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: Aashish k Jha Area channel manager Coca-cola, Patna

INTERNAL GUIDENCE Res. V.S.SOLANKI sir Faculty, IPM, Meerut

Submitted by: Sidharth Shankar Jha M-209061 PGDM (2009-11)

INSTITUTE OF PRODUCTIVITY & MANAGEMENT, MEERUT

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 Place: Meerut

Sidharth Shankar Jha

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

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 1 2 3

PARTICULARS BRIEF SUMMARY OF THE PROJECT OBJECTIVES OF THE PROJECT INTRODUCTION A Brief Insight The FMCG Industry in India A Brief Insight Beverage Industry in India THE COCA COLA COMPANY History HINDUSTAN COCA COLA BEVERAGES PVT. LTD.(HCCBPL) About the Company HINDUSTAN COCA COLA BEVERAGES PVT. LTD. PATNA Manifesto for Growth Values Mission Products Distribution network Setup of Coca Cola LITERATURE REVIEW RESEARCH METHODOLOGY 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 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

PAGE NO 10 15 18 19 21 24 26 28 29 29 31 35 37 40 42 42 46 47 51 53 54 57 63 67 67 70 70 71 72 74

5 6 7

9 10

LIMITATION BIBLIOGRAPHY

77 79

LIST OF FIGURES
6

FIGURE NO CHAPTER 4 4.1 4.2 7.1 7.2 7.3 7.4 7.5 7.6 7.7 7.8 7.9 7.1 7.11 7.12 7.13 7.14 7.15 7.16 7.17 7.18 8.1 8.2 8.3 8.4 8.5

PARTICULARS

PAGE NO 28 29 42 43 43 44 45 45 47 48 49 49 50 50 57 58 59 60 61 62 67 70 71 72 74

Location of COBO, FOBO in India Working with bottlers Distribution Network of Coca Cola Distribution Network of Parle Distribution Network of HUL Distribution Network of Dabur Distribution Network of ITC Distribution Network Nestle Order Collection of Coca Cola Order Collection of HUL Order Collection of Parle Order Collection of Dabur Order Collection of ITC Order Collection of Nestle Sales Structure of Coca Cola Sales Structure of HUL Sales Structure of Parle Sales Structure of Dabur Sales Structure of ITC Sales Structure of Nestle Rural Marketing Present Rural Distribution of Coca - Cola New Distribution Model Future view of our Model Distribution Model of COKE CHACHA

CHAPTER 7

CHAPTER 8

LIST OF TABLES

TABLE NO CHAPTER 1 1.1 1.2 8.1 8.2

PARTICULARS

PAGE NO 11 11 74 75

Distribution Network of different FMCG Companies Distribution Margin to the channel Partners Initial Investment of Coke Chaha Investment of Coke Chacha in distributing the products to other outlet

CHAPTER 8

CHAPTER - 1

BRIEF SUMMARY ABOUT THE PROJECT

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 CocaCola 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 CocaCola. 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 CocaCola. We had to also find the opportunities to leverage the existing channel of different FMCG companies.

DATA COLLECTION: -

10

Data was collected from different location of Bihar as: Patna Aarah Darbhanga Jhanabad Gaya Bhagalpur

1. Distribution network and role of different channel partners. TABLE1.1 Channel partners C&F Super Distributor Distributor Wholesaler Retailer HUL PARLE Coca Cola DABUR NESTLE ITC

{ 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. CocaCola 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 CocaCola 11 DABUR NESTLE ITC

Distributors Rural Distributors Super Distributor Stockiest AMC Wholesalers Shakti Amma Retailer 5.63% 3.50%

4.76%

5.80% 4.00% 5.00%

1.44% - 3%

1.00% 3.57% 1.50% 3.00% 2.00%

5.00% 3% 10% 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 mechanismCompany 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. 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. 12

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 Distribution network and role of different channel partners. Distribution margins to the channel partners. Order collection mechanism. Delivery Mechanism Company to distributor, Distributor to rural partner, 14

Rural partner to the outlet. Frequency of service. Investment and ROI of the respective channel partners. Sales structure. Data management and MIS.

