safal project
TRANSCRIPT
SUMMER TRANNING REPORT
ON
A STUDY OF RETAIL BUSINESS OF SAFAL PRODUCTS
Mother Dairy Fruit and Vegetable Private Limited
In
Partial fulfillment of the
Masters of Business Administration
2009-2011
Submitted by:- Project Guide:-
Gaurav Kumar Ms.Shalini Gupta
090101039 (Marketing Manager)
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MOTHER DAIRY
Certificate of Completion
This is to certify that the dissertation entitled“To understand the retail business of fresh fruits, vegetables and safal productsthroughsafal outlets of Delhi & NCR”carried out byMr. GauravKumar, student ofMASTER OF BUSINESS ADMINISTRATION [2009-2011], of SCHOOL OF MANAGEMENT, GAUTAM BUDDHAUNIVERSITY, GREATER NOIDA, is hereby accepted and approved as a credible work.Submitted in the partial fulfillment for the requirement of degree of MBA.It’s a bona fide record of the work done by him under my supervision during his stay as a project trainee at MOTHER DAIRYfrom May 10, 2010 to July10, 2010.
Ms.SHALINI GUPTA
(Marketing Manager)
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Dissertation certificate
This is to certify that the dissertation entitled“To understand the retail business of fresh fruits, vegetables and safal products through safal outlets of Delhi & NCR”byMr. Gaurav Kumarstudent ofMASTER OF BUSINESS ADMINISTRATION, session [2009-2011]ofSCHOOL OF MANAGEMENT, GAUTAM BUDDHAUNIVERSITY, GREATER NOIDA,is hereby accepted and approved as a credible work. It is further certified that this work has not been submitted for similar purpose anywhere else. His work has been found satisfactory for the partial fulfillment of the award of the degree of MBA.
Declaration
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I,Gaurav Kumar, hereby declare that the project work entitled“To understand the retail business of fresh fruits, vegetables and safal products through safal outlets of Delhi & NCR”is an authenticated work carried out by me atMOTHER DAIRYunder the guidance ofMr. H.S.MEHTA (ZI)& ANSHU BHATNAGAR (TI)for the partial fulfillment of the award of the degree ofMASTER OF BUSINESS ADMINISTRATIONandthis work has not been submitted for similar purpose anywhere else except toSCHOOL OF MANAGEMENT, GAUTAM BUDDHA UNIVERSITY, GREATER NOIDA.
GAURAV KUMAR
ACKNOWLEDGEMENT
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It gives immense gratification to place on records my profound gratitude andsincere appreciation to each and everyone who has helped me in this endeavor.
I would like to thank Ms.Shallini Gupta for giving me the opportunity of being associated with this project.
I extend my sincere thanks to Mr. AnshuBhatnagar (TI) for his cooperation and valuable suggestion to initiate the training.
On a personal note I would like to thank all my batch mates for their support. Anyomission in this brief acknowledgement does not mean lack of gratitude.
GauravKumar
090101039
LIST OF ILLUSTRATIONS
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TABLES
Table ICatalogue of safal products.
Table II Competitors schemes & Margins.
FIGURES
Figure I Production in a FMCG sector
Figure II Division of different products in processed food sector
Figure III Different Distribution Channels
Figure IV Physical Flow of Goods
Figure V Title Flow of Goods
Figure VI Payment Flow for Goods
Figure VII Information Flow between Channel partners
Figure VIII Division of Various Companies in Defined Categories
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ABSTRACT
The project deals with channel creation for sales and distribution ofSafal products.Safalpresently
has 375 F&V booths in Delhi and NCRand with help of distributors we plan to launch 30 SKU’s
inGeneral trade.
The methodology followed for the project is PRIMARY RESEARCH, which is done by
surveying the market and creating a list ofprobable distributorsin different zones. Study of
different channel partners
(i.e.distributor,C&Fagents,superstockiestandretailer)willalsobeundertaken.
It justifies why distributors are beneficial for the company and how we can gain through model
of distribution. It gives an insight about the terms and conditions of the company as well.
Theprojectaimsto understand the retail business of fresh fruits, vegetables andsafalproduct
through safal outlet.
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EXECUTIVE SUMMARY
India is a market of diversity-diverse with regard to income, price points, culture and preferences. The Indian lifestyle has a traditional predilection for fresh fruits andvegetables or those processed at home. With the changing lifestyle and improved spending habits the processed food consumption in India is gaining momentum. Country’s GDP has accelerated well past the 7 to 8 percent per annum growth rate.
