Sidharth Summer Report

A

Summer Training Report

On

Study of the rural distribution of the top FMCG companies and

suggest opportunities for enhancing the rural distribution of Coca –

Cola.

SUBMITTED TOWARDS PARTIAL FULFILLMENT

OF

POST GRADUATE DIPLOMA IN MANAGEMENT

(APPROVED BY AICTE, GOVT. OF INDIA)

ACADEMIC SESSION

2009 - 2011

EXTERNAL GUIDENCE: INTERNAL GUIDENCE

Aashish k Jha Res. V.S.SOLANKI sir

Area channel manager Faculty, IPM, Meerut

Coca-cola, Patna

Submitted by:

Sidharth Shankar Jha

M-209061

PGDM (2009-11)

INSTITUTE OF PRODUCTIVITY & MANAGEMENT, MEERUT

1

DECLARATION

This is to certify that I, the student of PGDM(2nd year) have personally worked

on the topic “Rular Distribution of Coca Cola” under the able guidance of Mr.

Sarvjeet Singh Sir, DY. Director, Mr. V.S. Solanki Sir , & Mr. Michael Samuels Sir,

faculty of IPM, Meerut, U.P during the session of April-July 2010.

The data's mentioned throughout the project are authentic and reliable. I have

worked to the best of my efforts and capability.

Date: 20th July 2010 Sidharth Shankar Jha

Place: Meerut

2

ACKNOWLEDGEMENT

The research report will be incomplete without acknowledge giving my sincere,

gratitude to all person who have helped me in the preparation of this report.

First of all, I thank “GOD” for the blessing showered on me throughout this

project work, which has helped me in the successful completion of the training.

I express my thanks to Hindustan Coca Cola Beverages Pvt. Ltd. for granting

me the permission to work with the esteem organization.

I am also thankful to Mr. Aashish K Jha (Area channel manager) of Hindustan

Coca Cola Beverages Pvt. Ltd. He guided and helped me in all possible ways he

could, at every stage of the report.

I would also like to thank all the executives, distributors and staff of Hindustan

Coca Cola Beverages Pvt. Ltd. who provided all the relevant information and

their kind support on the basis of which this report has been prepared.

I would also like to thank all the executives, distributors and staff of all other

FMCG companies which we have considered.

I would also like to thank Mr. Sarvjeet Singh (Mentor for the summer training),

Mr. V. S. Solanki Sir & Mr. Michael Samuels Sir who helped me and guided me

through the course of internship.

Last but not the list , I am thankful to all retailers who gave their precious time

and support to fulfil this task, without their co – operation the study would not

have seen the light of the day & complete.

Sidharth Shankar Jha

M – 209061

IPM, MEERUT

CERTIFICATE FROM THE ORGANISATION

3

4

CERTIFICATE FROM FACULTY GUIDE

This is to certify that the project report entitled “RURAL DISTRIBUTION OF

COCA – COLA” made during the summer internship done at “HINDUSTAN

COCA – COLA BEVERAGES PVT. LTD” is a bonafide record of work done by

SIDHARTH SHANKAR JHA and has been submitted in the partial fulfilment of

the requirement of Post Graduate in Management from Institute of productivity

& Management, Meerut.

Mr. Sarvjeet Sir

Deputy Director

IPM, Meerut

LIST OF CONTENTS

5

S.NO PARTICULARS PAGE NO

1 BRIEF SUMMARY OF THE PROJECT 10

2 OBJECTIVES OF THE PROJECT 15

3 INTRODUCTION A Brief Insight – The FMCG Industry in India A Brief Insight – Beverage Industry in India

181921

4 THE COCA – COLA COMPANY HistoryHINDUSTAN COCA – COLA BEVERAGES PVT. LTD.(HCCBPL)About the CompanyHINDUSTAN COCA – COLA BEVERAGES PVT. LTD. PATNA Manifesto for Growth Values Mission Products Distribution network Setup of Coca – Cola

24

26

28

29293135

5 LITERATURE REVIEW 37

6 RESEARCH METHODOLOGY 40

7 FINDINGS Distribution Network and role of different channel partners Distribution Margins to the channel partners Order Collection Mechanism Delivery Mechanism Frequency of Service Investment and ROI of the different channel partners Sales Structure Data Management & MIS

424246475153545763

8 SUGGESTION Gaps and opportunities in the current rural distribution set up of Coca – Cola Opportunities to leverage the existing channel of different FMCG Companies Present Rural Distribution set up of Coca – Cola New Distribution model suggested by us Future view of our model Distribution model of COKE CHACHA

67

6770

70717274

9 LIMITATION 77

10 BIBLIOGRAPHY 79

LIST OF FIGURES

6

FIGURE NO

PARTICULARS PAGE NO

CHAPTER 4

4.1 Location of COBO, FOBO in India 28

4.2 Working with bottlers 29

CHAPTER 7

7.1 Distribution Network of Coca Cola 42

7.2 Distribution Network of Parle 43

7.3 Distribution Network of HUL 43

7.4 Distribution Network of Dabur 44

7.5 Distribution Network of ITC 45

7.6 Distribution Network Nestle 45

7.7 Order Collection of Coca – Cola 47

7.8 Order Collection of HUL 48

7.9 Order Collection of Parle 49

7.1 Order Collection of Dabur 49

7.11 Order Collection of ITC 50

7.12 Order Collection of Nestle 50

7.13 Sales Structure of Coca – Cola 57

7.14 Sales Structure of HUL 58

7.15 Sales Structure of Parle 59

7.16 Sales Structure of Dabur 60

7.17 Sales Structure of ITC 61

7.18 Sales Structure of Nestle 62

CHAPTER 8

8.1 Rural Marketing 67

8.2 Present Rural Distribution of Coca - Cola 70

8.3 New Distribution Model 71

8.4 Future view of our Model 72

8.5 Distribution Model of COKE CHACHA 74

LIST OF TABLES

7

TABLE NO

PARTICULARS PAGE NO

CHAPTER 1

1.1 Distribution Network of different FMCG Companies 11

1.2 Distribution Margin to the channel Partners 11

CHAPTER 8

8.1 Initial Investment of Coke Chaha 74

8.2 Investment of Coke Chacha in distributing the products to other outlet

75

8

CHAPTER - 1

BRIEF SUMMARY ABOUT THE PROJECT

9

The work assigned was to study the Rural distribution of the top 5 FMCG

companies and suggest opportunities for enhancing the Rural distribution of

Coca-Cola in Bihar.

Thus project was: -

Study the rural distribution of 5 FMCG companies and suggest opportunities for

enhancing the rural distribution of Coca Cola. For knowing the rural distribution

information requirement was:-

Distribution network and role of different channel partners.

Distribution margin to the channel partner.

Order collection mechanism.

Delivery mechanism – Company to Distributor, Distributor to the

rural partner, rural partner to the outlet.

Frequency of service.

Investment and ROI of the respective channel partners.

Sales structure.

Data management and MIS.

For this we had to collect the information from the distributors of different

FMCG Companies as well as distributors of Coca–Cola of rural areas. We went to

the urban and rural distributor of the different FMCG companies and asked

question on the 8 objectives stated above. We had taken companies like HUL,

Parle, Nestle, Dabur and ITC.

We also got the knowledge of the distribution setup of Coca–Cola.

By analyzing the information on the above mention objectives we had

to find the gaps and opportunities in the current Rural Distribution set

up of Coca–Cola. We had to also find the opportunities to leverage the

existing channel of different FMCG companies.

