Sales and Distribution Channel of Airtel

i
INTRODUCTION
 Project Flow

• Understanding Distribution Channel.

• Service strategy.

• Sales Force Management Issues.

• Airtel in Rural India.

 CORE BUSINESS AREA
• Mobile Services.

• Tele media Services.

• Enterprise Services.

• Carriers.

• Corporate.
Understanding Distribution Channel
 OVERVIEW
Market
194.8 million
Leader: 23.4%
users
share

Presence in 22 Presence in 19
Telecom countries
Circles
OVERVIEW
 The Distribution Network
• 23 circles have been divided into regions or territories

•Regional organizations are responsible for developing

Sales and Marketing Strategies
•Has Direct and Indirect Sales Channels
 The Distribution Network

Second Third
Degree Degree
Distribution Distribution
Network Network

Urban Rural
The products, services Due to less demand for
and promotional materials company’s products and
can reach the retailers in lack of proper
shorter span of time infrastructure in rural
areas
The Modern Trade Distribution
Network
 The Distributor
Items Details
Distributor Name Sri Rohit Enterprises
Territory Covers an area of 6-7 Km range. This starts
from Sitapur Road till IIM Campus, other side
from Bakhsi-ka-talab

Outlets Universal (1500 no.)

Telecom Outlets (200 no.)
Products Prepaid Sales – New Airtel Sims, Recharge
vouchers
No.of Companies dealt with 5 – Airtel brings in 75 % of revenues
No. of employees 7 Foot on Sales
Turnover Approx. 75-80 Lakhs
 The Distributor

Items Details
Technology Easy Recharge Technology
Online payment and receipt of money
LAPU Sims
Margins Retailer Margins – 2.75%
Distributor Margin -1.25%
Credit Terms No credit terms
Profit Rs. 90000 – 1 lakh / month
 Key Players
• Located at District HQ.
• Distributes the products, easy balance,
AIRTEL services and promotion material to retailer
in designated urban areas of a district.
• Activate customer SIMs within territory
URBAN • Distribution of promotional materials
among the retailers.
DISTRIBUTORS •To maintain required stock of RCVs and
Easy Recharge .
•Circulate communication from the
FOOT ON SALES
company properly to retailers.
•Escalation of retailers’ claims and
complains to TM/ZSM.
RETAILERS •To make DD payments to company for
primary on scheduled. l
 Key Players
•FOS is responsible for the secondary
AIRTEL sales under his assigned beat.
•FOS is responsible for collecting PEFs,
money against billing by retailer and
URBAN distribution of promotion material among
retailers in consultation with TM.
DISTRIBUTORS •Circulate communication from the
company properly to Retailers regarding
FOOT ON SALES schemes, new offers, incentives.
•FOS resolves the retailer complains
through FOS help line.
•To escalate the unresolved claims and
RETAILERS complains of retailers to distributor and
TM.
 Key Players

AIRTEL •Fill error free PEFs and verification of

supporting copy for POI and POA of the
customer with originals and same for the
URBAN Re-documents before activating the SIM.
•Proper utilization and display of
DISTRIBUTORS promotional materials.
•Communicate customers properly about
FOOT ON SALES the schemes, new offers and benefits.
•To sell the product and services to
customer at right price.
•Serve the customers’ requirements with
RETAILERS the available stocks of SIM, RCV and easy
balance etc. and not to create artificial
shortage.
 Should purchase RCVs, SIMs and Easy
Balance from respective distributor only.
 Supply Chain

Traditional Extended
procurement Enterprise

Collaborative
Economic Order Planning
Quantity Forecasting and
Replenishment
 Few points to note
Maximization of mutual opportunities for growth and
profitability

Consists of central core team and execution teams

under different business divisions

Three step approach of improving, reviewing and

analyzing for continuous improvements

Higher business share for partners who help improve

technology, competitiveness and customer delight

Rigorous partner selection process

 Supply Chain Progression

Functional Internal External Cross enterprise

focus Integration Integration collaboration
• Resource is • Resources are • Necessitates • Use of
managed at managed both the information
the functionally involvement technology to
department and cross of strategic align the
level functionally partners in supply chain
different objectives
important
processes
 Channel Conflicts
Territory
Encroachments