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. 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. 15

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 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 17

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. 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 18

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 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 19

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 to cater the right products to the right person. The different was of segmenting it is as follows: Alcoholic, non-alcoholic and sports beverages 20

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. This formula which was made from carbonated water, cane sugar syrup, caffeine, extracts of kola nuts and cola leaves was brought to the nearby

23

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 CocaCola 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. advertising. Pemberton earned $50 and spent $73.96 on

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 of the Coca Cola business. Within 4 years, his merchandising flair had helped 24

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, threewheelers that can go the narrow alleyways of Indian cities, ensure availability 25

of Coke 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 26

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

FIGURE4.1 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 regularly are: L e a d e r s h i p : To t a k e i n i t i a t i v e , l e a d , m o t i v a t e a n d d e a l t h e team with energy so that it can deliver good and outstanding results.

28

Innovation: Pa s s i o n :

To a l w a y s t r y f o r p r o g r e s s a n d t r y t o r e a c h To be committed and deliver outstanding

the above level of excellence in whatever we do. performance. Te a m w o r k : To u n i t e p e o p l e f o r g r e a t e r s t r e n g t h a n d w o r k i n teams to achieve the common goals of the organization. Ownership: To t h i n k a n d a c t a s o w n e r s a t d i f f e r e n t l e v e l s , To be accountable, transparent to our so those decisions are taken at the lowest level. Accountability: colleagues so that agreed targets and goals are achieved. VISION FOR SUSTAINABLE GROWTH To p r o v i d e a n e x c e p t i o n a l s t r a t e g i c l e a d e r s h i p f o r t h e C o c a C o l a r e s u l t i n g i n c o n s u m e r p r e f e r e n c e a n d l o y a l t y.

FIGURE4.2

MISSION
To create consumer products, processes customer and tools service in and to bottling create

system

strategies,

order

competitive and deliver superior value to:

29

Consumer as a superior beverage experience. Consumer as an opportunity to grow profits through the use of finished drinks. Bottlers as an opportunity to grow profits in volumes. Bottlers Suppliers when system as as a an trademark opportunity value work, enhancement to make in and positive profits of and economic value added. reasonable an creating wide real team added flexible environment system

business

continuous improvement. Indian society in the form of a contribution to economic and social development.

QUALITY POLICY
To ensure customer deeds and delight, action we by commit to quality in our our thoughts, continually improving

processes every time.

PRODUCTS
The CocaCola Company offers a wide range of products to its consumers. CocaCola 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 CocaCola each with a different taste and it has also many SKUs. Some of the brands CocaCola bought from Parle like Thums Up, Limca etc. All the brands of CocaCola 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 CocaCola 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 CocaCola 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: - CocaCola 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 COCACOLA 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 CocaCola 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 visicooler (refrigerator) to the retailers depends upon this category. i.e.: 34

i. Bronze : - 4 vc ii. Silver : - 7 vc or 9 vc 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. 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. 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): -it is very useful in distributing the product where the rural dist. cannot reach.

RETAILERS SHOPS ARE CLASSIFIED AS FOLLOWS: -

DISTRIBUTORS ARE CATEGORIZED AS FOLLOWS: -

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. 36

Different 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 37

urban India is Rs 49,500crores and by rural India is 63,500crores. According to 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 Source: Primary data are collected by Personal Interview. Secondary data are 39

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. Order collection mechanism. Deliver mechanism Co. To distributor, Distributor to rural partner, rural partner to the outlet. Frequency of service. Investment and ROI of the respective channel partners including the last tier. Sales structure. Data management and MIS.