DATA COLLECTION: -

Data was collected from different location of Bihar as:-

10

Patna

Aarah

Darbhanga

Jhanabad

Gaya

Bhagalpur

1. Distribution network and role of different channel partners.

TABLE–1.1

Channel partners

HUL PARLE Coca

Cola

DABUR NESTLE ITC

C&F √ √ √ √ √ √

Super

Distributor

√

Distributor √ √ √ √ √ √

Wholesaler √ √ √ √ √

Retailer √ √ √ √ √ √

{√ Available}

ANALYSIS

In all other FMCG companies, there is one more intermediary which is

wholesaler. The wholesalers have a benefit that they are not bound to sell a

single company product. They can sell different company products. Coca–Cola

should focus on these wholesalers as this channel partner can help in

distributing the products very well.

2. Distribution margin to the channel partner.

TABLE-1.2

Channel partners

HUL PARLE Coca- DABUR NESTLE ITC

11

Cola

Distributors 4.76% 5.80% 1.44%

- 3%

Rural

Distributors

3.50% 4.00%

Super

Distributor

5.00%

Stockiest 5.63% 1.00%

AMC 3.57%

Wholesalers 5.00% 1.50% 3.00% 2.00%

Shakti Amma 3% -

10%

Retailer 10.00

%

15.00% 13.69

%

10.00% 10% - 12% 8% -

10%

ANALYSIS

Coca-cola gives a good margin to its rural outlet i.e. 13.69% is very good, with

respect to the other FMCG companies. Only PARLE gives a higher margin to the

retailers i.e. 15%.

3. Order collection mechanism.

ANALYSIS

In Coca – Cola there is no fixed day of stock keeping for the rural distributor like

other FMCG companies. For AMC and the outlets, orders are not taken by the

RMD where as HUL, Nestle, and Parle; the order is taken by the ME. Also in rural

areas the order is not collected with the help of Blackberry handset as it is

done in urban areas. HUL is the only FMCG Company which is using HTC

handsets in order collection in some rural areas.

4. Delivery mechanism–Company to Distributor, Distributor to the rural

partner, rural partner to the outlet.

ANALYSIS

Deliver mechanism in rural distribution of all the company is almost the same.

12

But in some companies like Nestle bears 75 % of the transportation cost and

the rest 25% is beard by different channel partners.

5. Frequency of service.

ANALYSIS

Frequency of service of all the company are near about the same.

6. Investment and ROI of the respective channel partners .

ANALYSIS

Retailers of Coca -Cola has to invest in GOD (Glass On Deposit) to the company

which is an extra investment to the retailers. The same is the case with the

distributor and AMC whereas it is not with the other FMCG companies. Also in

Coca-Cola all the intermediaries has to deal with the cash because Coca – Cola

does not do businesses in credit.

7. Sales Structure

ANALYSIS

There is only one RMD for 120km of area and 1000 outlets. Which is not

sufficient? The company should assign more RMD is these rural area; so that

the work should be divided equally is these RMDS. This will lowers down their

work load & will increase their work efficiency

8. Data Management and MIS

ANALYSIS

Coca-cola does not provide any software to its distributor. Whereas HUL, Nestle,

and Johnson & Johnson distributor have some kind of software (Respect

generating) provided by the respective company. Like j & j provide positive

spiral V3. It include reports like top article, dead outlet, reports attribute wise,

product wise, retailers wise, reports like actual receipt v/s order place,

collection report like daily cash balance, providing bills, trial balance, ,balance

sheet. Same is with Nestle and HUL but they use SAP software.

13

CHAPTER - 2

OBJECTIVE OF THE PROJECT

To study the rural distribution of the top FMCG companies and suggest

opportunities for enhancing the rural distribution of Coca – Cola.

INFORMATION REQUIREMENT

14

Distribution network and role of different channel partners.

Distribution margins to the channel partners.


Delivery Mechanism – Company to distributor, Distributor to rural

partner, Rural partner to the outlet.


Investment and ROI of the respective channel partners.

Sales structure.


Gaps and opportunities in the current Rural Distribution setup of Coca

-Cola.

Opportunities to leverage the existing channel of different FMCG

companies.

1. Distribution network and role of different channel partners: -To find

out the distribution network of different FMCG companies and what is the role

of different intermediaries.

2. Distribution margins to the channel partners: -To find out the profit

margins of the intermediaries of different FMCG companies.

3. Order collection mechanism: -To find out how the order is placed from

bottom to top in the distribution channel of different FMCG companies.

4. Delivery Mechanism: -To find out delivery mechanism from Company to

distributor, Distributor to rural partner, Rural partner to the outlet of different

FMCG companies.

5. Frequency of Service: - To find out the frequency of service from

Company to distributor, Distributor to rural partner, Rural partner to the outlet

of different FMCG companies.

6. Investment and ROI of the respective channel partners: - To find out

the investment of different channel partner to start their business and what is

the return on investment to the channel partner of different FMCG companies.

Main focus was on distributors and intermediaries that Coca – Cola does not

have.

15

7. Sales structure: - To find out the hierarchy of the sales department of

different FMCG companies.

8. Data management and MIS: - To find out how the different FMCG

companies manages their data and MIS at distribution point.

16

CHAPTER – 3

INTRODUCTION

Coca Cola is the company that has given the world its best known taste was

born in Atlanta, Georgia on May 8 1886. Coca Cola company is the world's

17

leading manufacturer, marketer and distributor of non – alcoholic beverage

concentrates and syrups, it is use to produce nearly 400 beverages brands. It

sells beverage concentrates and syrups to bottling and canning operators,

distributors, fountain retailers and fountain wholesalers. The company's

beverage product comprises of bottled and canned soft drink as well as

concentrates, syrups and not ready to drink powder products. In addition to

this, it also produces and markets sports drinks, tea and coffee. The Coca Cola

Company began building its global network in the 1920s. Now operating in

more than 200 countries and producing nearly 400 brands. The Coca Cola

system has successfully applied a simple formula on a global scale:”Provide a

moment of refreshment for a small amount of money – a billion times a day.”

The Coca Cola Company and its network of bottlers comprise the most

sophisticated and pervasive production and distribution system in the world.

More than anything, that system is dedicated to people working long and hard

to sell the products manufactured by the company. This unique worldwide

system has made the Coca Cola company the world's premier soft- drink

company. Coca-Cola, more than any other consumer products has brought

pleasure to thirsty consumers around the globe. For more than 115 years Coca

Cola has created a special moment of pleasure for hundreds of millions of

people every day.

The company aims at increasing share owner value over time. It accomplishes

this by working with its business partners to deliver satisfaction and value to

consumers through a worldwide system of superior brands and service, thus

increasing brand equity on a global basis, this aim at managing their business

well with people who are strongly committed to the company values and

culture and providing an appropriately controlled environment, to meet

business goals and objectives. The associate of this company jointly takes

responsibility to ensure compliance with the framework of policies and protect

the company's assets and resources whilst limiting business risk.

A BRIEF INSIGHT- THE FMCG INDUSTRY IN INDIA

Fast Moving Consumer Goods (FMCG) have a quick turnover and relatively low

cost. Consumer generally put less thought into the purchase of FMCG than they

do for other products. FMCG industry witnessed significant changes since 1990.

18

Many players had been facing problems on account of increased competition

from small and regional players and from slow growth across its various

products categories. As a result all the companies revamp their product,

marketing, distribution and customer service strategies to strength their

position in the market.

By the turn of the 20th century, the face of the Indian FMCG industry had

changed significantly. With the liberalization and the Indian customer witnessed

an increasing exposure to new domestic and foreign products through different

media, such as television and the internet. Apart from this, social changes such

as increase in the number of nuclear families and the growing number of

working couples resulting in the increased spending power also contributed to

the increase in the Indian consumer's personal consumption. The realization of

the customers growing awareness and the need to meet changing

requirements and preferences on account of changing lifestyles required the

FMCG producing companies to formulate customer centric strategies.

These changes had a positive impact leading to the rapid growth in the FMCG

industry. Increased availability of retail space, rapid urbanization and qualified

manpower also boosted the growth of the organized retailing sector.

