowest‟ pricing strategy. It has the best distribution network among the competitors.

Logistics. The Distribution Channel Network: Parle Manufacturing Unit of Parle at various locations Parle Depots Wholesalers and Distributors Transportation to next level Retailers: Pan-bidi/city stores Procurement: Customers Marketing Management 2 Trimester 2 FMG XVIII A .Parle: Distribution. and Management – a Report 11 8.

Intensive Distribution Parle uses Intensive Distribution for Parle G.4. The Channel Members of the Distribution Network of Parle The Parle distribution network for biscuits has essentially four levels as enlisted below:  Parle Depots  Wholesalers and Distributers  Carry Forward Agents (if required)  Retailers 9. Level 3: Mass consumption and suitable for National and International coverage. Sri Lanka. Parle's international operations consist of serving markets in the Middle East.3.g. 9. For e. increases the ultimate margin for the manufacturer.1.Parle: Distribution. Logistics. level 3 distribution channels levels. and Management – a Report 12 9. This is the ideal strategy for the market leader as intensive distribution has the following advantages:  Increases coverage and sales  Increases product availability  Encourages retailers to compete aggressive. level 2. 9. Level 2: Since it's an FMCG product this channel exists for customers scattered throughout the country. Channel Dynamics Parle has a multi-channel marketing system since it uses more than two marketing channels to reach all its customer segments. Higher competition leads to narrower margins for the retails hence. A two hundred strong dedicated field force services these wholesalers and retailers. Australia and North America for which the 3 level distribution channel exists. Africa. Parle has level 1. The Channel Members and Logistics Parle has nearly 1500 wholesalers. Level 1: Availability of Parle G biscuits at all departmental stores across the length and breadth of the country. there are 31 depots and Carry and Forward agents supplying goods to the wide distribution network. The Parle G Distribution Network 9.2. South America. Additionally. catering to 425000 retail outlets directly or indirectly. Marketing Management 2 Trimester 2 FMG XVIII A .

The following are the host of factors considered by the company in selecting the channel members:     Authentication is required by the regarding the identity of the channel members. Proof of solvency which requires name and address of the channel member‟s bankers Safety of the inventory. Market coverage by the distributors needs to be defined which includes details of Geographic coverage and Outlets per market area.  Matador. Details of the various products of other companies that the channel member keeps have to be provided. Inventory or the perishable goods kept by the distributor/ dealer should be in good condition which means a detail of storage space and Refrigeration facility is to be provided. This is due to the fact that Parle believes that the reputation of the dealer affects the clientele in the long run. The salesmen too are divided into various categories like  The Field salesmen  Counter salesmen The details of Clerical Staff and labour are to be provided. This is because it believes that selection of channel members is a long run decision and the rest of the decision regarding the supply chain depends upon the efficiency and coverage by the channel members. The technical competence of the salesmen needs to be mentioned.  The number and model of each of the vehicle needs to be furnished to the company.  3 Wheeler Van. The Parle Distribution Network Logistics 10. which means that the distributor/ dealer should get the stock of the company insured. The following also need to be furnished with the above:  The annual sales of these products have to be mentioned. Details of the delivery vehicle. Selection of Channel Members for Parle Parle takes into consideration a host of factors while selecting the channel members. Logistics. The company also requires the dealers to furnish any Advertising and Sales initiative undertaken by them on behalf of the company. Company acknowledges the fact that it needs to be sensitive to the market demands. which includes the name and address. Dealers of the company must carry a good reputation.         Marketing Management 2 Trimester 2 FMG XVIII A .Parle: Distribution. photograph of the location.  Tricycle Van and Hand/Push cart. and Management – a Report 13 10.1.  Details of complementary products and product lines need to be mentioned. which includes the following:  Light Commercial Vehicles. For this it requires that a number of salesmen needs to be present on the field.

2. Also the fact that Parle being a cooperative society cannot afford to spend exorbitantly on such events therefore it has a very traditional way of organizing these get together which leaves an impact on the members. Here various counseling measures are undertaken by the company to improve the overall working of the distribution network.a. In fact all monetary incentives are just the short run means to promote the company‟s product. Now-a-days it has been raised to 8. Vision and mission statement: the company cascades down the vision to the various channel members.3.3. In order to keep the Channel members motivated in the long run. For the company. 10.  Volume wise this comes out to be a big figure since Parle‟s product has a good demand in the market. this is done through various events organized by the company at different locations where the values of the company are made clear and enforced to the channel members. Usually the margins offered by Parle are 8%. Parle‟s products are considered to be value for money since the company does not believe in charging high margins. The company is organizing various Total Quality Management initiatives and workshops.  However to keep the channel members motivated to work.5%. Parle Products being a cooperative cannot afford to give heavy monetary incentives. and Management – a Report 14 10. However compared to the other companies the margins are still lower since the new players in the market offer a much higher margin.Parle: Distribution. motivating its channel members is of utmost priority because of the following reasons:  If the channel members are motivated. they can also initiate advertising and sales promotion schemes on behalf of the company. which keep the distributors motivated. Logistics. is the margin. Parle has build on the concept of “Trade Marketing” which makes the dealers and the distributors believe that the company‟s products are worthy of being pushed in the market. The Distributors  One of the main factors. But the very fact that Parle‟s products have good demand in the market motivates the distributors to stock it. The Channel Members of the Parle Distribution Network 10.      Marketing Management 2 Trimester 2 FMG XVIII A . the company has to incur certain costs but the benefits of it are felt in the long run. Motivation of Channel Members Parle strongly believes in maintaining a good relationship with the channel members so that they are genuinely motivated to work for the company.

