Assessment of Sales and Distribution Network of

Perfetti Van Melle and the way ahead

Under the guidance of: Mr Rajeev Verma (BSM, south)

By Maurya Krishna Summer Trainee

IIM Lucknow

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Contents List of Figures and Tables .......................................................................................................................... 2

1. Abstract Summary ............................................................................................................................. 3

2. Background and Importance of the project ...................................................................................... 4

3. Methodology ..................................................................................................................................... 5

4. About the Organization ..................................................................................................................... 6

4.1 The Perfetti Van Melle distribution system .................................................................................. 8

4.1.1 The Direct distributors .............................................................................................................. 9

4.1.2 The Super Stockiest and Sub Stockiest structure .................................................................... 10

4.1.3 PSR .......................................................................................................................................... 10

4.1.4 DSE .......................................................................................................................................... 10

4.1.5 DBSM ....................................................................................................................................... 10

4.1.6 Star Outlets ............................................................................................................................. 11

4.1.7 Operation Nano ...................................................................................................................... 11

5. Findings and Recommendations ..................................................................................................... 12

5.1 A comment on the small candy market ...................................................................................... 12

5.2 Competitors ................................................................................................................................ 12

5.3 Relationship Marketing ............................................................................................................... 13

5.4 Rural market: Operation Nano.................................................................................................... 13

5.4.1 Key repeat beat observations: ................................................................................................ 14

5.4.2 The way ahead ........................................................................................................................ 14

5.5 Implementation of a product catalog ......................................................................................... 17

5.6 PSR tracking................................................................................................................................. 18

5.7 The problem called FORUM ........................................................................................................ 19

5.8 Relative comparison of salesmen and better control: ................................................................ 20

5.9 General Recommendations ........................................................................................................ 22

5.9.1 Increase the Price point .......................................................................................................... 22

5.9.2 Bundle Packs ........................................................................................................................... 22

5.9.3 Demand Chain Planning .......................................................................................................... 22

5.9.4 Indulge in innovative advertising ............................................................................................ 22

6. Conclusion ....................................................................................................................................... 23

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List of Figures and Tables

Fig No

Description Pg No

1 PVMI product portfolio 7 2 Stop Not the new snack launched from PVMI 8 3 PVMI distribution system 8 4 Van used for Operation Nano 11 5 The main competitor of PVMI 12 6 Percentage sales from top 20 percent outlets on each route 15 7 Product wise sales of operation Nano 16 8 Product Catalog 18 9 Format for relative comparison between salesmen 21 10 A new model to exert better control 21

Table No

Description Pg No

1 Coverage of the urban Distribution system by RSUs 9 2 Product division into units 9 3 Costing for Operation Nano 16 4 Operation Nano details 17 5 PSR tracking format 18 6 Current super stockiest format 19 7 Modified super stockiest format 19

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1. Abstract Summary

No system in the world is perfect. Perfetti Van Melles distribution was studied, loopholes were

identified and suggestions were made. Perfetti has a well-established distribution network to reach the

urban and rural regions. The direct distributor structure for the urban regions and the Super stockiest-

sub stockiest structure for the rural regions is the status quo. To reach beyond this PVMI has started van

operations and termed this as operation Nano. The super sub structure was being computerized and

several problems were being faced during its implementation stage. PSR working of PVM was not

structured. A tracking mechanism for the PSR has been suggested. Benefits of Operation Nano and

suggestions to improvise have been discussed. For the urban system, a computerized technique has

been suggested. This technique would free the DSE of the physical stock check and making monthly

reports. The reports could be easily generated by software. The DSEs time could be used to do more

productive work, help the DBSM and increase sales. A decision about which DBSM to be helped can be

arrived at by viewing the relative comparison format. Perfetti could indulge in innovative advertising to

have better impact on the rural areas. An idea about the type of advertising to be involved in is

suggested.

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2. Background and Importance of the project

Perfetti Van Melle has a very strong distribution network. This is the core competency of the company.

There is always a scope for improving any existing system and moving towards perfection. The sub

stockiest-super stockiest structure was not generating the expected throughput. PSR functioning was

not structured. The PSR would go to a sub stockiest point at a time that is convenient to him. He would

not cover the market at times. All these factors would result in lesser throughput. Operation Nano, the

seeding operation for micro interiors, had a high cost of operation. PVM wanted ensure that the

investment is in the right direction generating tangible and intangible benefits for the company. The

seeding operation had to be more efficient to reach its goals successfully.