HUL led the way in revolutionizing the product, market, distribution and service

formats of the FMCG industry by focusing on rural markets, direct distribution,

creating new products and distribution and service format. The FMCG sector

also received a boost by government led initiatives in the 2003 budget such as

the setting up of excise free zones in various parts of the country that

witnessed firms moving away from outsourcing to manufacturing by investing

in the zones.

Though the absolute profit made on FMCG products is relatively small, they

generally sell in large numbers and so the cumulative profit on such products

can be large. Unlike some industries, such as automobiles, computers and

airlines FMCG does not suffer from mass layoffs every time the economy starts

to dip. A person may put off buying a car but he will not put off having his

dinner.

Unlike other economy sector, FMCG shares float in a steady manner

irrespective of global market dip, because they generally satisfy rather

fundamental, as opposed to luxurious needs. The FMCG sector, which is

19

growing at the rate of 9% is the fourth largest sector in the Indian Economy and

is worth Rs 93000crores. The main contribution making up 32% of the sector, is

the South Indian region. It is predicted that in the year2010, the FMCG sector

will be worth Rs 143000crores. The sector being one of the biggest sectors of

the Indian Economy provides up to 4 million jobs.

A BRIEF INSIGHT: BEVERAGE INDUSTRY IN INDIA

In India, beverages form an important part of the lives of people. It is an

industry, in which the players constantly innovate in order to come up with

better products to gain more consumers and satisfy the existing consumers.

The beverages industry is vast and there various ways of segmenting it, so as

20

to cater the right products to the right person. The different was of segmenting

it is as follows:

Alcoholic, non-alcoholic and sports beverages

Natural and Synthetic beverages

In-home consumption and out of home on premises consumption.

Age wise segmentation i.e. Beverages for kids, for adults and for senior

citizens.

Segmentation based on the amount of consumption i.e. High levels of

consumption and low levels of consumption.

If the behavioural patterns of consumers in India are closely noticed, it could be

observed that consumers perceive beverages in two different ways i.e.

Beverages are a luxury and that beverages have to be consumed occasionally.

These two perceptions are the biggest challenges faced by the beverages

industry. In order to leverage the beverage industry, it is important to address

this issue so as to encourage regular consumption as well as to make the

industry more affordable.

Four strong strategic elements to increase consumption of the products of the

beverage industry in India are:

1. The quality and the consistency of beverages needs to be enhanced so

that consumers are satisfied and they enjoy consuming beverages.

2. The credibility and trust needs to be built so that there is a very strong

and safe feeling that the consumers have while consuming the

beverages.

3. Consumer education is a must to bring out benefits of beverage

consumption whether in terms of health, taste, relaxation, stimulation,

refreshment and well- bring or prestige relevant to the category.

4. Communication should be relevant and trendy.

The beverage market has still to achieve greater penetration and also a wider

spread of distribution. It is important to look at the entire beverage market, as

a big opportunity, for brand and sales growth in turn to add up to the overall

growth of the food and beverage industry in the economy.

21

22

CHAPTER – 4

THE COCA – COLA COMPANY

HISTORY:

The story starts in Atlanta, Georgia on May 8, 1886, when a pharmacist whose

name was Dr. John Smith Pemberton first mixed Coca- Cola in his back yard.

23

This formula which was made from carbonated water, cane sugar syrup,

caffeine, extracts of kola nuts and cola leaves was brought to the nearby

Jacobs' pharmacy where it made its debut as a soft drink the same day, selling

for only 5 cents. His bookkeeper named this drink “Coca – Cola”.

He first distributed the product by carrying it in a jug and customers bought the

drink for five cents at the soda fountain. Carbonated water was mixed with the

new syrup, whether by accident or otherwise, producing a drink that was

proclaimed delicious and refreshing a taste that continues to be loved today

wherever Coca Cola is enjoyed.

Dr. Pemberton's partner and book keeper whose name was Frank M. Robinson,

suggested the name and noted “Coca–Cola” in the unique flowing script that is

famous worldwide even today. He suggested that the two Cs would look good

in advertising. The first newspaper advertisement for Coca-Cola appeared in

The Atlanta Journal, suggesting thirsty citizen to try the new and popular soda

fountain drink. Hand -painted oil cloths signs reading Coca – Cola appeared on

store awnings, with the suggestion “Drink” added to inform passersby that the

new beverage was for soda fountain refreshment.

By the year 1886, sales of Coca-Cola averaged nine drinks per day. In the first

year Dr. Pemberton sold 25 gallons of syrup, shipped in bright red wooden

kegs. Red has been a distinctive color associated with the soft drink ever since

then. For his efforts Dr. Pemberton earned $50 and spent $73.96 on

advertising. Dr. Pemberton never realized the potential of the beverage he

created. He gradually sold portion of his business to various partner and just

prior to his death in 1988, sold his remaining interest in Coca – Cola to As a G.

Candler, an entrepreneur from Atlanta. Till the year 1891, Mr. Candler

proceeded to buy additional rights and acquire complete ownership and control

24

of the Coca – Cola business. Within 4 years, his merchandising flair had helped

expand consumption of Coca – Cola to every state and territories after which he

ended his pharmaceutical business and focused his full attention on the the

soft drink. Mr. Candler formed a Georgia corporation named the Coca- Cola

Company. The trademark “Coca – Cola” used in the marketplace since 1886

was registered in the United States Patent Office on January 31 1893.

The business continued to grow and in 1894, the first syrup manufacturing

plant outside Atlanta was opened in Dallas, Texas, Chicago, Illinois, Los Angeles

and California. In 1895, three years after The Coca- Cola Company's

incorporation, report to share owners that “Coca – Cola is now drunk in every

state and territory in the United States”

As demand for Coca Cola increased, the Company quickly increased its

facilities. A new building devoted exclusively to the production of syrup and the

management of the business. In the year 1919, the Coca Cola Company was

sold to a group of investors for $25 million. Robert W. Woodruff became the

President of the Company in the year 1923 and his more than 60 years of

leadership took the business to unsurpassed heights of commercial success,

making Coca – Cola one of the most recognized and valued brands around the

world.

HINDUSTAN COCA -COLA BEVERAGES PRIVATE LIMITED

ABOUT THE COMPANY:

Every person who drinks a Coca Cola enjoys a moment of refreshment and

shares an experience that millions of others have savoured. All of those

individual experiences combined have created a worldwide brand – a truly

global brand. On the distribution network front, 10-tonne trucks, three-wheelers

that can go the narrow alleyways of Indian cities, ensure availability of Coke

25

brands in every nookar and corner of the country. The company – owned

bottling arm of the Indian Operations, Hindustan Coca – Cola Beverages Private

Limited is responsible for the manufacture, sale and distribution of beverages

across the country.

Coca – Cola was the leading soft drink brands in India until 1977, when it left

the Indian market because of the reveals its formula with the Government and

reduces its equity stake as required under the Foreign Regulation Act( FERA)

which governed the operations of foreign companies in India. Coca – Cola re–

entered the Indian market on 26th October 1993 after a gap of 16 years. An

agreement with Parle Group gave the Company instant ownership of the top

soft drink brands of the nation. With access to 53 of Parle's plant and a well set

bottling network, an excellent base for rapid introduction of the company's

international brands was formed. The Coca – Cola Company acquired soft drink

brands like Thumps Up, Gold – Spot, Limca, Maaza which was introduced by

Parle, as these products had achieved a strong consumer base and formed a

strong brand image in Indian market during the entry of Coca Cola in 1993.

Thus these products became a part of range of products of the Coca Cola

Company.

