123new S&D- End Term Project_Gaurav%2c Sandeep%2c Punyatoya
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Transcript of 123new S&D- End Term Project_Gaurav%2c Sandeep%2c Punyatoya
End term Project
Stationery products- notebooks
TABLE OF CONTENTS
Objective:____________________________________________________________________________________3
Company Profiles_____________________________________________________________________________3
ITC Limited- Classmate______________________________________________________________________3
Classmate Notebooks_____________________________________________________________________3
Distribution channels__________________________________________________________________________5
ITC Classmate’s Distribution Channel Structure_______________________________________________5
Local Brands Distribution Channel Structure__________________________________________________6
Distribution channel and terms of sale____________________________________________________________7
Customer preferences_________________________________________________________________________8
Comparative analysis of brands_________________________________________________________________8
Credit terms________________________________________________________________________________9
Delivery time_______________________________________________________________________________9
Channel operation___________________________________________________________________________9
Stationery products- notebooks
Sales and Distribution Management by Prof. P.C. Mehra
Group 3 : Punyatoya Panigrahi Gaurav Sardana Viswanadha Sandeep
Beat cycle__________________________________________________________________________________9
Guarantee__________________________________________________________________________________9
Growth areas_______________________________________________________________________________9
Condition for retailer sale____________________________________________________________________10
Strategy for sale___________________________________________________________________________10
Psychology behind Sales and Relationship Management__________________________________________11
ITC_______________________________________________________________________________________11
Local brands_______________________________________________________________________________11
ITC Distributor’s Territories____________________________________________________________________12
Territory of 2 distributors for ITC classmate on either side of NH._________________________________12
Date: 3rd Septemeber 2014Submitted by: Punyatoya Panigrahi, Gaurav Sardana,Viswanadha Sandeep
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OBJECTIVE: To find and study the sales and distribution structure, strategy and modes of operation of various brands dealing with paper based stationery
COMPANY PROFILESWe studied the following brands
List of brands and their locations (distributors/manufacturers)
ITC - Main depot at Jagatpur, near Cuttack Uphar - Laxmisagar in Bhubaneswar Manorama - Budheswari colony in Bhubaneswar Navneet - Krishna Kripa Agency Jagannath Nagar Krishna - Hi-Tech road- (distributor) in Bhubaneswar Times and Today - Bargarh near Sambalpur Power - Bhimtangi, in Bhubaneswar Ganapati - Jatni on the outskirts of Bhubaneswar Popular – Jharpada, in Bhubaneswar
The detailed company profiles of the local manufacturers are not available as they do not have any presence on the internet.
Date: 3rd Septemeber 2014Submitted by: Punyatoya Panigrahi, Gaurav Sardana,Viswanadha Sandeep
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ITC LIMITED- CLASSMATE
Classmate is the lead provider of all student stationery needs. ITC launched its Classmate brand in 2003 with the notebooks category. Subsequently, Classmate added new products to its portfolio which now consists of pens, pencils, mechanical pencils and geometry boxes, erasers and sharpeners.
CLASSMATE NOTEBOOKS
Classmate is India's No. 1 Notebook brand. Its range of more than 300 variants is custom made to take care of varying needs in notebooks, long books, practical books, drawing books & reminder pads segments. These notebooks reach more than 90,000 outlets across the country.
The Classmate Notebook range builds in regional preferences and caters to the requirements of All India & State Education Boards. Every Classmate notebook carries ITC's Corporate Social Responsibility message on its back. For every four Classmate Notebooks purchased, ITC contributes Re. 1 to its social development initiative that supports, among other projects, primary education.
Classmate recently launched the Classmate Composition notebooks which are 60GSM notebooks with magenta ruling and with increased spacing for superior writing experience.
Apart from notebooks ITC Classmate also deals with the following items:-
Classmate Pens Classmate Pencils Classmate Mechanical Pencils Precision Instruments Erasers and Sharpeners
Date: 3rd Septemeber 2014Submitted by: Punyatoya Panigrahi, Gaurav Sardana,Viswanadha Sandeep
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DISTRIBUTION CHANNELSITC CLASSMATE’S DISTRIBUTION CHANNEL STRUCTURE
Manufacturer: - ITC has its manufacturing plants located in Bhadrachalam- Telangana and other southern states like Karnataka and Tamil Nadu. Most of its paper products are produced in these manufacturing plants and then the products are moved to a central warehouse location in Chennai.
Carrying and Forwarding agent (CFA):- Odhisha has one CFA located at Jagatpur. This CFA maintains its stocks by ordering from the Chennai office and he needs to pay the cash in advance for the stocks he is ordering. This CFA is responsible for meeting the supply requirements of all the distributors from the entire state. CFA gets the order from the individual distributors and receive the cash payments in advance. Then from the Jagatpur location supplies are provided to the individual distributors.