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3. Methodology

The problems were identified by living through the Perfetti Van Melle distribution system. Direct

distributors were interviewed to ask them about the problems they faced. Distributor salesmen were

observed when they made calls and sold products to the retailers. DSEs contributed towards better

understanding of the system. Such an activity was carried out in various towns.

To understand the problems in the rural distribution network, various super stockiests were met in

several upcountry towns. They were interviewed about the problems they faced. PSR activity was

observed by working alongside with him. Various sub stockiest points were visited along with the PSR

and a note of his working was made. The problems at the sub stockiest level were also identified.

A study about recently started Operation Nano was made. The working of the PSR there was observed.

The pattern of sales and the pattern in which these routes were covered were also observed. Van routes

were observed when the beats where covered for the first time and also when the repeat beats were

done. The first beat sample was of 6 days and that of repeat beat was of 3 days. Conclusions were

drawn based on these samples.

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4. About the Organization

Perfetti Van Melle is a global manufacturer of confectionary and gums. It was founded back in 1946 by

Ambrogio and Edigio Perfetti. Perfetti acquired Van Melle in 2001 to form Perfetti Van Melle. The Indian

Subsidiary of Perfetti was established in 1994. Today the company has close to 30% share in the Indian

confectionary market making it one of the leading players. Perfetti Van Melles brands enjoy a great

recall value in todays market in the minds of the consumer. Perfetti is known for making innovative

products and advertising them in an innovative way as well.

The Indian subsidiary of Perfetti Van Melle also takes care of the development of South Asian

markets and exports to other Asian countries. Perfetti Van Melle has adopted an aggressive sales

strategy to retain the numero uno position in the confectionery industry in India backed by a wide

network of Carry & Forwarding agent (C&FA), distributors & sales force. Perfetti Van Melle India has a

network of around 4,500 distributors spread across 2000 urban towns. Perfetti has a direct distributor

structure for the urban markets where as the super stockiest-sub stockiest structure is predominant in

the rural markets. To reach beyond the sub stockiest structure, operation Nano has been started. This

operation consists of a van selling products to outlets that have not been supplied earlier.

Perfetti Van Melle has 150 brands worldwide out of which 24 brands have been launched in

India so far. Some of the leading Indian brands are Center fresh, Big Babool, Mentos, Center Fruit,

Alpenliebe etc. The brands are categorized into toffees, bubble gums, chewing gums, clairs and

functional gums. Toffees as name suggests are sugar candies- Alpenliebe, being a classic example for a

toffee. Creamfills is another example for a toffee. Chewing gums are the products which are to be

chewed to consume. Center Fresh is an example for a chewing gum. Bubble Gum, as name suggests are

those gums which can be blown into a bubble- Big babool being an example. Functional gums perform a

particular function other than being a chewing gum. Eg : Hapydent White does the task of removing

yellow marks on the consumers tooth. Chocoliebe is an clair and also enjoys the privilege of being the

first cocoa based product launched by PVMI. Center Fresh is the first gum launched in the Indian market.

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Fig 1 : Product portfolio of PVMI

Big Babol Filly Folly is a new innovative product launched by the company. The product is first a cotton

candy and then it is a bubble gum.

After ruling the confectionary segment for 17 long years, PVMI is now moving towards

becoming a food company. The segment PVMI selected to enter is the snacks segment. The reason

behind choosing this segment is the attractiveness of the segment in terms of growth. PVMI duplicated

its innovativeness of making products in this segment also. The resulting product was the first of its kind

in the Indian market- a center filled snack. I was named Stop Not. With its innovative packing, it had the

ability to draw the consumers attention once it was placed on the retailers shelf. Stop Not has been

launched in two states and is soon set to be launched in other parts of the country.

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Fig 2 : Stop Not the new snack launched from PVMI

Cadbury and Wrigley are the major competitors of Perfetti Van Melle in the Indian confectionary

market. Cadbury is the market leader worldwide whereas PVM is enjoying the pole position in Indian

markets. The advantage PVM has over its competitors is the extensive distribution network that is in

place reaching out even the rural areas, the wide range of products that PVM has to offer the consumer

and the innovative advertising that has a high brand recall potential.

4.1 The Perfetti Van Melle distribution system

The core competency of the company in the Indian markets is its distribution system which is one of the

most effective.