In the new liberalized and deregulated environment in 1993, Coca Cola made

its re – entry into India through its 100% owned subsidiary, HCCBPL, the Indian

bottling arms of the Coca Cola Company. However, this was based on

numerous commitments and stipulations which the company agreed to

implement in due course.

Coca Cola consist of 7000 local employees, 500 managers, over 60

manufacturing location, 27 Company Owned Bottling Operations (COBO), 17

Franchisee Owned Bottling Operations (FOBO) and a network of 30 Contract

Packers that facilitate the manufacture process of a range of products for the

company. It also has a supporting distribution network consisting of 70, 00,000

retail outlets and 9000 distributors. Almost all goods and services required to

cater to the Indian market are made locally, with help of technology and skills

within the company. The complexity of the Indian market is reflected in the

26

distribution fleet which includes different modes of distribution, from 10- tonne

trucks to open – bay three wheelers that can navigate through narrow

alleyways of Indian cities and trademarked tricycles and pushcarts.

“Think local, act local”, is the mantra that Coca Cola follows, with punch line

like “Life ho to Aisi” for Urban India and “Thanda Matlab Coca Cola” for

Rural India. This resulted in a 37% growth rate in rural India visa – vie 245%

growth seen in urban India. Between 2001 and 2003, the per capital

consumption of cold drink doubled due to the launch of the new packaging of

200 ml returnable glass bottle which were made available at a price of Rs 5

per bottle. This new market accounted for over 80% of India's new Coca Cola

drinkers. At Coca Cola, they have a long standing belief that everyone who

touches their business should benefit , thereby inducing them to uphold these

values enabling the company to achieve success, recognition and loyalty

worldwide.

HINDUSTAN COCA–COLA BEVERAGES PVT. LTD. PATNA

Hindustan Coca – Cola Beverages Pvt. Ltd. Patna is the organization which is

having its plant and office is in Patliputra industrial area. It looks on the sales ,

distribution of Coca – Cola products in Bihar ,Jharkhand and some part of

western West Bengal. Its plant capacity is to produce 8000 cases of RGB

(Resumable Glass Bottle) in a day. The rest of the pet bottles come from the

Dasna factory in Ghaziabad.

27

FIGURE–4.1

FIGURE: Location of COBO, FOBO & Contract Packaging in India (Source: -

Google images.com)

MANIFESTO FOR GROWTH

VALUES

The values for the employee of the company is expected to

keep up the work regular ly are:

Leadership: To take in i t iat ive, lead, mot ivate and deal the

team with energy so that i t can del iver good and

outstanding resul ts .

Innovat ion: To a lways t ry for progress and try to reach the

above level of excel lence in whatever we do.

28

Pass ion: To be committed and del iver outstanding

performance.

Teamwork: To uni te people for greater strength and work in

teams to achieve the common goals of the organizat ion.

Ownership: To th ink and act as owners at d i f ferent levels ,

so those decis ions are taken at the lowest level .

Accountabi l i ty: To be accountable, t ransparent to our

co l leagues so that agreed targets and goals are achieved.

VISION FOR SUSTAINABLE GROWTH

To provide an except ional strategic leadership for the Coca Cola

resul t ing in consumer preference and loyal ty.

FIGURE–4.2

MISSION

To create consumer products , customer serv ice and bott l ing

system strategies, processes and tools in order to create

compet i t ive and del iver super ior va lue to:

Consumer as a super ior beverage exper ience.

Consumer as an opportuni ty to grow prof i ts through the

use of f in ished dr inks.

29

Bott lers as an opportuni ty to grow prof i ts in vo lumes.

Bott lers as a t rademark enhancement and pos i t ive

economic value added.

Suppl iers as an opportuni ty to make reasonable prof i ts

when creat ing real va lue added in an environment of

system wide team work, f lex ib le bus iness system and

cont inuous improvement.

Ind ian soc iety in the form of a contr ibut ion to economic

and soc ia l development.

QUALITY POLICY

To ensure customer del ight , we commit to qual i ty in our

thoughts , deeds and act ion by cont inual ly improving our

processes every t ime.

PRODUCTS

The Coca–Cola Company offers a wide range of products to its consumers.

Coca–Cola is the world's most valuable brand. It is the largest manufacturer,

marketer and distributor of non alcoholic beverages in the world. There are

many brands of Coca–Cola each with a different taste and it has also many

SKUs. Some of the brands Coca–Cola bought from Parle like Thums Up, Limca

etc. All the brands of Coca–Cola come in different pack- size with different

prices.

THE DIFFERENT BRANDS OF COCA – COLA ARE AS FOLLOWS:

Thums Up: - In India Thums Up is the main brand of Coca Cola. Coca – Cola

bought this brand from Parle. It has a punch line “Taste the Thunder”. It come

in different pack size of 200 ml, 300 ml, 350 ml,330 ml(can),600ml, 1.25 litters,

2 litters, 2.5 litters.

30

Coke: - Coke is the second main brand of Coca – Cola in India. Coke is the main

brand of Coca – Cola in the world. It come in different pack size of 200 ml, 300

ml, 350 ml, 330 ml (can), 600ml, 1.25 liters, 2 liters, 2.5 liters.

Sprite: - Sprite is one of the most selling brands of Coca – Cola in India. It has a

punch line “Sidhi Bat No Bakwas”. It come in different pack size of 200 ml, 300

ml, 350 ml, 330 ml(can),600ml, 1.25 liters, 2 liters, 2.5 liters.

Maaza: - Maaza is the brand of Coca–Cola which is categorized in juice

category. It tastes like mango. It comes in 250 ml RGB bottle, 250 ml tetra

pack, 600 ml, 1.2 liter, 2 liter.

31

Fanta: - Fanta is the brand Coca–Cola introduces in lieu of Gold Spot the brand

which Coca Cola bought from Parle along with Thums Up and Limca. It comes in

200 ml, 300 ml, 330 ml (can), 350 ml, 600 ml, 1.25 liter, 2 liter and 2.5 liter.

Limca: - Limca is the brand which Coca – Cola bought from Parle. It tastes like

lemon drink. It comes in 200 ml, 300 ml, 330 ml(can), 350 ml, 600 ml, 1.25

liter, 2 liter and 2.5 liter.

32

Minute Maid Pulpy Orange: - Minute Maid Pulpy orange comes under juice

category. It has pulp of orange in it. It comes in packs of 400 ml and 1.25 liters.

Minute Maid Nimbus Fresh: - Minute Maid Nimbus Fresh has been launched

this year only. It tastes like nimbu pani. It comes in pack of 400 ml.

33

Kinley Mineral Water & Soda: - Coca–Cola owns a brand “Kinley”. It comes

in mineral water and soda. Mineral water comes in pack of 1 liter and Soda

comes in pack of 600 ml and 1 liter.

DISTRIBUTION NETWORK SETUP OF COCA–COLA IN BIHAR

AND JHARKHAND.

Coca – Cola has two different distribution network setup in Bihar. One is for

urban area and one is for rural area. In urban area like Patna Coca–Cola

distribute its SKUS with help of one C&F and distributors. In rural areas it

distributes its SKUS through distributors and AMC.

Retailers are classified as FOLLOWS: -

Bronze: - The retailers who sells 0 – 199 case in a year.

Silver: - The Retailers who sells 200 – 399 case in a year.

Gold: - The retailers who sells 400 – 799 cases in a year.

Diamond: - The retailers who sells above 800 cases in a year.

Distribution of visi–cooler (refrigerator) to the retailers depends upon this

category. i.e.: -

i. Bronze : - 4 vc

ii. Silver : - 7 vc or 9 vc

34

iii.Gold : - 15 vc or 20 vc

iv. Diamond : - 20 vc or 30 vc

RETAILERS COUNTER IS CLASSIFIED AS:-

Red Counter: - Where the Coca – Cola refrigerator has been set up.

Non Red Counter: - Where the refrigerator is not available.