Disputes Role
Regarding incongruity
Margins

Perceptual
Differences
 Conflicts in the distribution
channel
• Territory encroachment. 
• Role incongruity.
• Perceptual differences.
• Problem of service gap.
• Competition.
• Non-availability of particular offers.
• Giant Retailers selling SIM Cards at lower prices.
• Old SIM Cards not replaced in time.
 Conflict Management
• Current practices
Second and Third degree distribution network.

• Recommendations
Variable margin structure to tackle channel
conflict.
Performance based rewards scheme.
Trade Promotions to be given at different levels.
Our Proposal – Variable Margin Structure

•Classify the retailers into various categories according to

performance.
Eg: Class I, Class II etc.

•Link Margins with Performance.

Advantages:
• Link performance with reward and thus motivate the
distributors and retailers.
•Increase the sales as channel members are rewarded for
better performance.
• Compete with new players which offers huge margins.
 Service Strategies of Bharti Airtel
 Best-in-class
technology.
World-class Installation & Customer Service.
Interactive VAS to Drive ARPU enhancement.
One Airtel Synergies for Distribution, Brand &
IT.
Data Products: Internet, MPLS etc.
Integrated Solutions to Drive Share of wallet.
 CONTD….
• Strategic Alliances.
• Indirect Channel to Drive Penetration.
• Deeper & Not Wider: 94 Cities.
• Vertical & Not Horizontal: Hi-Rise.
• Network Enhancement to Deliver 8+ MBPS.
• New Products & VAS to drive Flat, combo
plans.
Sales Force Management Issues
Sales Force Organization Structure
COO

Zonal Business Zonal Business

Manager1 Manager2

Zonal Sales Zonal Sales

Manager1 Manager2

Territory sales Rural Sales Territory sales Rural Sales

Manager Officer Manager Officer

Field Sales
Distributors’
Officer (Rural
sales force
Distributor)
Sales force Organization Structure
• A hybrid of geographic and market structure
followed.
• Zone consists of 3-4 districts depending on size,
density and size of rural area.
• Under each Zonal Business managers there are 3-
4 Zonal Sales Managers.
• Each ZSM has 3-4 Territory Sales Manager.
• Depending on the rural area, there are Rural
Sales Officer reporting directly to ZSM.
 Sales Territories
• Presence in all the 23 telecom circles.
• Subscriber base is divided into four categories
– Metros-Chennai, Delhi, Mumbai, Kolkata.
– “A” Circle-AP, Gujarat, Karnataka, Maharashtra, Tamil
Nadu.
– “B” Circle-Haryana, Punjab, Rajasthan, Madhya
Pradesh, West Bengal, Kerala, Uttar Pradesh(West),
Uttar Pradesh(East).
– “C” Circle-Jammu and Kashmir, Himachal Pradesh,
Bihar, Orissa, Assam, North eastern States.
UP Telecom Circle – Airtel Context
• UP(East) – 5 zones & UP(West) – 4 zones.
• Each zone has 3-4 districts depending on size,
density, urban areas etc.
• Each zone has around 40-50 distributors.
• Lucknow as a city has 14 distributors.
• The TSM deals with the distributors of his area
in urban context; while RSO does the same in
rural areas.
• Each area has 2 TSMs – one for Prepaid and one
for Postpaid.
 Selection, training and evaluation of sales
personnel in the company
• The Sales personnel (FOS) who deal with the retailers
are employees of the Distributor.
• The Distributor selects them and pays salary.
• They are dedicated to Airtel’s service.
• Their training is conducted by the company – by
programs or online.
• Based on the performance of the FOS, they could be
promoted to RSO (an employee of the company).
• For Relationship centers (show-rooms), the employees
are franchisee managed.
Airtel in Rural India
 Airtel in Rural India
Opportunities
– Rural customers account for
about 70% of the total
population with a tele density of
only 18.5%.
– Rural dwellers place a high
value on communications.
– Mobile service provides
immense socio-economic
benefits for rural population.
– Relatively untapped market with
many under penetrated regions.
Threats
– Rural users’ low incomes
• The average revenue per user
(ARPU) for rural residents is
typically less than US$2 per
month.
– Widely dispersed population.
– Less than ideal public
infrastructure.
– Need for cost effective
marketing, efficient sales and
distribution channel.
 Rural Strategy of Airtel:
Alliances/Partnerships
• Launched micro financing agreements in collaboration
with Nokia and SKS Micro-finance.
– Subsidized tariffs and SIM cards to rural users.
• Sharing passive infrastructure with Vodafone and Idea.
– Helped in reducing operating and capital expenses.
• Joint Venture with IFFCO.
– Leverages IFFCO’s wide rural presence to create awareness
and to distribute Bharti’s products.
• Providing subsidized handsets and connections at
competitive prices through IFFCO Kissan Sanchar.
 Rural Distribution Strategy