Fig 3 : PVMI distribution system

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Perfetti has a 2 level structure for the urban regions. The distributors serve the retailers who in turn

serve the end consumer. The distributors also serve the wholesalers. This shows the presence of a 3

level structure also. The structure consists of 3 levels for rural regions consisting of a sub and a super

stockiest. The function of a marketing channel is to ensure availability of the product to the end

consumer. The main components of the Perfetti Van melle distribution channel are explained below

4.1.1 The Direct distributors

For urban areas Perfetti relies on direct distributors to ensure effective distribution. The distributors are

served by the C & F agents. A particular distributor may have one or two units .The product range is

divided into 3 or 4 units depending on the area. The units are called P1, P2, P3 and P4. The products in

these units are mutually exclusive to avoid cannibalization amongst the distributors. A particular area is

divided into beats. A beat typically is a route consisting of about 60 outlets. A particular unit covers a

beat once in a week. The unit covers all the outlets on a particular beat during the course of the day. Eg :

Monday Tuesday Wednesday Thursday Friday Saturday

Beat 1 P1 P2 P3

Beat 2 P1 P2 P3

Beat 3 P3 P1 P2

Beat 4 P3 P1 P2

Beat 5 P2 P3 P1

Beat 6 P2 P3 P1

Table 1 : Coverage of the urban Distribution system by RSUs

P1 covers beat 1 on Monday, beat 2 on Tuesday and so on. P2 follows P1 but with a 2 day lag. The

division of products into units ensures the width of distribution. There will be more products in a

particular outlet than if a single distributor were employed.A typical division of products into units can

be seen below

P1 P2 P3

Alpenlibe Regular Big Babool stick Big Babool Center fresh spear mint Center Fruit Water Melon Lollipop Regular Marble black green Mentos Lemon Mentos Black orange Mentos assorted Alpenlibe coffee Happydent white Fruit tella lemon stick Filly folly fruit

Center Fresh sweet mint Center fruit grape Center fruit strawberry Big babool color magic Alpenlibe strawberry Alpenlibe chocolate Happydent white 150 Mentos mint Chocolebe Mangofills Marbles assorted Fruit tella 230

Center fresh Pepper Mint Center fruit Tuity fruity Alpenlibe banana Creamfills Chlormint Alpenlibe Eclairs Mentos Strawberry Sour marbles Happydent wave Filly folly strawberry Protex fruit

Table 2 : Product division into units

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4.1.2 The Super Stockiest and Sub Stockiest structure

For up country markets, a typical town consists of about 30 to 40 outlets. The velocity of the product in

these outlets is generally low. Hence having direct distributors here would not be feasible. So, the

distribution system for upcountry markets consists of a sub stockiest-super stockiest structure. A super

stockiest is generally based in a town where there are direct distributors and is responsible for serving

all the sub stockiests in his district. The super stockiest receives stock from the CFAs. A super stockiest is

given a margin of 2% on his investment.

A sub stockiest is a distributor who is being served by the super stockiest. He is responsible for

the distribution of the products in the town where he is based. The sub stockiest also receives service

from the PSR. A sub stockiest is given a 3.5% margin on his investment.

The difference between the rural and the urban market is that the breadth of the products in a

particular outlet in the rural market is less than that in an urban market. Eg : A particular outlet in the

urban market may have 3 flavors of center fresh, but the rural outlet will mostly stack only one flavor of

a particular product.

Selling in the sub super structure happens through order booking, where as in the direct distributor

structure it is through on spot delivery of the product.

The components of the Perfetti sales force are listed below

4.1.3 PSR

A pilot sales representative is a person who serves every substockist under a superstockist, i.e a PSR

serves all the substockiests in a particular district. The PSR is responsible for timely dispatch of stocks

being to the sub stockiest. He is a property of the super stockiest but is maintained by the company. A

PSR typically collects orders from the local retail outlets and passes it on to the sub stockiest which shall

be fulfilled by the latter. PSR ensures the effective working of the sub stockiest. He is the eyes and ears

of the company in the rural market. PSR is the lowest level in the company hierarchy.

4.1.4 DSE

A distribution and sales executive is the property of the company who handles distributors in a

particular area. The number of distributors in a town is dependent on the population of the area and the

volume of sales the area can support. The DSE is responsible for prospecting a new distributor in his area

if any line is vacant. He ensures effective working of the distributor and the DBSM. DSE is the person

who is responsible for the sales in his area. DSE has to maintain good relationship with the distributor

for better distribution of the companys products.