also schemes like good packaging incase of butter and cheese is undertaken by the company.4.  Summary of the product wise monthly sales potential of institutions.  Beat plan: this plan is generated for the various product categories.  Stall facility with photograph.3.  Details of the delivery vehicle with photograph.   10. for these the company raises the margins by 2%. Cumulative performance: the performance of the dealers is averaged out over a period of three years where a comparison is made of the present performance vis-à-vis the previous ones.g. The Retailers  Trade schemes: these are undertaken by the company only for the hard selling items e. Biscuits and Snacks etc. These are the Beat Plan. Infrastructure facilitation: the company facilitates the retailers to buy beautiful stalls by formulating an easy payment program and a commitment to buy back the equipment at a reasonable price when the value of the equipment has depreciated. Logistics.b.  The computerization facility available.Parle: Distribution.  The storage space.  Glow boards: the company puts up glow boards at the retailer and pays the major portion of the cost. Evaluation of the Channel Members Parle has a three pronged process to evaluate its channel members. A weekly schedule is prepared for various markets and the retailers the turnover for each of the product is calculated for the wholesale dealers.  Details of the bank guaranty  Photographs of the offices  Details of the wholesalers and the distributors‟ salesmen and the product lines they deal in. the Cumulative Performance plan and Target versus Achievement Plan. Schedule of the salesmen: they provide the retails with this schedule so the retailers can pre estimate the quantities of the various products needed. This is done for each of the product category. Target versus achievement: the performance and the targets are compared and therefore the gaps are identified which help in evaluating the wholesalers and the distributors and planning for the next year as well. Other criteria: these need to be fulfilled by the channel members of Parle.  Summary of the monthly potential sales of markets.    Marketing Management 2 Trimester 2 FMG XVIII A . and Management – a Report 15 10. However this is only a short-term initiative to push the products of the company.

Packaging: The channel members for easy storing demand a better quality of packaging. which at times s hard to manage as retailers tend to do it often.g.Parle: Distribution. The retailer’s margin in case of Parle G is 8% as compared to Britannia’s 12%       11. the retailer disagreed to comply and created issues of ownership.2.1 Conflicts among the Channel Members  Ownership of assets: Previously the company used to give the products on lease to the retailers. Logistics. Stocking issues: The company doesn‟t want the retailers to stock the competing brand in the company leased stall. and Management – a Report 16 11. Replenishment: The replenishment of the stocks is not prompt in case of Parle cheese Biscuit and all hard selling items. Credit policy: Compared to the market. therefore avoiding any conflict amongst the distributors regarding their areas of operation. This is an ongoing activity facilitated by the company offices in different locations. Co-operation among the Channel Members  Parle quality circles: The members of the local channel meet together every month to share issues and the achievements of the channel members. the company‟s credit period is less that specially incase of institutional sales is very important.    Marketing Management 2 Trimester 2 FMG XVIII A . Agreement defining rights: The company makes the distributors sign an agreement where the areas of operation for each of the distributors are defined. when the company wanted the stuff back. Replacement of products: The deterioration in the product calls for fail in replacement by the company this major issue of vertical conflict. For e. Pilot salesmen scheme: To reduce the financial burden of the distributors this scheme is run whereby half the cost of the salesmen is born by the company and the rest half by the distributor Scheduling of sales: The wholesalers and the distributors provide their respective schedules of their sales men to the retailers so that the retailers can plan out and place the orders in advance. this enables the channel members to learn together and reduces the horizontal conflicts among the wholesalers and the distributors. Margins: The Company provides least margins to all the channel members. Conflicts and Co-Operation Among the Channel Members and Parle 11.

and Management – a Report 17 12. While the other companies fail to replenish demand due to lack in procurement of raw material. Parle is able to provide products at the least price in the industry. and is able to give least channel margins as the channel members earn through volumes and not through high margins. The Distribution Channel and Parle  The company‟s strength is in the procurement of raw materials and essentially not the distribution of its product. also the fact this would affect the cost of the product the company doesn‟t undertake many promotion schemes. Parle has loyal cooperatives that provide products only to them. over time the relationship of trust has built up with these people that Parle leverages now. The transport channel is another strong point for Parle. Parle‟s inventory management is sound. it forces the channel members to carry all its new products. Parle believes that there is an ongoing demand in the market and therefore no promotions are needed to increase the sales. distribution logistics is the industry‟s main problem. Logistics. Because of the strong relationship that Parle shares with the constituent channel members. But. the bonding with them enables the company to give least margins when it comes to the distributors in the industry. Even though Parle is the market leader in biscuits. lowering the costs. The company has been able to push its new products into the market by hooking them onto the fast moving products like Parle butter bite.       Marketing Management 2 Trimester 2 FMG XVIII A . As these transporters have grown with the company overtime.Parle: Distribution.

This can be an effective mode of „umbrella marketing‟. - The End Marketing Management 2 Trimester 2 FMG XVIII A . The advantages of this alternative channel would be as follows:  Full range display.  Easier to promote new products.  Pushcarts: These should be increased in number in order to increase the market reach (especially the rural market). Suggestions Channel for the Parle Distribution The following are the suggestions that Parle can implement to better its distribution channels:  Increase the margins: In order to motivate the channel members it is also very essential for the company to increase the margins for the hard selling items. Logistics.Parle: Distribution.  Parle should also go in for ‘Parle’ Zones: It is primarily for big city retail outlets. This can provide with a very effective channel.  The Parle Brand building exercise will be enhanced. This strategy can be implemented in regions where the footfalls are large in number. Here all the Parle products can be stalked. and Management – a Report 18 13.  Easy to push impulse purchase products.

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