Date: 3rd Septemeber 2014Submitted by: Punyatoya Panigrahi, Gaurav Sardana,Viswanadha Sandeep
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Manufacturer
CFA
Distributor
Wholesaler
Retailer
Distributors: - There are two distributors in the Bhubaneswar region. As per their territory one is located on the left hand side of NH-5 and other on the right hand side of the road. These both distributors provide their depot order to the CFA in Jagatpur whenever there is a shortage of inventory. While ordering, a distributor needs to tell the code of each notebook he requires to the CFA. No credit is given to them by the CFA and they need to make full payment in advance. Distributor goes to the wholesalers to take their orders in the 15 days cycle. So a top down approach is followed while replenishing the stock. A distributor provides a margin of 25% + 3% to the wholesalers and 25% to the retailers if any retailers are approaching directly to him.
Wholesalers: - There are around 10 wholesalers in the Unit 1 wholesale market. These wholesalers maintain their stocks from the regular supplies carried out by the distributor every 15 days. Wholesaler gets the classmate stock at a margin of 25%+3% and he sells it to the retailers at a margin of 25%. Retailers visit the wholesalers for their stock replenishment following a bottom up approach. No credit is provided to the retailers and they need to pay in cash.
Retailers: - Retailers fulfill their stock requirements from the wholesalers following a bottom up approach. They get their products from wholesalers at a margin of 25% and sell these to customers at a margin of 15%.
LOCAL BRANDS DISTRIBUTION CHANNEL STRUCTURE
Manufacturer/CFA/Distributor:- For local brands like Brilliant, Popular, Uphar, Sampark, Mastermind, The manufacturer, distributor are same they cover the entire market of Bhubaneswar and Cuttack. So for every local brand there is one distributor in the city. Sales people appointed by these distributors will visit all the wholesalers stores to take the orders from them.
Wholesalers :-
Date: 3rd Septemeber 2014Submitted by: Punyatoya Panigrahi, Gaurav Sardana,Viswanadha Sandeep
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Manufacturer/Distributor
Wholesaler
Retailer
In the unit 1 wholesaler market there are 2 wholesalers for each local brand. The locations of these two particular wholesalers who is carrying the same brand is two different ends in order to avoid horizontal conflict. The company sales people of these local brands daily visit these stores from 6pm onwards. These local brands generally give high margins to these wholesalers in order to push their product into the market. Brilliant gives the highest margin of 30% to wholesalers among these local brands. Other brands usually give a margin of 25-30%. However the quality and quantity of brilliant is more than other local brands.
Retailers:-
Retailers usually fulfill their stock requirements by using bottom up approach. They gets a margin of about 10% less than what wholesaler gets from the distributor.
DISTRIBUTION CHANNEL AND TERMS OF SALE
Vertical channel conflict- Wholesalers or Dealers also engage in retailing. They sell
with lower margins, this puts the retailers at a loss. However, this is minimal as the wholesalers also do not give huge differences in margins in comparison with the retailers to the end customers. Margins or discounts are purely decided on the basis of volume buy.
Horizontal channel conflict- No wholesaler kept all the local brands. Classmate was the only shared brand which all wholesalers had. The rights for selling the local brands were shared by 2-3 wholesalers maximum under the condition that they are geographically distant. This is done purposefully and the distributors also be a party to this because, too many wholesalers for their products would lead to unhealthy competition and undercutting each others margins to gather more sales. The few wholesalers for the local brand have some sort of an agreement which is facilitated by the distributor to sell at a single price retaining same margins.
No guarantee/coverage to wholesaler or retailer. Only severe manufacturing defects in bulk are returned and replaced by the manufacturer for select wholesalers having higher turnover.