4.1.5 DBSM

A distributor salesman is the salesman of the distribution unit. He is the person who actually goes to the

retail shops and sells the products. Having a good DBSM is very essential as he is the one who sells it to

the customer. DBSMs relationship with the retailer is very important for effective distribution. DBSM

stacks the products into a RSU (ready stock unit) and covers the beat assigned for that day.

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4.1.6 Star Outlets

Star outlets exist in urban areas. Star outlets are those 20% outlets who contribute to 80% of the sales.

These are the outlets which stack only the high value products. The reason behind concentrating on

these outlets is not only the higher profit derived from these but it is also the increased price point.

4.1.7 Operation Nano

PVMIs Operation Nano is targeted towards reaching those regions where no competitor has reached.

PVMI is moving from micro interiors to nano interiors. PVMI is looking for the first mover advantage.

Even if other competitors follow PVMI, the latter will have an edge over the former. Operation Nano can

be viewed as a seeding operation to seed the nano interiors. Once the retailer realizes the demand for

the product, he would ensure that the product is present on his shelf.

Current scenario: Van routes have started in Hassan. Various routes were designed and the schedules

for the vans were made. The vans run through these routes supplying to all outlets that come along the

way. Sales averaged to around 8000 per day. Though the operation is expensive, perfetti is looking at it

as a long term investment. The investment is looked into as an advertising expense which is used to

seed the micro interiors.

Fig 4 : Van used for Operation Nano

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5. Findings and Recommendations

5.1 A comment on the small candy market

The candy market is impulse driven. Brand loyalty does exist, but it is minimal. The importance of display

cannot be under estimated. A wide range of close substitutes are available for the products. In a

particular retail shop a visibility experiment was conducted. Mentos jar was placed such that it was not

visible to the consumer. In a regular day the retailer sold 3 pieces. The next day the jar was placed such

that it was visible to the consumer. The retailer ended up in selling 18 pieces of mentos. This

demonstrates the importance of visibility. To ensure visibility, the products should be available at the

outlets. Distribution channels ensure availability at all possible outlets. Intensive distribution is

employed to ensure presence in all the outlets. Visibility is not only important at the retailers but it is

equally important at the wholesaler points as well. Wrigley had a competition for the wholesaler which

was called Display Ka Baap. The wholesaler with the best display of Wrigley products would win prizes.

Interviewing some wholesalers, the fact that Wrigley sales had increased in the recent days ( i.e the days

after the display was put up) was brought into light.

5.2 Competitors

The main competitors in the small candy market are Cadbury and Wrigley. Wrigley has presence in most

of the outlets where Perfettis products have their presence. Boomer is the competitor product which

sells the most in rural areas. Interviewing the kids who buy this product (in rural regions), an inference

was drawn that the brand equity of the brand is high due to advertising involving a superhero. Wrigleys

constant focus on Boomer can also be seen as the reason for the strength of the brand. General attitude

of the respondents was also perceived to be of the type Who does not know Boomer.

Fig 5 : The main competitor of PVMI

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5.3 Relationship Marketing

The distributors relationship with the retailer is another important factor that decides the depth of the

distribution. The salesman of a distributor also plays a very important role. It was observed that in

places where the distributor/salesman serviced the retailers frequently, sales was not a problem. Sales

went on smoothly each time the salesman made his call. But when the distributor doesnt serve the

retailer regularly, the retailer hesitates to purchase and makes minimal purchases. Relationship can be

established over a period of time when the salesman makes calls. Having a salesman with good

communication skills is very important for the company to prosper. The importance of relationship was

demonstrated during the new product launch in Hyderabad. A salesman who serviced the retailers

occasionally found it very difficult to place his product in the outlets whereas one who serviced the

retailers frequently had a good time in placing the products. A new distributor establishing a

relationship with the retailer will take time. This is one of the reasons why changing the distributor is the

last option in todays market.

The companys relationship with the distributor is again a criterion for effective distribution. Better is

the relationship between the company and its distributors more is the push from the distributors for

that particular product and less is the quitting tendency of the distributor.

