A study and critical examination of Sales Force

Management and Channel Management Practices at Nivea

Sales and Distribution Management
By APO-8
Shubh Agarwal | 210101170
Anjali Singh | 210101167
Yash Gupta | 210101126
Abhijeet Vitthal Apar | 210103001
Rajat Sharma | 210101157
Srajan Gupta | 210101112
 INTRODUCTION

COMPANY BACKGROUND

Purpose:
Core Values
To care beyond skin. Care for healthy skin and nurture people
from outside in.
Courage Simplicity
Vision:
To be the number one in skin care in the relevant markets and
categories Trust Care

Strategy:
Outperform the market, create customer value and ensure
sustainable profitability using the C.A.R.E + model. C.A.R.E
stands for Courage + Aspiration + Responsibility + Empathy

Introduction
Insights Analysis Recommendations
 Business Overview

Introduction
Insights Analysis Recommendations
 Business & Services
Body Care Body Cleansing Grooming Deodorants

Body Lotion Shower Gel Shaving Gel Roll-on Deo

Body Milk Face Wash Shaving Foam Deo Spray
Cold Cream Face Scrub Beard Oil
Face Moisturizer Beard Wash After Shave
Hand Cream
Sunscreen
Lip Balm

Introduction
Insights Analysis Recommendations
 Competitive Landscape
● Highly successful in ‘Go to market strategies’ for it’s products
● Superb performance in new markets
● Strong brand portfolio
● Highly skilled workforce through successful training and learning programs
● Good returns of capital expenditure
● Successful track record of developing new products
● Onboarding of success suppliers
● Successful track record of integrating complimentary firms through mergers and acquisitions

Introduction
Insights Analysis Recommendations
 Understanding Nivea’s Distribution
Network
Indirect Distribution:
One or more intermediaries serve as a link between the manufacturer and the final customers

Urban Rural
Direct Super Stockist

Depot Distributor Super

Depot
Stockist

Retailors Sub
Retailors Stockist

Insights
Introduction Analysis Recommendations
 Understanding Nivea’s Distribution
Network
How are distributors selected?
• Based on turnover
• Companies they are currently handling
• Duration of association with current companies
• Rate on their scorecard “Finfit”

How are territories allocated?

Retailer base is seen and it is kept in mind that 180
to 210 outlets have to be under 1 Distributors Sales
Representative (DSR)

Insights
Introduction Analysis Recommendations
 Reporting Structure
Distributors Sales Pilot Sales Representative
Representative (DSR) (PSR)

Business Development Officer (BDO)

Area Sales Manager (ASM)

Regional Sales Manager (RSM)

Sales Director

Insights
Introduction Analysis Recommendations
 Salary of Salesmen and Associated Incentives

• Fixed Salary is around 14-15k

• 8-9k can generally be earned through incentives
• Incentives can be:
o Value Incentive
o Eco Incentive
o Bill cut
o Focused SKU Incentive (Nivea calls it Distribution Big Bat)

Insights
Introduction Analysis Recommendations
 Sales Force Evaluation
• Weekly Reviews
• Quarterly Reviews
• Half-yearly Reviews

Best performer/ Top performer is identified and Training

awarded with various incentives.

• Training is done in the weekly feedback meets

• If in case a new product is launched, training is
given for that with relevant information
• Nivea conducts two proper training sessions
for salesmen across regions twice a year

Insights
Introduction Analysis Recommendations
 Channel Structure
Nivea has a very strong distribution channel. They adopt mainly two types of channels
to reach out to the customers.
• Customers can buy Nivea’s products online which means they themselves need to
take care of the promotional activities
• But the main channel for selling the products is the retail outlets
• Nivea makes sure it has different approaches for different channels as well as outlets

• They use a cost-effective distribution strategy by selling to large retailers

• The top 20 retailers identified in every region are given preference to receive the
products first
• For online sales, consumers can buy from the Nivea website and products would be
delivered from the nearest warehouse

Insights
Introduction Analysis Recommendations
 Channel Conflict
• Huge discounts offered by E-commerce platforms shift the burden on traditional
retail outlets
• Limited range selling as the consumers prefer certain classic products
• Strong distribution channels required to go beyond the top 30 towns in India
• Timely service in E-commerce distribution
• Delayed payments by distributors exceeding the credit period affect the working of
the entire supply chain
 

Insights
Introduction Analysis Recommendations
 Channel Evaluation and Control
• 65% of the entire sales are through supermarkets and retail outlets
• In order to lure big retailers, the company puts in place several ‘quantity purchase
schemes.
• Outlet performance trackers put in place to measure the output of every outlet
• The performance of every channel is gauged to calculate effectiveness and plan
future actions
• BDO allocates the target of every channel based on the above-mentioned
performance.
• Targets are decided on a weekly basis and are revised based on past performance
measured through weekly checks

Insights
Introduction Analysis Recommendations
Analysis of Nivea’s Distribution Network

Nivea employs indirect distribution channel to supply it goods from factory to retailers
More intermediaries in rural distribution than urban due to large number of small retailers
with small ticket size.

Nivea uses ecommerce to have a healthy presence in direct-to-consumer distribution channel

but discounted pricing strategy adopted by ecommerce is causing channel conflict as pricing
become reason for consumer to shift away from retail outlets.

Nivea employs tight control over its distribution channel by constantly evaluating top retailers,
using the scorecard to identify distributors, awarding those retailers and employs a very
hierarchal structure of sales managers so that they can have total control over their indirect
distribution network.

Analysis
Introduction Insights Recommendations
 Analysis of Nivea’s Sales Network
• Nivea is operating in a highly competitive environment; hence the sales manager always
needs to be on their toes to match the sales number.
• Sales number and market penetration of Nivea in tier - 3 cities and rural region is still
very less.
• Majority of the sales happens through classic products and brand awareness of specialty
products is comparatively low.
• Less penetration in rural region leads to inventory shortage which results in dissatisfied
retailers and customers.

Analysis
Introduction Insights Recommendations
 Recommendations
• Average SKU size sold through indirect distribution is comparatively less than the SKU size
sold through ecommerce, this insight can be used to solve the problem of channel conflict
by selling only bigger SKUs on ecommerce.

• Supply chain inefficiencies in rural region is a major problem, this problem arises due to
demand variability and inefficient inventory management. Technology can be integrated in
Nivea’s system to predict the demand variability. Nivea can also collaborate with new age
startups like Elasticrun who are solving the supply chain problem for remote retailers.

• To evaluate employees at all levels a more complex evaluation matrix can be used with
KPIS focusing on other aspects apart from meeting sales numbers.

Recommendations
Introduction Insights Analysis
 Thank You

Recommendations
Introduction Insights Analysis