Itc shampoo
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Transcript of Itc shampoo
Study of Distribution Network of ITC
Shampoos
ITC HISTORYITC Limited
Parent Company ITC Limited
Category Consumer Products, Hotels & Services
Sector Public & Conglomerate
Tagline/ Slogan100 Inspiring years; 100 years 1 mission India first
Founder
Henry Overton Wills on August 24, 1910(as Imperial Tobacco Company of India)
STP
Segment Products and services for daily needs
Target GroupEvery Indian household especially the middle class
PositioningEnduring Value. For the Nation. For the Shareholder.
ITC
Hotels Lifestyle Retailing
Information
TechnologyFMCG
Cigarettes Foods PCP
Soaps Shampoo
Vivel Fiama Di Wills Superia
Matches, Incense Sticks
Education and
Stationary
Agribusiness
Paperboards, Paper
and packaging
ITC Business Portfolio
A Brief Overview
• Rs. 2900 crore Shampoo Market in India
• Other Players : Dabur, Wipro
• Major Players : HUL and P&G
• Growth of Industry : 15% pa
• FMCG Revenues: 12,955 cr.
• ITC : a Rs.18,000+ cr. turnover company
• ITC’s Share : 5% (despite being a very late entrant)
• Rs. 145 cr. Revenue contribution through shampoos
What is Channels of DistributionDistribution is the process of making a product or service available for use or
consumption by a consumer or business user, using direct means, or using
indirect means with intermediaries.
Product distribution (or place) is one of the four elements of the marketing mix
It can be of the following ways
Distributors of PCP in India
The total number of distributors in India of ITC is 5027 in PCP products.
Some of the Major cities include the metro cities Nagpur, Ahmedabad, Kochi, Jaipur, Hyderabad . etc
In Mumbai it is divided into 3 regions Each region consists 6-8 distributors
having a total 25 distributors.
Territory division in Mumbai
Mumbai divided into 3 sub cities : “City 1” , “City 2”, “City 3”
Every “City” consists of 4 regionsA total of 12 regions
6-8 distributors per region : A total of 23 distributors
SWOT Analysis
Strength•ITC has a strong and experienced management•. Strong brand presence, excellent products
advertising•Diversified product and services portfolio •ITC limited employees over 25,000 people
Weakness•ITC is still dependant on its tobacco revenues and
people have cheaper substitutes and other brands•2.Hotel industry has not been able to create a
huge market share
Opportunity•Tap rural markets and increase penetration in
urban areas•Mergers and acquisitions to strengthen the brand•More publicity of hotel chains to increase market
share
Threat•Strict govt regulations and policies regarding
cigarettes•Intense and increasing competition amongst other
FMCG companies and hotel chains•FDI in retail thereby allowing international brands
Distribution Channel Process
Distribution Channel
Production at Haridwar
3rd Party WSPFee Based
Service CFA at Bhiwandi
Distributor
Unorganized Retail
End Customer
s
Organized Retail
Fixed Margin: 3.5%
TOT on Case to Case Basis : Decided by
Central OfficeDistributor pockets
3.5%
10% on Bottles24% on Sachets
Company Freight
Rs.100
Rs.103.5
Rs.113.85
Rs. 102Rs.100Rs. 95
Credit flow across the Chain
No credit offered to distributor Goods delivered strictly on cash, cheque, RTGS
basis. Distributor offers 7-15 days credit to
retailers. Margins of Distributor includes an interest
component towards the credit he offers down the chain
Flow of Damaged Products
ITC
Distributor
Retailer
Consumer
Only replacement of Damaged Products, No reimbursements Paid
Damaged Goods Moving Back to ITC
May ReplaceMay Reimburse
Achieving Economies of Scope
Cigarettes
Food
PCP
Distributor
Sales Team PCP
Sales Team Food
Sales Team Cigarettes
Single distributor for all 3 verticals
Single Sales team for entire PCP: Soaps, Shampoos and Agarbattis
Distribution of “Distribution” @ Kamla Enterprises
1600 retailers under this distributor- Malad & GoregaonDeals with 7 salesmen handle Soaps and Shampoos
1 Salesman handles 6 beats
1 beat per day
Sales tracking sheet
Sales persons use PDA to transfer information into the FORUM system. Database consolidation
happens every evening. Uses FORUM – IT system to monitor distribution
activities, link distributors with company, track orders, etc
The system helps to track inventory,
determine reordering levels other than
being a one-stop-shop for all the information about
salespersons and retailers
Linking “IT” FORUM system
-Key Strategies
Selection of Distributors Exclusivity of distributors is strictly maintained in
ITC Company leverages its brand and high inherent
demand of its products in the market to enforce exclusivity on distributors
Not possible for smaller manufacturers to force exclusivity, as they don’t enjoy bargaining power with distributors
Advantages No need to push products through distributors as
they have access to only ITC products Saves on extra margins company gives to
distributors to lure them in ITC’s favor
Area Wise Strategy- Organised Retailers vs Unorganised Retailers
Mumbai
Areas with High standard of living
Bottles of Fiama Di Wills and Vivel
Distributor margin decided by company on the basis of no. of retail outlets of key A/Cs in
the territory
Areas with low standard of living
Sachets of Superia and Vivel selected as the key product
Distribution margin is fixed for all distributors
Area selection according to Standard of Living
SKU and key Products
Profit Margin
Share of Sachet by revenue
Share of Bottles by revenue
Superia 80 20
Vivel 60 40
Fiama Di Wills
20 80
What is SKU
Stands for "Stock Keeping Unit," and is conveniently pronounced "skew.“
SKUs may be a universal number such as a UPC code or supplier part number or may be a unique identifier used by a specific a store or online retailer.
Mainly used to track the inventory using their own custom database system.
When shopping online or at retail stores, knowing a product's SKU can help you locate the exact product at a later time.
Choice criteria of distributors/retailers (80-20 rule)
ITC is a late entrant in the shampoo market Currently enjoys 5% of the market share
Fiama Di Wills : Oct, 2007 Vivel : June, 2008 Superia : August, 2008
Strictly follows 80:20 principal to gain economies of scale first
Selects the first 20% of the most profitable retailers for ITC in a particular territory
Out of the total 1 lakh retailers in Mumbai, it today serves only 24000 retailers
The Way Forward
• Small unbranded Salons a major consumer of Shampoos
• ITC under the process of exploring these sales outlets
Exploring New
Channels• Introduction of reward points at
retailer end• Highest points for Fiama Di
Wills, Lowest for Superia
Pushing High Margin
Products• Pilot Project in Mumbai• Retailer been incentivized to
stock only ITC products
Exclusive ITC Retail Outlets
By group 8
Tripti Madhushree
NikeshCelistin
AlanAbhimanu Kumar
SinghAakash Thakkar