5.4 Rural market: Operation Nano

The retailers in the rural regions generally buy in small quantities. Retailers are conservative. Many

retailers are uneducated and cannot differentiate between PVMs products and the local duplicates. The

retailers connect with the brand by means of the color. Hence any duplicate product having a similar

appearance as PVMs product has the potential to replace the latter on the retailers shelf. Only means

to solve this issue is by ensuring the presence of PVMs products on the shelf. Retailers resistance to

change is high; i.e he does not stack products which are not demanded for. His purchase is completely

demand driven. A lot of convincing is to be done to place a new or a product which is not well known on

the retailers shelf. Hence, if a product is once established in these regions replacing it with a substitute

is a difficult task.

The rural consumer connects with the brand through its color and packaging. Rural consumers are not

as curious as the urban consumers to try out new things. Word of mouth publicity has a very high

potential in the rural market. A particular consumer will try out a brand suggested by people around

him. This fact was brought to light after interviewing respondents.

The three point mantra for procuring sales in operation Nano Relationship, Regularity and Service

a) Relationship with the retailers is the most important thing on these routes. Selling would be easier

once the PSR establishes a rapport with the retailers. Many retailers were also concerned about the fact

that the salesmen would never return after selling the product and they would incur a loss in case the

products are not sold. All these issues would not rise once the relationship is established. Relationship

would also have long term implications. i.e of appointing a sub stockiest.

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b) Wholesalers from nearby areas serve the retailers through van routes. But these wholesalers are not

regular and so the retailers buy products from other sources. Once a relationship has been established

and the retailers are convinced that the vans service those locations at regular intervals, the resistance

to selling would further decrease.

c) The resistance to selling is very less on the van routes. Retailers buy items as they never experienced

service where products were delivered at their doorstep. The level of service we provide will be the

differentiating factor which will give us an edge the other existing service providers. Providing service by

merchandising the product also helps. Make the customer feel he is the king.

5.4.1 Key repeat beat observations:

Successful seeding: Repeat beat observations would point towards the seeding operation being

successful. A particular retailer bought chocoliebe for the first time when he was approached during

the first beat. When the repeat beat was done, chocoliebe was present on his shelf. But this time he

had bought it from a nearby wholesaler. He had realized the demand for the product.

Consolidated relationship: Customers were recognizing the PSR. Once the retailer is taken into

confidence that the salesmen would be regular, he would wait for them to make his purchases.

Operation Nano would generate sales sufficient enough to sustain the costs. If Operation Nano does

not service these retailers, their shelf will be occupied by Boomer as it gives them a higher margin.

The operation can help in building the super stockiests relationship with people and it may

ultimately help PVMI in appointing a sub stockiest in the town.

Interactive marketing and word of mouth publicity: The investment in Operation Nano is also

serving as a means of Interactive marketing. The van, when it stops in a village on its route draws

crowd attention. This results in people gathering around the van and enquiring about the products.

This would increase the recall value of our products. This would also be like advertising the regions.

Interactive marketing also contributed to the word of publicity and ultimately increased sales.

Operation Nano also resulted in PVM gaining market share at the cost of Boomer. If a particular

retailer goes to a wholesaler to purchase products, he would end up buying Boomer as it gives him

more margin than PVMs products. Once he is serviced regularly he may probably stop purchasing

Boomer.

5.4.2 The way ahead

Analyzing the sales figures for a week, it was observed that on an average 80% of the total sales for the

day were from 20% of the outlets on that route.

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Fig 6 : Percentage sales from top 20 percent outlets on each route

The graph in fig 6 is based on the data while covering the first beat. The same pattern was observed

from the repeat beat as well. And astonishingly many outlets repeated their sales. Eg : 2 outlets

contributed to about 50% of sales of the day were from just 2 retail outlets. These outlets had

contributed to 40% of sales when the route was covered for the first time. For seeding to be more

effective, concentrate on these outlets, brand them with stickers. Let it be called Nano Stars.

Concentrate on these outlets and list them. It would be easier to now concentrate on the sales from

the van because outlets which contribute a majority of these sales have been identified. A

relationship can be established with these retailers, ensuring that they are present to make the

purchase when the van covers the route. This would ensure sales on the van routes and hence

sustaining costs.

0

10

20

30

40

50

60

70

80

90

100

1 2 3 4 5 6

% of total sales

Days

% of total sales from top 20% outlets

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Fig 7 : Product wise sales of operation Nano

The graph in fig 7 shows the product sales for Operation Nano (No of SKUs). This would help in

identifying which brand is to be advertised in these areas through stickers.