Direct communication strategy

 Provides all marketing content in local languages.
 Staff goes to locals in a van and educates them about
mobile service and usage.
Shared phone service (PCO)

Putting up service centers

 To address customer queries and complaints.
 Act as sales and distribution points.
 Rural Distribution Channel
Third degree network • Company makes invoice of SIMs,
PEFs, GSM Pay Phones, Easy
Rural
Distributor1 Balance, RCVs to only Rural Super
• Retailers
Distributors (RS).
• Follows Hub and Spoke Model in
Rural Sector.
• RS acts as the hub.
Rural Rural Rural • RS distributes the items to Rural
Distributor4 Distributor2
Super Distributors (RDs) and transfers easy
balance into RDs SIM.
• RDs then distribute the items among
the retailer according to the demand
Rural
Distributor3
of it and transfer easy balance to
retailer through FOS SIM.
 Rural Super (RS)
• Located at district headquarters.
• Distributes the products, easy balance, services and
promotion materials to its rural distributors only.
• One Rural Super has maximum 12 RDs and can have a
maximum 1 crore turnover.
• RS works with certain percentage margin on all its sales.
• Make DD payments to company for primary sales on two
scheduled days per week.
 Rural Distributor (RD)
• Located at blocks and towns.
• For every 5000 population there has to be a RD.
• Distributes the products, services and promotion material
in designated territory.
• Responsible for smooth attainment of target of SIM
activation and recharge without encroaching into other
distributor’s territories.
• They cannot get invoice from company directly.
• Each RD gets a distributor SIM, one FOS SIM per FOS and a
503 SIM or activation SIM.
• Make payments to RS for primary sales on two schedule
days per week.
 Responsibilities of retailers
• Fill error free PEFs and verification of supporting copy
for POI and POA of the customer with originals before
activating the SIM.

• Proper utilization and display of promotional materials.

• Proper communication about the schemes, new offers

and benefits to customers.

• Selling products and services to customer at right price.

 CONTD…
• Serving the customers’ requirements with the
available stocks of SIM, RCV and easy balance
etc.

• Not creating artificial shortages.

• Purchasing RCVs, SIMs and Easy Balance from

respective distributor’s FOS only.
 Rural Penetration
• Covered 440,000 villages as of April 2010, approximately
covers 84% of India’s total population.
• In march,2010,added 9 million new customers to reach a
total of 128 million connections.
• With ARPU of just under $5, EBIDTA margin is approx 30%,
EBIT margin 19% which indicate a healthy return on overall
investments.
Main issues/ challenges faced by the company

• Mainly two important issues are being faced by the

company in their sales and distribution system are:
• Problem of service gap: Cases have been there where
the retailer has run out of its recharging balance and
the balance has not been refilled by the distributor
timely. This may be caused because of the time lag, or
because of the no credit policy of the distributor.
• Competition: Due to large number of players, now the
retailers have to keep competitors product as well. But
they are unwilling to make extra investments.
Thank You