RETAILERS SHOPS ARE CLASSIFIED AS FOLLOWS: -

Convenience: - Shops like panwala.

E&D Type 1 : - Quick service restaurant without sitting arrangement

E&D Type 2 : - Restaurants with sitting arrangements

Grocery: - General stores.

DISTRIBUTORS ARE CATEGORIZED AS FOLLOWS: -

Urban Distributors: - One urban distributor distributes the products within

an area of 10 – 15 Kms.

Rural Distributors: - One rural distributor distributes the products within

an area of 50 – 60 villages.

AMC (AREA MARKETING CONTRACTOR): - i t i s very usefu l in

d istr ibut ing the product where the rura l d ist . cannot reach.

35

CHAPTER – 5

LITERATURE REVIEW

According to National Council of Applied Economic Research (NCAER),(2004)

rural households from 71.7% of the total households in India. Spending in this

segment is growing at a fast pace and consumption patterns are closing in on

those of urban Indian market. Jagan Singh Raju, professor of marketing at

Wharton says “No consumer goods company today can afford to forget that the

rural market is a very big part of the Indian consumer market. You cannot build

a presence for a brand in India unless you have strategy for reaching the

villages.”

According to National Council of Applied Economic Research (NCAER) the low

penetration rates in the rural markets can be attributed to three major Factors:-

1. Low income levels, 2. Inadequate infrastructure facilities and 3. Different

36

lifestyles from urban. But income levels are going up, infrastructure is

improving and lifestyle is changing in rural areas. Almost one third of the rural

population in India is using shampoo now compared with 13 % in 2000.

According to Hansa Research, the penetration of consumer durables has rise

very good in India's village between the years 2000 -2005. In color TVs

segment sales are up 200%, in motorcycles it is 77%. In absolute numbers the

penetration of durables is still low. Coke, for instance reaches barely 25% of the

rural market. This means the potential is huge for companies that develop

effective marketing strategies.

The Confederation of Indian Industry (CII) has recently released the report

which was prepared by McKinsey & Company “Bhart Nirman Plus: Unlocking

Rural India's Growth Potential”. The success of Bhart Nirman Plus depends on

two key factor – creating innovative models that can be replicated across

India's vast and diverse rural sector and concerted action by all stakeholder –

central and state government, locals communities and panchayats and the

private sectors. CII believes that Bhart Nirman Plus has the potential to help

India realize its aspiration of Inclusive growth.

FICCI has brought out a book titled “Business in Service of Rural India”. In this

an attempt has been made to portray some of the success stories of the

different organizations which has been actively involved in the empowerment

and development of the rural masses through various social welfare scheme

and useful programs. These models thus depict synergies between the

corporate and the rural economy, it also inspire other organizations to venture

into similar projects in rural India leading to rural upfiftment and better quality

of life for the rural population.

Trends indicate that rural markets are coming up in a big way and growing

twice as fast as the urban markets. According to NCAER study there are almost

equal numbers of middle income and above households in the rural areas as

there are in the urban areas. There are also almost twice as many lower middle

income households in rural areas. And at the highest income level there are 2.3

million urban households as against 1.6 million households in rural areas.

According to Shivakumar, D., (2005), Business head, personal products

Division, HUL. Stated “the money available to spend on FMCG products by

urban India is Rs 49,500crores and by rural India is 63,500crores.” According to

37

him there are four factor which influence demands in rural India and they are –

access, attitude, awareness and affluence. HUL has successfully used these to

influence the rural market for its shampoos in sachets successfully.

Aithal, Rajesh K., (2007), Structure of Distribution in Rural Areas, IRMA, Gujrat

stated “The essence of marketing lies in the exchange process and channels of

distribution facilitate this exchange process by providing the linkage between

the producer and the consumer.”

Prahalad, C.K, (2008), “The future lies with those companies who see the poor

as their customer”.

38

CHAPTER – 6

RESEARCH METHODOLOGY

Research Design: Exploratory design and Descriptive design

Sample Design:-

Sample Unit: Urban and Rural Retailers and Distributors of different FMCG

companies of Bihar.

Sample Size: 2 Urban and 2 Rural Distributors of different FMCG companies.

20 Urban and Rural Retailers.

Sampling Techniques: Convenience Sampling

Sampling Area: Bihar

Data Collection: Primary Data and Secondary Data

39

Source: Primary data are collected by Personal Interview. Secondary data are

collected by internet, Coca-Cola's official reports.

Tools: Unstructured Questionnaire.

40

CHAPTER – 7

FINDINGS

Findings based on the 8 information as : -

Distribution network and the role of different channel partners.

Distribution margins to the channel partners.


Deliver mechanism – Co. To distributor, Distributor to rural partner, rural

partner to the outlet.


Investment and ROI of the respective channel partners including the last

tier.

Sales structure.

41


We have taken companies like HUL, Parle, Dabur, Nestle and ITC . We have

found out the above mention information regarding these FMCG Companies.

1. Distribution network and role of different channel partners

COCA-COLA

COMPANY Godown RURAL DISTRIBUTOR

AMC REATILER

FIGURE 7.1

THIS DISTRIBUTION NETWORK IS ONLY FOR THE RURAL SECTOR.

ROLE OF DIFFERENT CHANNEL PARTNERS:

DISTRIBUTOR: This distributor is only for the rural sector, which

focuses on the rural distribution. They directly deliver to AMC as well as

to the Retailers. Rural Distributor received the products from Company's

warehouse.

AMC: They also give the products to the retailers. It acts like a

wholesaler.

PARLE

Company Warehouse Urban Distributor

42

Rural distributor

Retailers

FIGURE–7.2


1. Urban Distributor: It distributes the products in the urban area.

2. Rural Distributor: It distributes the products in the rural area.

HUL

Company Warehouse Distributor {urban distribution}

Super Stockiest (rural distribution)

Wholesaler Retailer Shakti AMMA

FIGURE-7.3Role of different channel partners:

1. Distributor: Distribute the products in the urban areas.

2. Super Stockiest: It is also called rural distributor. It distributes the

products in the rural markets.

3. Wholesaler: It is that intermediary that keeps the products of different

companies. In HUL wholesalers are of two types i.e normal wholesalers and

Vijeta. Vijeta are those wholesalers that invest more than Rs. 40000/- in a

month.

4. Shakti Amma: These are women of rural areas helping in distributing the

products to the remote areas.

DABUR

43


Super Distributor (rural distribution)

Wholesaler Retailer

FIGURE – 7.4



2. Super Distributor: It is also called rural distributor. It distribute the



companies.

ITC


Stockiest (rural distributor)

44

Retailer Wholesalers

FIGURE–7.5

Role of different channel partners:


2. Super Distributor: It is also called rural distributor. It distribute the



companies. In ITC there are 3 different wholesalers for cigarets items, food

items and persona products items.

NESTLE

Company's C&F Distributor Urban & Semi urban outlet

Wholesalers

Rural Distributor Rural

Outlet/wholesalers

FIGURE–7.6

Role of different channel partners:

1. Distributor: Distribute the products in the urban and semi urban areas as

well as delivers the products to the rural distributors.

2. Rural Distributor: It distributes the products in the rural markets to the

45

outlets and wholesalers.


companies.

2.DISTRIBUTION MARGINS TO THE CHANNEL PARTNERS

COCA-COLA

Distributor- 4.76% margin (3% excluding transportation cost)

AMC - 3.57% Margin

Retailer - 13.69% Margin

HUL

Super Stockiest - 5.63%

Wholesaler - 5%+1.5 %( according to scheme)

Shakti AMMA - 3 %( door to door selling)

10 %( when sells to retailers)

Retailers - 10%

PARLE

Rural distributor -3.5%

Wholesaler - 1.5%

Retailers - 15%

DABUR

Super distributor -5%

Wholesaler -3%

Retailer - 10 %

ITC

Distributor- 1.44(in cigarette)

3 % (in other personal care product)

Stockiest -0.72 % (in cigarette)

Retailer - 8 %( in cigarette)

10 %( personal care product)

NESTLE

Distributor -5.8 % in other products and 4.8 % milk items.