The driver alone could manage the van. The job would be more difficult for him, but giving him DA

and incentives would provide the required motivation. DBSMs in many areas deliver products in

vans. He may have to be relieved from the task of writing the daily market report. This can be

experimented with the driver for some time and his performance can be assessed. A decision about

cutting off the PSR from the van route can be taken later. This can be done only when the van routes

are started with only the driver. Once the driver is accustomed to having PSR along with him, he

may not work efficiently when he is alone. Table 1 and 2 shows the costing.

Expense Head Cost (Old) Cost(New) % Reduction

Driver + van 8750 8750

Salesmen Salary 3500 0

Salesmen DA 1250 1250

Incentive 1500 1500

Total Without-Fuel 15000 11500 23.3333333

Fuel costs/month 6249.7067 6249.7067

Total sales/month 176540 176540

Total Cost (With Fuel) 21249.707 17749.707

Cost to sales ratio(%) 12.036766 10.054212

Table 3 : Costing for Operation Nano

ALP 300

ALP 200

ALP 1000

ALP 1500

ALP STI

C/FRESH MONO

C/FRESH STIC

CE3NTER FRUIT MONO

MANGOFILLZ 1400

CHOCOLIEBE 160

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Average distance travelled per day 90.14 (From 21 days sample)

Average sales per day 6790 (From 21 days sample)

Fuel cost (gas)/ltr 40

Fuel 15km/ltr

Table 4 : Operation Nano details

The first call on an average is made at 11 45 am. This is because the super stockiest arrives late.

Instruct the driver to load the stock into the van the preceding day and leave for the route in the

morning around 9 30 am.

Currently the beats are covered once in a month. While retailers argued that the products will be

over in 15 days. Experiment covering certain beats fortnightly. The decision has to be taken after

consulting the super stockiest and the DSE because they have an idea about the sales in the routes.

5.5 Implementation of a product catalog

Salesmen are supposed to carry the product jars along with them so that the retailer sees it. This will

have more impact on the retailer than if the salesman just utters the name of the products. The logic is

similar to in an ice cream parlor customers generally tend to buy those items which have been

picturized. But many a time this does not happen. The salesman does not carry the SKU's with him

because it is strenuous. This impacts the sales. The solution to this problem is to have a product catalog

which shall contain chocolate wrappers on it. This shall give the retailer a feel of the product. This again

will have a better impact than just uttering the names. Obviously the effect of a jar will be much more

than that of a wrapper. But the salesman can be convinced to carry the catalog with him.

A product catalog was designed and experimented in the market. It had a good response. Customers

could connect with the brands better. It was easy to use and could be kept in the salesman's pocket by

folding it. A cool lamination sheet was used for the design. For a sample of 8 retailers 15% incremental

sales were generated. A product catalog having all the product wrappers would increase sales by a

greater amount. The product catalog is shown in fig 8.

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Fig 8 : Product Catalog

5.6 PSR tracking

The PSR module of Perfetti Van Melle does not function efficiently. PSRs do not reach the Sub stockiest

point on time. They do not plan their visit with the sub stockiest which denies them an opportunity of

inspecting the market and analyzing distribution of the products.

A format in table 5 could be used to ensure effective working of the PSR.

Date Market Visited

Time Departed HQ

Time departed Sub DB point

No of calls made

No of Productive calls

No of outlets having PVM products

Sales Value

1/6/2011 Malavalli 9:30 am 2:00 pm 28 14 16 4564

Table 5: PSR tracking format

PSR should plan his visits for the week in advance. He should inform the sub stockiest that he would be

visiting. There should no occasion where the PSR comes back without visiting the market (i.e if the sub

stockiest has already collected orders). This means that the PSR should ensure that the Sub stockiest

adjusts his schedule such that he collects orders when the PSR is present. PSRs seriousness can have a

large effect on the Sub stockiests performance. The time mentioned by the PSR can be authenticated

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with the help of the K.S.R.T.C ticket which he shall possess when he travels. A copy of the first ticket

(assuming he has to change a bus) when he leaves the HQ and the first ticket when he leaves the Sub DB

point should be attached along with the form. DSE should be responsible to follow up with the PSR

continuously. DSE should give weekly feedback to the PSR on his working. It should be the DSEs

responsibility to inform the concerned ASM when the PSR is not functioning efficiently.