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

Rural distributor 42

Retailers FIGURE7.2 ROLE OF DIFFERENT CHANNEL PARTNERS: 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 FIGURE-7.3

Shakti AMMA

Role 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

Company

Warehouse

Distributor {urban distribution}

Super Distributor (rural distribution)

Wholesaler

Retailer

FIGURE 7.4

ROLE OF DIFFERENT CHANNEL PARTNERS: 1. Distributor: Distribute the products in the urban areas. 2. Super Distributor: It is also called rural distributor. It distribute the products in the rural markets. 3. Wholesaler: It is that intermediary that keeps the products of different companies. ITC Company Warehouse Distributor {urban distribution}

Stockiest (rural distributor)

44

Retailer

Wholesalers

FIGURE7.5 Role of different channel partners: 1. Distributor: Distribute the products in the urban areas. 2. Super Distributor: It is also called rural distributor. It distribute the products in the rural markets. 3. Wholesaler: It is that intermediary that keeps the products of different 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

FIGURE7.6 Role of different channel partners: 1. Distributor: Distribute the products in the urban and semi urban areas as

45

well as delivers the products to the rural distributors. 2. Rural Distributor: It distributes the products in the rural markets to the outlets and wholesalers. 3. Wholesaler: It is that intermediary that keeps the products of different companies. 2.DISTRIBUTION MARGINS TO THE CHANNEL PARTNERS COCA-COLA Distributor- 4.76% margin (3% excluding transportation cost) AMC Retailer - 3.57% Margin - 13.69% Margin HUL Super Stockiest - 5.63% Wholesaler Shakti AMMA Retailers - 10% PARLE Rural distributor -3.5% Wholesaler 1.5% 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) 46 Retailers - 15% 5%+1.5 %( according to scheme) 3 %( door to door selling) 10 %( when sells to retailers)

NESTLE Distributor -5.8 % in other products and 4.8 % milk items. Rural Distributor 4 % in both items (milk as well as others). Retailers It varies between 10% - 12%. Wholesalers 2 % 3. ORDER COLLECTION MECHANISM COCACOLA-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.

Market Developer of Coca Cola

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

Coca Cola company database Forwards the order automatic ally to company and concerne Concerned d godown Godown or the concerned Distributor

FIGURE7.7 HUL 47

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. 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

Marketing executive PARLE s of HUL

ME Takes order on HTC (hand device of HUL)

HUL company database Forwards the order automatic ally to company Concerned C&F and or the concerne concerned d godown Distributor

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.

Sales man of PARL E

SM Takes order on NOC (new order collection book

Forwards the order to concerne d rural distributo

PARLE

48

Forwards the order to Concerned C&F FIGURE7.9 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. Salesma n of DABUR SM Takes order on SGB (Sales generation book of DABUR) Forwards the order concerned wholesaler Concerned superDistributor Concerned godwon

F I G U R E 7 . 1 0 Dabur company database 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. Pilot sales represe ntative of ITC PSR Takes order on OGB (order generation book of ITC) Forwards the order to concerne d stockiest. ITC compan y databas e

Concerned C&F or the concerned Distributor 49

FIGURE7.11 Nestle 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. Salesma n of Nestle SM Takes order on SGB (Sales generation book of Nestle) Forwards the order concerned wholesaler Concerned superDistributor Concerned godwon

Nestle company database

FIGURE7.12

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. 50

HUL 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. The main difference between the Urban & Rural distribution is that delivery 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: 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 rural distribution by their own transport. The main difference between the Urban & Rural distribution is that delivery 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 51

route after a week. They deliver the goods to the retailer. Dabur 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: 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 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 52

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 : 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

53

 Take the order per week. Deliver the order per week. 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 Take the order per week. Deliver the order per week. 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 week Distributor 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%

54

Retailers: -

Turnover 15000(monthly) Investment 2500 Margin 13.69% HUL

Super Stockiest: -

Turnover - 600000 (monthly) Investment-300000 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 55

Margin -15% Dabur Super Distributor: - 40lakh monthly turnover Investment-10lakh Margin-5% (Margin=4%excluding transportation cost) ROI-4000000*4%/1000000*100 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 % 56

ROI = 40000/300000*100 = 13.33%

7. SALES STRUCTURE Coca Cola RTM

Area Sales Manager

Sales Team Leader

Rural Market Developer

57

Under Rural Distributor Sales man

Driver

Munsi FIGURE7.13

HUL Area Sales & Commercial Manager

Sales Channel Manager

Activation In charge

Operational Manager (for distributor)

58

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

Sales Team Leader (1 STL for 10 ME)

Marketing Executive FIGURE7.14 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 59

Sales man FIGURE7.15 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.