Rural Distributor –4 % in both items (milk as well as others).

46

Retailers –It varies between 10% - 12%.

Wholesalers – 2 %

3. ORDER COLLECTION MECHANISM

COCA–COLA-Company has appointed RMD (Rural Market Developer) for the

field work. These RMD takes the order from the retailers and AMC. Generally

RMD takes order on beat plan i.e. one RMD has 200 – 250 retailers with him

and it is up to the RMD to take orders twice in a week from one retailers. Some

times RMD takes the order on mobile phone in spite of visiting the retailers

personally. Then RMD passes the order to the local distributor. In urban areas

the MD (Market Developer) uses the Blackberry Handset to take the order. By

taking the order on this handset it automatically get generated to the database

of the company as well as to the distributor. The distributor gives the order to

the ASM (Area Sales Manager). Then the ASM forwards the order to RTM in the

main office twice a month because the distributor has to keep at least 18 days

stock with him.

FIGURE–7.7

HUL

Company has appointed MEs (Marketing Executives) for the field work. These

MEs takes orders from different outlets and then place the order on a hand

device known as HTC device.

47

Market Developer of Coca - Cola

MD Takes order on Blackberry (hand device of Coca-Cola)

Coca Cola company database

Concerned Godown or the concerned Distributor

Forwards the order automatically to company and concerned godown

HTC is the device which automatically forwards the order to the concerned

Distributor as well as to the company. HTC has the functions which immediately

generates the total value of the order.

FIGURE – 7 .8

PARLE

Company has appointed SMs (salesman) for the field work. These SMs takes

orders from different outlets. They take order on NOC (new order collection)

book and they place the order too the rural distribution point.

SM takes a order in MSSS (monthly stock and sales statement) and place the

C&F.

48

Marketing executives of HUL

ME Takes order on HTC (hand device of HUL)

HUL company database

Concerned C&F or the concerned Distributor

Forwards the order automatically to company and concerned godown

Salesman of PARLE

SM Takes order on NOC (new order collection book

Forwards the order to concerned rural distributo

PARLE

Forwards the order to Concerned C&F

FIGURE–7.9

Dabur

Company has appointed SMs (sales man) for the field work. These SMs takes

orders from different retail outlets and then place the wholesale point.

The salesman takes order to the SGB (sales generation book) and forwards the

order to the concerned rural wholesale Distributor. As well as to the company.

FIGURE–7.10

ITC

Company has appointed PSR (Pilot sales representative) for the field work.

These PSR takes orders from different retail outlets and then place the order on

an OGB (order generation book).

PSR take order to an OGB (order generation book) and forwards the order to

the concerned Distributor.

FIGURE–7.11

Nestle

49

Pilot sales representative of ITC

PSR Takes order on OGB (order generation book of ITC)

Forwards the order to concerned stockiest.

ITC company database

Concerned C&F or the concerned Distributor

Salesman of DABUR

SM Takes order on SGB (Sales generation book of DABUR)

Forwards the order concerned wholesaler

Dabur company database

Concerned super- Distributor Concerned godwon

Sales man of the distributor having the company sale book takes the order

from the urban and semi urban outlets once in a week. The rural distributor can

give order over the phone to the distributor. The rural distributor gives order to

the distributor as per their needs, it is not fixed.

FIGURE–7.12

4.Delivery Mechanism – Company to Distributor, Distributor to rural

partner, rural partner to the outlet

Coca – Cola

Company to C&F and C&F to Rural Distributor:

Company directly delivers its good to the C&F and through the C&F the goods

supply to the Rural Distributors through its own vehicles. Rural Distributors

have two vehicles only. 9 AMC works under 1 rural distributor.

The main difference between the Urban & Rural distribution is that delivery

cost is less in the urban distribution then rural distribution.

Rural distributor to the AMC as well as Retailers both:

Rural Distributor directly delivers its good to the AMCs as well as to the

Retailers. Sometimes AMCs also deliver its good to the retailers directly.

HUL

50

Salesman of Nestle

SM Takes order on SGB (Sales generation book of Nestle)

Forwards the order concerned wholesaler

Nestle company database

Concerned super- Distributor Concerned godwon

Company to Distributor and Super stockiest: -

Company directly deliver its goods to Warehouse and then to the C&F.

C&F then delivers the goods to the Distributor for Urban distribution and to the

SUPER STOCKIEST for Rural distribution by their own transport.


cost is less in the urban distribution then rural distribution.

SUPER STOCKIEST to Rural Partner: -

Super Stockiest have their own vehicle from which they supply the goods in the

rural area. Every vehicle goes in their particular route and it goes again in a

same route after a week.

They deliver the goods to the wholesaler, retailer and to the Shakti AMMA.

In case of Shakti AMMA the Super Stockiest delivers the products twice in a

month.

Parle

Company to C&F to rural Distributor: -



rural distribution by their own transport.


cost is same.

RURAL DISTRIBUTOR to Rural retailers: -

Distributor has their own vehicle from which they supply the goods in the rural

area. Every vehicle goes in their particular route and it goes again in a same

route after a week.

They deliver the goods to the retailer.

Dabur

51

Company to Super Distributor and Super distributor to rural

wholesaler: -

Companies directly deliver its goods to the C&F.

C&F then delivers the goods to the Distributor for urban super distributor and

SUPER DISTRIBUTOR deliver the goods to the rural wholesaler by their own

transport.

SUPER DISTRIBUTOR to Rural Partner: -

Super Distributor has their own vehicle from which they supply the goods in the

rural area. Every vehicle goes in their particular route and it goes again in a

same route after a week.

They deliver the goods to the wholesaler.

ITC

Company to Distributor: -



STOCKIEST for Rural distribution by their own transport.

STOCKIEST to Rural Partner: -

Stockiest have their own vehicle from which they supply the goods in the rural

area. They deliver the goods to the retailer.

Nestle

Company to Distributor:

The good are delivered to the distributor once in a week. The goods are

delivered from the company's C & F .

Distributor to Rural Distributor and Urban & semi urban Outlet :

52

Distributor delivers the goods to the Rural distributor and urban outlet once in

a week.

Rural distributor to rural outlet:

Rural distributor delivers the products to the rural outlet twice in a week.

In distributing the products company bears the 75% of the transportation cost

and the rest of the 25% of transportation cost is beard by different channel

partners.

5. FREQUENCY OF SERVICE:

COCA-COLA

The company work through the Beat plan system. Sales man goes to the particular market weekly. If sales man gets a good response from the market

then they visit 2 – 3 times in a week.

HUL

HUL works on GTM theme. (I.e. GO-TO-MARKET) Take the order per week

Deliver the order per week.

PARLE

Take the order per week. Deliver the order per week.

The distributor goes every week in a month to deliver the goods to Retailers.

DABUR


The retail outlets who have a less capacity of purchasing goods, for these the super distributor have kept salesman to see all these outlets.

The Super distributor goes weakly to deliver the goods to rural distributor.

ITC

53


The retail outlets who have a less capacity of purchasing goods, for these the stockiest have kept boys to see all these outlets.The Stockiest goes once in a week to Retailers.