An alternative for this method is that the PSR can call the DSE from the Sub stockiests landline number

once he reaches there. This would give an idea to the DSE about how is the PSR working.

5.7 The problem called FORUM

Educate the super stockiest not only to use forum, but also to avoid the discrepancies he could be facing

thereby. The format which the super stockiest currently uses to dispatch stock is as shown in table 6. He

has such a sheet for each sub stockiest.

Product No of cases

Alpenlibe 300 2

Alpenlibe 200 4

Table 6 : Current super stockiest format

There is discrepancy between the scheme for the stocks which has been billed and the scheme for the

stock which has been delivered. The super stockiest also said that the person who dispatches stock is

uneducated and will not be able to read the scheme details.

Have a new column in this format which has something called a case code. This case code will define the

scheme present in the case. Educate the super stockiest to first load the cases into the truck, meanwhile

making entries to his list. Now bill the sub stockiest accordingly.

Product No of cases Case code

Alpenlibe 300 2 101,102

Alpenlibe 200 4 3*100+1*101

Table 7 : Modified super stockiest format

Eg : case code 101 corresponds to the scheme where 15 pieces are free in each jar. Case code 102

corresponds to a scheme where a pen is free with the jar.

Now while making entries about what stock is to be delivered to which sub stockiest, he also makes

entries regarding the scheme for that stock. Billing the sub stockiest as per this sheet would avoid the

discrepancy.

If the above technique is not easy to implement, educate him to enter the scheme in the new column

added and then dispatch the stock.

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5.8 Relative comparison of salesmen and better control:

PVM asses the performance of a distributor through manual estimation of stock at the distributor point.

This provides him an opportunity to inflate/deflate his stock. This may ultimately result in infiltration.

To avoid this, the following model can be used:

DBSM have to send a message to web number regarding the days sales. The software shall receive the

message, identify the DBSM with his mobile number and make an entry into the database. Now this

software shall generate the MSSR and the OCS. The credibility of thus generated reports will be more

than those generated manually.

A relative comparison between the salesmen can be adopted to exert better control. The format

showed in the fig can be used. The format compares the salesmans weekly performance. It also gives an

idea of how a particular beat is performing in par with the other beats.

DSE should be given the onus of following up with the salesmans details. Comparing the beat average

with a particular salesmans sales, an idea about how is the salesman performing can be drawn.

A units average will give an idea about the salesmans individual performance.

All these means that we are comparing the salesmen working in the units under a particular DSE. We

shall name the best salesman as the salesman of the month for that area. This would also increase his

motivation to work.

Fig 9 and 8 shows the pictorial representation of the model.

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Fig 9 : Format for relative comparison between salesmen

Fig 10 : A new model to exert better control

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5.9 General Recommendations

5.9.1 Increase the Price point

Cadbury eclairs brownie was launched in the market with an increased price point. Consumer response

for this was good with consumers not minding the increased price point.

PVM had stopped the production of Center shock due to cost constraints. This brand can be re-launched

with an increased price point. The name of the brand may have to be changed so that it doesnt affect

the sales of other brands like Center Fresh and Center Fruit.

5.9.2 Bundle Packs

A single pack of 2INR containing one Center Fruit and one Center Fresh could be tried. This compels the

consumer to buy more of PVMs product.

5.9.3 Demand Chain Planning

Stock outs are a serious problem is PVM. Demand chain planning should be implemented to avoid this

and to ensure better distribution of products.

5.9.4 Indulge in innovative advertising

As India is emerging as the driver of World economy, rural India has extremely large potential for future

growth. Similar is the case in the candy market. Huge growth potential exists in the rural market. Perfetti

currently uses its sales force to exploit this market. The mention of Zandu Balm in the movie

Dabaang sky rocketed the sales of the product. Get into a deal with a movie song writer which

features an elite actress would probably increase the sales of Mentos in the rural areas.

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6. Conclusion

Perfetti Van Melle has a well-established distribution network. IT can be used to implement better

control. The model suggested, if implemented may cut down the problems of infiltration. The rural

markets have not been explored yet. Operation Nano has a huge first mover advantage. These markets

can be monopolized and competition can be phased out from these markets. The relationship thus

established can also be leveraged when Perfetti enters other categories. This structure can be used to

monopolize the new category markets. FMCGs in the past have demonstrated by moving into rural

markets and monopolizing them. PVM can repeat history.