Distribution Channel of

The Times of India

Ishpreet Singh – 12P139 J Abhinav– 12P140

Karan Jaidka – 12P141 Kshitij Agrawal – 12P142

Ladlee Rathore – 12P144

Group 10 – Sales and Distribution Management – Section B

PGPM 2012-14

Ishpreet Singh – 12P139 J Abhinav– 12P140

Karan Jaidka – 12P141 Kshitij Agrawal – 12P142

Ladlee Rathore – 12P144

Group 10 – Sales and Distribution Management – Section B

PGPM 2012-14

Methodology Analyzing the distribution structure of Times of India Identifying the roles (Primary and secondary) of all the

intermediaries Analyzing the promotion schemes followed by TOI Conducting a detailed study of the flow of the product

and relationship between these existing intermediaries Interviewing intermediaries to get insights about

problems in the existing system After identifying the inefficiencies in the channel,

conducting research for probable solutions Making recommendations

Company BackgroundOwned and managed by Bennett, Coleman & Co. Ltd.45 dailies and periodicals108 editions from 9 centres 16 Special Interest offerings targeted at groups of

consumers ranging from photography to education to annuals on beauty, fashion etc.

Readership of 76.43 lakhs Times of India is ranked as the top English daily in

India by readership

Industry OverviewMore than 1,30,000 printing presses in IndiaMore than 10m families involved in the industry INR 20 bn+ turnoverPer capita consumption of paper & boards - 4.5

kgsMachinery - new & second-hand -

predominately from China, France, England, Germany

Industry OverviewCirculation and Readership

Circulation [number of copies distributed (not same as sold)] one of the principal factors used to set advertising rates

Readership: number of people reading the publication

Advertising80% of the revenue comes from advertising & 20%

from sales

Distribution - StructureThe Times of India

Printing Press

Depots Agents

Vendors Vendors

Beat Boys Newspaper Stands

Beat Boys (3-4)

Newspaper Stands

Readers

Channel MembersPrinting Press

It takes the content from the editorial team and prints using high capacity advanced press machines that deliver the product in packaged condition

Situated in Ghaziabad for Delhi NCR region Capacity to print over 10 lac copies Printing starts around 1-1:30 am usually After Printing, stacking is done before dispatching newspapers to

depots Labeling done to match stacks with destination Usually stocks for depots situated the farthest are dispatched earliest

Channel MembersDepots

The distribution centre receives the copies from the transporter and stocks it for a short duration Close to 100 depots in Delhi Keep publications (newspaper + magazines) for various companies Serviced by salespersons who are company employees Unorganized – keep newspapers / magazines scattered on pavements or

on steps of some malls etc Records are kept at depots in the following format:-

Newspaper 1 Newspaper 2Vendor code Qty to be Delivered Qty Actually Delivered Qty to be Delivered Qty Actually Delivered

XY

Channel MembersAgents

Employed where distribution is not organizedExclusive agents of TOIWork on commission, themselves act as salesmenDelhi market- Working with depotGurgaon- Working with agency system

Channel MembersVendors

Like retailers. Link between depot and end consumerGo to nearest depot everyday. Pick out publications they

want They sell via : door-to-door beat boys/single point

newspaper standsMDI vendor serve in areas – Sector 14 and MDI. He collects

newspapers from Old Bus Stand Agent

Channel MembersBeat Boys

The delivery boys have demarcated regions/housing societies, which they serveHawkers are individuals who do not have established customers and sell at road sides, bus stands etc. They make small quantity purchases

Deliver required publications to proper destinationsHave route-wise list of addresses and their required

newspaper/publications 3-4 beat boys cover an area via their routes

Information FlowNew consumer/Existing consumer taking or terminating subscription

Inform their Vendor( increase/decrease his order by one )

Vendor Informs the distributor

Distributor informs the company.

Channel MarginsMargin given by TOI to channel members is around

30%More or less uniform rate across the industryAgents get 5-10%, salesmen on payroll get fixed salaryVendor receives 20-25%, to cover the costs incurred

due to travel, beat boys etc. It depends on the type and language of newspaper. (Hindi – 25%; English – 20%)

Credit Periods30 day credit period to distributor is offered,

subject to 3 month security depositFor Vendors, on an informal basis, 1-2 days is

offered. Vendors buy a fixed, large amount of newspapers daily and pay in cash on a day-to-day basis

2% of the papers which remain unsold at the end of the day can be returned back

Promotion SchemesTrade Schemes

Offered to channel members Incentive to increase sales Challenge for channel member: Balance reader interest while

trying to increase sales to avail benefits of the scheme Discounts for purchase of larger volumes by vendor Bonus of 50 paise for each new account generation by vendor

Discounts Mainly for institutional sales Eg. Bulk sale at schools at discount rates

Promotion SchemesReader Schemes

Directed at final consumer/reader. Mainly to draw in new customers

Varies depending on location & demographyCould include trials, discounts, freebies, combo offers etc

Subscription SalesOffer choice of publication for a certain amount of time at

a lump sum discount pricePurpose- gaining new customers and making customer

switch

Issues Identified

Timely DeliveryPayment & Claim DelaysReturn PolicyManual Packaging system

Timely Delivery Important to deliver on time at each level Dispatch first to depots that are farthest Company might go against norms- For eg. deliver first in

areas of early risers Unnatural events could affect on-time delivery Most common reasons are traffic jams, monsoons, break-

downs etc Ownership is transferred once paper leaves press In case of delay, agitated vendors and stall owners might

switch to substitutes to satisfy their customers

Recommendation Local Knowledge about routes etc. can be

helpful Timely delivery at important locations Benchmarking competition, especially

managing routing properly. Distributors should take care of critical vendor locations

Possible Roadblocks Additional costs due to operational inefficiency

to be borne by TOI Routing is not under control of TOI Could lead to complete system failure Distributor must be capable of handling this

task

Timely Delivery

Payment & Claim Delays

Informal Credit terms between distributor & vendor

Chances of default are higherProbability is higher towards month end when

vendors are cash-strappedCould translate into distributor defaulting on

payment to TOIChallenge for distributor to balance sales &

credit based promotion

Recommendations Formal credit system can be introduced Higher incentives for timely payment Credit period could be extended to Distributor

when possible which can be passed on to Vendor

Possible Roadblocks It can happen that distributor is bearing costs

which may not work Vendors may not be comfortable with formal

credit system

Payment & Claim Delays

Return PolicyTOI allows up to 2% returns with full refund of

costsIn case it exceeds the limit, channel members

bear the lossDistributor also allows the same 2% returns for

vendorsIssues arise when inventory increases above a

certain level due to poor forecasting or unforeseen reasons

Recommendations Benchmarking competition, like HT, the market

leader (Gurgaon region) allows 10% returns with full refund

TOI too should offer comparable return rates Increase flexibility for channel members, which

could lead to boost of sales

Possible roadblocks Higher costs to TOI Would need tighter monitoring by TOI to

prevent misuse

Return Policy

Manual Packaging Automatic & manual packaging, both are used in industry Manual Packaging has lot of inefficiencies associated

Delays – could cascade on to delays in loading, delivery Human Errors – could lead to incorrect quantities or editions being

packed

Onus to make up is on distributor, as error is detected usually after leaving printing premises

Distributor has to bear costs of transporting replenishments to aggrieved vendors

Recommendations Try the use of automatic system Eventually phase out use of manual packaging

systems TOI should adopt tight monitoring mechanisms Maintain beat boys at distributor to handle any

errors

Possible roadblocks Costs in setting up automated systems might

be prohibitive Distributor may not be willing to maintain beat

boys

Manual Packaging

THANK YOU