NESTLE

Company to Distributor: Once in a weekDistributor to Rural Distr. and Urban & semi urban Outlet: Once in a week

Rural distributor to rural outlet: Twice in a week

6. INVESTMENT AND ROI OF THE DIFFERENT CHANNEL PARTNERS

COCA-COLA

Distributor: - Investment-10, 00,000

Turnover- 20, 00,000(monthly)

Margin- 4.76%

(Margin=3% excluding transportation cost)

ROI= 60, 000/10, 00,000*100=6%

AMC: - Investment – 20000

Turnover – 60000(monthly)

Margin – 3.57

ROI = 2142/20000*100 = 10.71%

Retailers: - Turnover – 15000(monthly)

Investment – 2500

Margin – 13.69%

HUL

Super Stockiest: - Turnover - 600000 (monthly)

Investment-300000

54

Margin-5.63%

(Margin=4%excluding transportation cost)

ROI= 2, 40,000 / 30, 00,000*100 = 8%

Wholesaler: - Turnover – 250000 (monthly)

Investment – 50000

Margin – 5%

ROI = 12500/50000*100 = 25 %

Shakti AMMA: - 20,000 turnover

Investment-10,000

For retailer-12,000*10/100=1200

For door to door-8000*3/100=240

Then, ROI=1440/10,000*100=14.40%

Parle

Rural distributor: - 20lakh monthly turnover

Investment-5lakh

Margin-5%

(Margin=3.5%excluding transportation cost)

Roi-20, 000, 00*3.5%/500000*100

Rural retailers: - 20,000 turnover

Investment-5000

Margin -15%

Dabur

Super Distributor: - 40lakh monthly turnover

Investment-10lakh

Margin-5%

(Margin=4%excluding transportation cost)

ROI-4000000*4%/1000000*100

55

Rural wholesaler: - 4lakh monthly turnover

Investment-1lakh

Margin-3%

ITC

Stockiest: - 20 lakh monthly turnover

Investment-5 lakh

Margin-.72% (on cigarette)

5% (personal care product)

(Margin=3.5%excluding transportation cost)

ROI= 70,000 / 5, 00,000*100 = 14%

Nestle

Distributor: Rs 40 lack Turnover

Rs 20 lack investment

Margin = 5.3% avg

ROI = 212000/2000000* 100 = 10.6%

Rural Distributor : Rs 10 lack Turnover

Rs 3 lack investment

Margin = 4 %

ROI = 40000/300000*100 = 13.33%

56

7. SALES STRUCTURE

Coca – Cola

RTM

Area Sales Manager

Sales Team Leader

Rural Market Developer

Under Rural Distributor

Sales man

Driver

Munsi

57

FIGURE–7.13

HUL

Area Sales & Commercial Manager

Sales Channel Manager

Activation In charge

Operational Manager (for distributor)

Territory sales in charge (the concerned person of HUL for rural distribution

only)

Sales Team Leader (1 STL for 10 ME)

Marketing Executive

58

FIGURE–7.14

NOTE: The work of Territory Sales in Charge is to cover all the issues of rural

distribution, such as investment issue, sales issue, any market problem etc.

Parle

Area in charge

Sales manger

Area sales manager

Area manager

Sales man

FIGURE–7.15

NOTE: The work of area Sales manager is to cover all the issues of rural

distribution, such as investment issue, sales issue, any market problem etc.

59

Dabur

Area Sales Manager

Area Sales executive

Sales officer

Pilot sales manager

Sales man

FIGURE–7.16

NOTE: The work of pilot Sales manager is to cover all the issues of rural

distribution, urban distribution, such as investment issue, sales issue, any

market problem etc.

60

ITC

Sales manager

SWSD (semi whole sale dealer)

PSR (PILOT SALES REPRESENTITIVE)

Supervisor

Distributor

FIGURE–7.17

NOTE: The work of Supervisor in Charge is to cover all the issues of rural

distribution, urban distribution such as investment issue, sales issue, any

market problem etc. and pilot sales representative plays an important role in

the rural distribution in all aspects

61

Nestle

Area Sales Manager

Sales officer

Pilot Sales man

Sales Man

FIGURE–7.18

Pilot Sales Man – All the rural area are taken care of by the Pilot sales Man .It

deals with the problem of rural distributor and rural outlet.

Sales Man – Sales man deals with the Urban outlets and distributors

62

8. DATA MANAGEMENT & MIS

Coca – Cola

Coca – Cola does not provide any software or database to the distributor to

manage sales and order list data. The work is done simply on ledgers and

register. It uses a blackberry hand set to take order in urban areas but not in

the rural areas. The order is taken by the salesmen in their monthly stock and

sales statement (MSSS) book. The salesman goes to the distribution point order

thus generated goes to the company’s database. PARLE checks this data on

daily basis and through this the company come to know about the requirement

of every C&F and Rural Distributor. The order goes to the C&F; through this the

C&F generates the order to the company about its requirement.

HUL

In most of the rural areas HUL uses HTC device to take order from the retailers.

The order thus generated automatically goes to the company’s database. HUL

checks this data on daily basis and through this the company come to know

about the requirement of every C&F and Distributor. The 2nd copy of the order

goes to the C&F; through this the C&F generates the order to the company

about its requirement.

Thus HTC device is the key player in the Data Management of HUL.

Ex of MIS Format

SALESMAN

NAME

MARKET NAME GROSS

SALE

NO. OF BILL

Parle

The order is taken by the salesmen in their monthly stock and sales

63

statement (MSSS) book. The salesman goes to the distribution point

order thus generated goes to the company’s database. PARLE checks this

data on daily basis and through this the company come to know about

the requirement of every C&F and Rural Distributor. The order goes to the

C&F; through this the C&F generates the order to the company about its

requirement.

Ex of MIS Format

SALESMAN

NAME

MARKET

AREA

GROSS

SALE

TOTAL

AMOUNT

%OF DISC. NO. OF

BILL

Dabur

The order is taken by the salesmen in their sales generation book. The

salesman goes to the distribution point order thus generated goes to the

company’s database. DABUR checks this data on daily basis and through

this the company come to know about the requirement of every C&F and

Super Distributor. The order goes to the C&F; through this the C&F

generates the order to the company about its requirement.

Ex of MIS Format

SALESMAN NAME

MARKET NAME

GROSS SALE

TOTAL AMOUNT

NO. OF BILL

ITC

The order is taken by the pilot sales representative in their OGB (order

generation book). The PSR collect the order to stockiest and deliver the order

to the urban distributor and thus generated automatically goes ITC checks this

64

data on daily basis and through the Sifyforum software. Company comes to

know about the requirement of every C&F, Distributor and rural stockiest. The

2nd copy of the order goes to the C&F; through this the C&F generates the order

to the company about its requirement.

Thus sifyforum device is the key player in the Data Management of ITC.

Nestle

It has SDS Software (Star Distributor solution). It has information like:

Daily Sales report

it is a online software

Actual receipts v/s order placed

Order placed v/s order generated

Route wise outlet wise bill value

Route wise retailing summary

Outlet wise retailing summary

Collection report - Daily cash balance

Pending bills

65

CHAPTER – 8

SUGGESTIONS

GAPS AND OPPORTUNITIES IN THE CURRENT RURAL DISTRIBUTION SET

66

UP OF COCA-COLA:

According to us the gap in the current rural distribution of coca-cola can be

seen in the following ways:-

FIGURE–8.1

Availability- This is the main thing which is concerned with the right product

at the right time, at the right place. The goods don’t reach in a time due to

road problem which leads to a negative word of mouth and customer

dissatisfaction. Other things are about electricity problem due to which the

67

product doesn’t remain chilled and thus retailer hesitate to keep a product.

Acceptability- First of all acceptability is concerned with the retailers that

product is acceptable to the retailers or not. To fulfill this gap the coca-cola has

to provide ice-boxes and deep freezer as per their requirement due to

electricity problem. The second thing is acceptability of product by the rural

consumer. It means coca-cola have to provide such type of product which is

easily acceptable to the rural consumer. As other companies provide a product

in a smaller pack, in the same way the coca-cola has to provide a bottle size

which is different from urban areas and which is easily acceptable to the rural

consumer.