Date: 3rd Septemeber 2014Submitted by: Punyatoya Panigrahi, Gaurav Sardana,Viswanadha Sandeep
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CUSTOMER PREFERENCES
Customers generally do not have preferences for specific brands except for paper quality. Hence the retailer/wholesaler push the brands for which they get higher margins
The margins remain same across all the varieties (on the basis of page quality, number of pages etc) in all the brands
Classmate is on the high price segment and is not affordable for low/middle class students. Allegedly(by the wholesalers and retailers), Classmate engages in clandestine tie ups with English medium schools whose students specifically demand classmate
COMPARATIVE ANALYSIS OF BRANDS
Components ITC Other
Guarantee Coverage Only for Severe Damages Only for Severe Damages
Credit Terms No Credit Depends on the Relationship
Delivery Time 5 days 1 day
Beat Cycle Once in 1 month by ASM Every day at 7pm
Margins of wholesalers Margins of about 25%+3% Margins of about 30-40%
Strategy for Sales Pull Strategy Push Strategy
Date: 3rd Septemeber 2014Submitted by: Punyatoya Panigrahi, Gaurav Sardana,Viswanadha Sandeep
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Sl. No Names of brands
Price category
Margin Availability (20 stores)
Channels Credit
1 Navneet- Standard Notebooks
High 20% 2 NA NA
2 Classmate- Standard Notebooks
High 15-20% - Retailers25%- wholesalers
18 CFA-Distributer-wholesaler-retailer-customer
No Credit
3 Brilliant- Standard Notebooks and registers
Med 25% (notebooks), 30% (registers)
20 Distributer-wholesaler-retailer-customer
Credit to Wholesaler (15 days)
4 Manorama-Mastermind& Sampark- Standard Notebooks
Low 25% 10 Distributer-wholesaler-retailer-customer
Credit to Wholesaler
5 Shiva- Standard Notebooks and registers
Low 40% -customers do not want
5
NA NA
6 Camel- Wired Notebooks
High NA 6 NA No Credit
7 Bilt-Wired Notebooks
High NA 8 NA No Credit
CREDIT TERMS
Credit terms given to each wholesaler vary on the basis of their relationship with the distributor. The older it is, the more reliable it is and accordingly credit is given. ITC never supplies any goods on credit. A few local manufacturers provide credit. A few brands extend credit terms during peak season(March-June) of the year. In all other normal transactions, goods are issued on PDC.
DELIVERY TIME
The wholesalers opined that the local manufacturers had prompt response and faster delivery as compared to ITC- Classmate.
Date: 3rd Septemeber 2014Submitted by: Punyatoya Panigrahi, Gaurav Sardana,Viswanadha Sandeep
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CHANNEL OPERATION
Irrespective of the brand, all distributors send their salespersons to the wholesalers to take or supply orders. The retailers also visit to the wholesaler to buy their requirements
ITC, follows a prescribed channel structure as mentioned. All other local manufacturers directly supply to the wholesalers acting as manufacturers
cum distributors.
BEAT CYCLE
For ITC particularly the distributor’s salespersons visit 2-3 times a week. The company appointed ASM visits monthly once. The immediate superior of the ASM/ the regional sales manager visits once a year to
enquire about issues if any.
GUARANTEE
Only products with severe manufacturing defects in a large volume are replaced. The same applies for all brands
GROWTH AREAS
The wholesalers opined that there could be tremendous potential if the government could include them in their structure for distributing notebooks in rural areas(free notebooks for students from Standard 1-8). The end customers could hugely benefit by not having supply scarcity. The wholesalers could also benefit by drawing a small margin.
CONDITION FOR RETAILER SALE
They do not generally ask for TIN numbers. Margins and discounts are decided purely on volume purchase basis.
STRATEGY FOR SALE
ITC classmate follows a pull strategy for increasing its sales and invests heavily into advertising and promotions
Local brands follow a push strategy by engaging the channel partners through an array of discounts, offers, concessions, festive margins and competitive margins.
Date: 3rd Septemeber 2014Submitted by: Punyatoya Panigrahi, Gaurav Sardana,Viswanadha Sandeep
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PSYCHOLOGY BEHIND SALES AND RELATIONSHIP MANAGEMENTITC
Wholesalers do not want to sell classmate products. However, since customers come with specific demands asking for classmate only, they are bound to keep stocks to cater to the increasing market demand. Given a chance all the channel partners would like to sell local brands or any brand that gives them higher returns or profits. However the only activity they do is – they arrange for local meets or conferences for all wholesalers and major retailers and throw parties once a year. Some major wholesalers (providing higher turnover) also got discretionary Diwali gifts.
LOCAL BRANDS
Amongst the local brands again, the best brand maintaining personalised relations with all its partners is Brilliant. There was seemingly competition amongst the wholesalers to get the dealership for Brilliant products because, they gave the highest margins. The icing on the cake was that apart from that they also maintain cordial relations and apparently have the best climate management. As a result of this, the respective wholesalers for Brilliant, reportedly said, if given a chance, they proactively push Brilliant products.
Date: 3rd Septemeber 2014Submitted by: Punyatoya Panigrahi, Gaurav Sardana,Viswanadha Sandeep
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ITC DISTRIBUTOR’S TERRITORIESTERRITORY OF 2 DISTRIBUTORS FOR ITC CLASSMATE ON EITHER SIDE OF NH.
Date: 3rd Septemeber 2014Submitted by: Punyatoya Panigrahi, Gaurav Sardana,Viswanadha Sandeep
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