Dabur Area Sales Manager

Area Sales executive

Sales officer

Pilot sales manager

60

Sales man FIGURE7.16 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.

ITC Sales manager

SWSD (semi whole sale dealer)

PSR (PILOT SALES REPRESENTITIVE)

Supervisor

61

Distributor FIGURE7.17 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

Nestle Area Sales Manager

Sales officer

Pilot Sales man

62

Sales Man FIGURE7.18 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

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 companys 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 companys

63

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 statement (MSSS) book. The salesman goes to the distribution point order thus generated goes to the companys 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 companys database. DABUR checks this data on daily basis and through 64

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 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

65

Pending bills

66

CHAPTER 8

SUGGESTIONS GAPS AND OPPORTUNITIES IN THE CURRENT RURAL DISTRIBUTION SET UP OF COCA-COLA: According to us the gap in the current rural distribution of coca-cola can be seen in the following ways:-

67

FIGURE8.1 Availability- This is the main thing which is concerned with the right product at the right time, at the right place. The goods dont 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 product doesnt remain chilled and thus retailer hesitate to keep a product. Acceptability- First of all acceptability is concerned with the retailers that

68

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 areAs we know that the rural distributor handles the 50-60 villages and one RMD 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 69

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 doesnt 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.

70

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

1 RURAL DISTRIBUTION AREA

Rural Distributor

Rural Distributor

Rural Distributor AMC AMC

AMC Retailers Retailers Retailers

FIGURE8.2 Note: There are 3-4 rural distributors under each Rural Distribution Area. 71

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 companys distribution.

New Distribution Model suggested by us:

C&F of COCA-COLA

Super Stockiest

1 RURAL DISTRIBUTION AREA

Rural Distributor Rural Distributor

Rural Distributor

AMC AMC Retailers FIGURE8.3 FUTURE VIEW OF OUR MODEL: Retailer Retailer

AMC

72

3RD
DISTRIBUTION AREA
Super Stockiest

2ND
distributioN area

Super Stockiest

1ST
DISTRIBUTION AREA

FIGURE-8.4

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 73

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 Company Depot Rural Distributor Local

74

Retailers

AMC FIGURE8.5

COKE CHACHA

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: -

TABLE8.1 SKUS Distribution Trade Price of SKUS(case) Total Cost Over Charged Price Sale

75

200 ml 300 ml 250 ml 600 ml 2 lit 1.25 lit Total

16 2.5 3 4.5 2.5 1.5 30

168 258 258 516 500 411

2688 645 774 2322 1250 617 8296

10 14 14 27 60 38

3840 840 1008 2916 1350 684 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: TA B L E 8 . 2

SKUS 200 ml 300 ml 250 ml Total

Distribution of Trade Price SKUS(case) 10 5 5 20 164 254 254

Total Cost 1640 1270 1270 4180

Charged Price 168 258 258

Sale 1680 1290 1290 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 Total profit = 2342 + 80 = 2422 76

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
The study was done in only a few district of Bihar. 77

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.

78

CHAPTER 10

BIBLIOGRAPHY
Websites : Coca Cola India Myenjoyzone Beverages Marketing Corporation 79

Beverages Digest Books Company's Circular Ko t l e r, P h l i p ( 2 0 0 9 ) , M a r k e t i n g M a n a g e m e n t , Pe a r s o n Publication India.

80