Affordability- The main thing in the rural area is about the affordability of the

product. As other companies provide small unit packs which is affordable by

the rural consumer, the same process should be followed by the coca-cola to

bridge the gap of affordability. As we know that due to low income level and

lower standard of living the rural people are more conscious about the pricing

issue which has to be seen by the coca-cola. Coca-Cola has addressed the

affordability issue by introducing the returnable 200-ml glass bottle priced at

Rs 5. The initiative has paid off: Eighty per cent of new drinkers now come

from the rural markets. This is a good move, like this the company has to

make different strategies to lure the rural consumers.

Awareness- Awareness is termed as a backbone of marketing. If consumer will

not be aware, how come they know about the product and their features? So,

main thing is that there should be a proper advertising in the rural areas. Such

as signage, hoarding should be placed in a proper place. Vans should also be

utilized for the advertisement. In many places the folk-dances are organized in

the rural areas, so in these places the coca-cola can place an advertisement or

some Programs such as some promotional event to make aware about the

product and some new offers.

We also found some gap in the current Rural Distribution set up of Coca-Cola

that are-

As we know that the rural distributor handles the 50-60 villages and one RMD

68

sees the 3 rural distributors. This is the tough task. If the rural distributor can

handle less villages may say 20-30 then they can nicely manage the work load

and other new distributor can get an opportunity to invest and to manage their

work which is also beneficial for the Coca-Cola.

Another thing is that the distributor place an order to the RTM and RTM to the

Company. So in our point of view it is a lengthy process which leads to a late in

a delivery system. Due to which the goods doesn’t reach in time in the rural

area. So it impact in the unavailability of product which leads to a negative

word of mouth for a company. So the company has to take some steps

regarding this issue to make fast delivery of goods.

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OPPORTUNITIES TO LEVERAGE THE EXISTING CHANNEL OF DIFFERENT FMCG COMPANIES

Present Rural Distribution set up of COCA-COLA:

COCA-COLA Company

C&F of COCA-COLA

Rural Distributor Rural Distributor

Rural DistributorAMC AMC

AMC Retailers Retailers

Retailers

FIGURE–8.2

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1 RURAL DISTRIBUTION AREA

Note: There are 3-4 rural distributors under each Rural Distribution Area.

After our survey and research work we have figured out a new distribution

model for COCA-COLA Rural, in this model we added the idea of SUPER

STOCKIEST presently used by HUL and DABUR. This Super Stockiest will act as

a warehouse in the Rural Sector. Definitely Company has to bear a good

amount of investment on its set up. But, concentrating on the future prospect

we will find that we can form a HUB & SPOKE model around this Super

Stockiest.

So, this idea will definitely give an extra edge to the company’s distribution.

New Distribution Model suggested by us:

C&F of COCA-COLA Super Stockiest

Rural Distributor Rural Distributor Rural Distributor

AMC AMC AMC

Retailers Retailer Retailer

FIGURE–8.3

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1 RURAL DISTRIBUTION AREA

FUTURE VIEW OF OUR MODEL:

Super Stockiest

FIGURE-8.4

72

1ST

DISTRIBUTION AREA

2ND

DISTRIBUTION AREA

3RD

DISTRIBUTION AREA

Super Stockiest

Now, we are looking forward to convert our model into HUB & SPOKE model.

Thus, in future our super stockiest will act as an HUB. To ensure full loads, the

company depot supplies, twice a week to the super stockiest, this will act as

hub. This Super Stockiest appoints and supply, once a week, rural distributors

in adjoining areas.

Another opportunity that we can find out from the existing channel of FMCG

Company HUL, i.e. we can use their wholesaler which are providing good sale

to the HUL.

We found that HUL is running a project named VIJETA, under this project if a

wholesaler is having a monthly sale of 30,000 – 35,000 for HUL then they are

called as VIJETA. HUL gives more priority to these wholesalers.

Now, according to us what COCA-COLA can do is that it can have a talk with

those wholesalers and use them as their rural partners. As these wholesalers

are having a good hold over their market, this will definitely increase the

chance of COCA-COLA to overcome one of their important barriers i.e. keeping

their wholesaler alive in the OFF-SEASON.

DISTRIBUTION MODEL OF COKE CHACHA

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Company Depot Rural Distributor Local

Retailers

AMC COKE CHACHA

FIGURE–8.5

In this model there is one rural distributor who is distributing the products in an

area of 50 – 60 villages. These rural distributors distribute the products to the

local retailers as well as the AMC. In this model we have introduce a new

intermediary i.e. COKE CHACHA. This COKE CHACHA could be either a

connivance store or E&D type 1 outlets . Under one rural distributor we would

initially open 20 COKE CHACHA. We can create more of this COKE CHACHA

latter as time progress. These COKE CHACHA further can act as a wholesalers

in their local marketplace. It can distribute the products to other retailers of

other kind. Also there would be only one COKE CHACHA in a village.

COKE CHACHA will give the order to the rural distributor over the

phone once a week. Rural distributor will deliver the products to the COKE

CHACHA on weekly basis. For distributing the products the rural distributor will

have to take a delivery van for ex -TATA ACE. All the local retailers can take the

products from the COKE CHACHA by their own connivance. Rural distributor will

supply the goods to 10 COKE CHACHA in a day.

Initial Investment for the COKE CHACHA would be as follows: -

TABLE–8.1

SKUS Distribution Trade Price Total Cost Over Sale

74

of SKUS(case)

Charged Price

200 ml 16 168 2688 10 3840

300 ml 2.5 258 645 14 840

250 ml 3 258 774 14 1008

600 ml 4.5 516 2322 27 2916

2 lit 2.5 500 1250 60 1350

1.25 lit 1.5 411 617 38 684

Total 30 8296 10638

This is the investment for his own shop.

The investment he will incur in distributing the products to the other local

retailers would be as:

TABLE – 8 .2

SKUS Distribution of SKUS(case)

Trade Price Total Cost Charged Price

Sale

200 ml 10 164 1640 168 1680

300 ml 5 254 1270 258 1290

250 ml 5 254 1270 258 1290

Total 20 4180 4260

The company will provide the products to the COKE CHACHA on the same rate

which is for the AMC for distributing the products to other retailers.

Apart from these investments there are more investment which is required.

They are as follows:

GOD (Glass on deposit) – 5000

Electricity + Generator Bills – 1000

Total Investment – 5000 + 4180 + 8296 = 17476

Profit from his own Outlet by selling Coca – Cola products:-

10638 – 8296 = 2342

Profit by selling products to other outlets :-

4260 – 4180 = 80

75

Total profit = 2342 + 80 = 2422

Variable Cost =1000

Total Profit = 1422

We would also appoint one market developer who will only look and help in

enhancing the sales of COKE CHACHA and the outlets near it.

CHAPTER – 9

LIMITATION

76

The study was done in only a few district of Bihar.

The time period of 2 months was not sufficient.

Due to the financial and time constraints we were not able to include

more retailers and distributors.

In rural areas, it was very much difficult to find the investment and ROI of

the intermediaries especially the retailers as of their conservative mind

set.

The Investment and ROI part of the information is not very much

accurate.

A retailer sometimes gives wrong information.

All the information was collected by group of 5 students including me,

which was not sufficient. More members could have helped more.

The research was based on primary collection of data so there may be

chance of human error and biasness.

77

CHAPTER – 10

BIBLIOGRAPHY

Websites : -

78

Coca – Cola India

Myenjoyzone

Beverages Market ing Corporat ion

Beverages Digest

Books

Company's C i rcular

Kot ler , Ph l ip (2009) , Market ing Management, Pearson

Publ icat ion India.

79

Documents

Sidharth Summer Report