Distribution

Channel
Presented by-
Sayantani Ray (A91801920012)
Rahul Kundu (A91801920013)
Tanusree Das (A91801920014)
Piyasa Ghosh (A91801920029)
Adwait De (A91801920032)
Joydeep Samanta (A91801920047)
INTRODUCTION TO
“PROCTER &
GAMBLE”
.
 P&G, is an American multinational consumer goods
company.

Introduction
It was founded in 1837.

Headquartered in downtown Cincinnati, Ohio, United

States, founded by William Procter and James Gamble,
both from the United Kingdom.

Its products include cleaning agents and personal care

products.

Purpose is to provide branded products and services of

superior quality and value that improve the lives of the
consumers.
 One of the most successful consumer
packaged goods company in the world ($40
billion in sales revenue) that runs most of
its core business processes on SAP
applications.

Started using the enterprise resource

Intro…
planning system (ERP) which was
implemented by SAP.

It implemented a centralized ERP and

supply chain base that delivers significant
economies of scale while still being able to
support the company’s business plans.
Typical Distribution of P&G Products
Manufacturer

Marketing Agents- State Wise

Retailer/Wholesaler/Distributors

Chemist Shop/ Retail Outlets/ Big Markets

 P&G products are distributed through a network of
redistribution stockists R S (covering both urban and
rural population).

There are 35 C&FAs (Carrying and Forwarding Agents)

in the country who feed these redistribution stockists
regularly.

Agents The general trade comprises grocery stores, chemists,

wholesale, kiosks and general stores.

The C&FAs act as buffer stock-points (at company

depot) to ensure that stock-outs did not take place.
Intensive Distribution

P&G follows this strategy in India. As the company manufactures FMCG

convenience/necessity goods, hence there is lesser/no brand loyalty from customer side.

These products are typically purchased impulsively and frequently and required to be
widely available to customers.

The distribution network of the company needs to be very strong and proactive.

As the products are relatively small and easily transported, they are easy to box up a great
number of units to many different channel intermediaries.
Extensive Distribution
Sold in retail stores
Company requires
such as Walmart,
extensive distribution
Target, and other
to obtain big sales
convenient stores all
volume
over the world.

The Procter and

Gamble owns a series
of distribution centres
in Texas, Ohio, and
more.
 Corporate Vertical Marketing
Vertical System: Wella Professionals
have joined with P&G and are
Marketing exclusive distributors of their hair
and skincare products. They are

System only sold within their own stores.

 Producer – Retailers –
Diagrammatic Customers

Presentation
of Channel Producer – Wholesaler–
Retailers -- Customers
Old Distribution Channel of P&G in
India
Distribution System
• Using many distributors in limited area.

• Applying every possible method to match lever.

• Spent extensively on distribution network

• Imitating Hindustan Lever Distribution System.

• 85% of sales come only from top 30 towns.

Problems

• Increase in cost due to increase in distribution cover.

• Due to many distributors, ROI of distributors decreased.
• Frequency of replenishment was low.
• Volume demand was not available as distributors were trying to push up the volume.
 Project Golden Eye

Resulted in increasing
Initiative in Reducing its number of
ROI by reducing costs
Rationalizing its Sales distributors by one-
and Distribution tenth of the current
size
Manufacturing plant Distribution Channel
Institutional Buyer (Big)
Office Impulse
Driven
Company warehouse Confectionery
Institutional Buyer(Small) Adopted
Sessional- Party Wholesale

distribution
Distributer
Ensuring a better ROI,
P&G is now able to make
distributors invest more

By offering more
Retailer
Distribution: Focus on key
Benefits volumes, shaving
distributor’s margin by
urban markets 2%

This 2% can be
Customer effectively used in
advertising
 Reduced the number of stockists and moving to
Super Stockist.

Benefits from Less number of distributors result in good

new volume of stock.

Distribution Provided Better ROI to the distributors.

system
Will Result into Cost saving.

Revised margin rates resulted in saving and that

can be used for advertising.
 Challenges in Increasing Distribution -
Logistics

Narrow roads (only

Problems during Lack of warehouses
Lack of Pakka Roads certain vehicles can Uneven Terrain
rainy season to lease
reach these places)

Legal requirements
(only specified value
Pilferage Safety of products Rising fuel costs
of products allowed
per vehicle)
 Lack of Awareness - Promotion (Sales
Promotion and Advertising) Strategy.

Other Restricted Purchase Power.

Challenges
Additional Personnel Requirement to
Increase Reach
 P&G leverage the hand-held wireless PDA
device in rural areas to take orders; this helps
the company to get real time information on
demand patterns and trends, manage inventory
Technology to and production better, as well devise efficient
sales promotion programs to drive sales.
Reduce
Challenges P&G also leverage geo-tagging (GPS) technology
to map individual retailers and to find the
approximate distance and time required to
reach these shops from the nearest highway
RURAL DISTRIBUTION STRATEGIES FOR P&G
4
Strategic Winning in the Ensuring direct
Focus market place coverage

Sub-Distributor Model Typical sales = Rs. 5-10

lakhs
> 50 km from existing branch or Salient
Features
1 sales exec. per Sub-D
difficult to reach
What is
it?
Increasing reach in villages
350 stores per Sub-D
with < 20,000 population

Future of Rural Model at P&G

Power Villages Focus on Rural Bihar

• Identified 70,000 villages • Target power villages = 7,086

• Cost to serve < 10% of Revenue • Current Business = Rs. 11.2 Cr./month
• Current reach = 10% of such villages • Added 25 new Sub-D in Bihar
• Plans to increase 5-10% per year • Total ACV of Power Villages = 54.1%
 Campaign in Rural India 8
HUL P&G

Cost Parameters % of Sales Increasing • Live demonstration on use of

product products like diapers
awareness in • Coverage of 40,000 villages
Fixed Cost 4.00 rural areas in 2010

Commission 1.00

DSE Salary 2.50 • Make products more

affordable for rural
Reduction in consumers
App. Salaries 2.63 SKU size • Reduction in price of
whisper
Wholesale Margin 0.60 to Rs.25

Others 1.00
Introduction of • Launch of Tide Naturals in
more 2010
Total 11.7%
affordable • Increase in pack size without
brands increasing price
 P&G is a relatively new entrant in the Indian FMCG market .

Therefore, the company has been focusing on a high cost, high

quality model direct reach model in rural India.

In low throughput regions, the company should focus on sub-

distributors regions to decrease costs

Recommendation In high throughput regions, P&G should look to increase the

s number of distributor branches to increase its reach

Multiple sales executive per sub-distributors will help reduce

fixed costs and will help increase total margins

The company should also make sure that the incentives of the
employees are linked to shops covered
– Moreover, the fake billing problem can be reduced by
ensuring that GPS based billing is adopted across the
organization
Conclusion
• The company uses its absolute control power to design more
effective distribution channels.
• It streamlines the number of distributors so that making the
distributors is more stable and competitive.
• P&G Company is investing in a more agile and faster distribution
network to optimize inventory and reduce out-of-stocks.
• It reasonably allocates resources across channel options.
• It is also investing in its sales force to establish more profitable
distribution system (Annual Report of P&G, 2018)
 REFERNCE
•
•
S
https://mpk732t12016clusterb.wordpress.com
https://digital.hbs.edu
• https://in.pg.com
• https://www.researchgate.net
• https://www.marketing91.com
• https://www.business-standard.com

Thank You!