Mother dairy fruit and vegetable unit was set up in the year 1988 by the National Dairy Development board as a corporate body whose aim was to provide a direct link between farmers and consumers. It later on forayed into processed food segment through the much known Safal peas. Safal products are sold through its 375 retail outlets in the Delhi-NCR region. With an objective to increase the market share and boost up sales Safal decided to enter the General trade. To enter into the General trade a well established distribution network is of paramount importance, so the project involved creation of a market channel for Safal products. The effectiveness of distribution coverage is very important. Understanding of the distribution coverage is important for the manufacturer to plan and implement effective distribution strategy .The methodology used in the project is primary research which involved surveying the catchment area to find the list of probable distributors and thereby meeting and convincing them about our model.Study of channel partners was also undertaken. The methodology used is questionnaire method with open ended questions. An overall analysis of the competitors was also taken up. The project gave a huge area to explore the working of a channel involving the channel partners & findings of the project are basically divided into the findings of the retailers, distributors and the competitor’s schemes and margins. The findings are discussed in detail in the project. The conclusion which can be drawn from the project depicts the difficulties which a company faces while developing a distribution network and the type of distributor to search for in case of processed food distribution. The recommendations given involve various changes in the policies of the company. After putting lots of efforts the results seems to bein favor but still three months is not enough to practically understand everything and get the improvements done with the results. The results will blossom in the future.
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CHAPTERS
A) INTRODUCTION 11
Background 11
About 13
Project Brief 14
B) Objective of the Project 16
C) Scope of the Project 17
D) Research Methodology 18
E) Organizational Overview 20
F) Project in the Company 21
SWOT Analysis of FMCG Sector 23
Subsector Information 24
WHY WE REQUIRE CHANNEL PARTNER? 28
C&F Agent 30
Super Stockiest 31
ROLE OF DISTRIBUTOR 32
WORKING OF DISTRIBUTOR 35
TERMS AND RESPONSIBILITY OF DISTRIBUTOR 36
UNDERCUTTING 38
ARE THE CHANNEL OF DISTRIBUTION WHAT THE TEXTBOOK SAY? 39
PRODUCT PORTFOLIO OF SAFAL 41
SWOT Analysis of SAFAL 45
TERMS AND CONDITIONS FOR SAFAL AGENCY 46
G) FINDINGS 47
Study of Retail Outlets and Retailers 50
Competitors Schemes and Margins 51
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Data analysis
a) Data analysis 53
H) CONCLUSION 58
I) RECOMMENDATION 60
J) Limitation 61
K) Annexure(Questionnaire) 62
REFERENCES 63
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INTRODUCTION
BACKGROUND INFORMATION
Mother dairy fruit and vegetable unit was set up in the year 1988 by the NationalDairy
Developmentboard. It started as a corporate body whose main aim was toprovide a direct aim
between farmers in the village and the consumers. By this wayboth the farmers and the
consumers are benefitted. Safal made a foray into theprocessed food sector with its frozen peas
and captured the market and became themarket leader. It then entered into the processed food
and beverage with a wideproduct portfolio having 30 SKUs. These products are marketed
through 375 Safalbooths in Delhi-NCR region. Safal now wants to increase the sales of
theseproducts and increase the market share. This can be done by entering into theGeneral trade
for which we need the creation of a well defineddistributionchannel. Entering into the General
trade would require efforts as to developing achannelbyfinding the channelintermediary such as
distributors who haveknowledge of the market and can target the retailers.
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VISION STATEMENT-To provide quality produce, products and services for the entire satisfaction of consumers
Mother Dairy fruit and Vegetable Unit was set up in the year 1988 by NationalDairy Development Board, which is an institute of national importance, a bodycorporate created by Government of India. Its objective is to provide a direct linkbetween fruit and vegetable growers and consumers. The unit has drawn onNDDB’s three decades of dairy sector strengths in designing its state of the artlarge and ultramodern central distribution facility to handle fresh and frozen fruitand vegetable.
Unit complex is situated on 22 acres of land. It comprises a prefabricated buildingconsisting of cold store chambers with different sets of temperature and humidityconditions suitable for storage of various fruit and vegetables.
The Unit also initiates and supports production enhancement activities at farm,improved pre and post harvest practices, efficient logistics from farm to the retailoutlets, scientific quality assurance and education of grower, support staff andconsumer.
Production of quality product begins at the farm level where the grower, in co-operation with unit officials, work to cultivate and supply quality produce to theUnit.
The product portfolio of Safal has grown over the years to include a wide rangeof:
Fresh fruits and vegetables - marketed through 375 F & V Booths in Delhi &NCR Frozen vegetables - Peas, Corn & Mixed Vegetable. Processed products like jams, Pickles, ketchups etc. Fruits Juices & Nectars: Orange, Mixed Fruit, Apple, Mango, Grape & Guava.
Today, Safal is the market leader in the frozen peas category with over 60% marketshare nationally with a turnover of Rs. 165 crores (including exports)..
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About
Indian economic reform process commenced in 1991, it is only in the last five to seven years that the country’s GDP has accelerated well past the 7 to 8 per cent per annum growth rate. There is clear evidence of discernible increase in purchasing power in many parts of the country and rising affluence in many urban pockets.
Globalization, urbanization, relaxation of import policies, rising income, growth of organized retailing, economic growth, impact of visual media and changing lifestyles and food habits have opened the doors for the various processed foods and beverages in the market.
There are a large number of players in the market selling processed foods like Kissan, Nestle, ITC to name a few.
Safal has also forayed into the processed food market with a product line which comprises of juices, nectars, RTS, ketchups, jams, pickles, purees and squashes. Safal has a strong equity in fruits and vegetables space and hopes to leverage that.
India’s FMCG sector is the fourth largest sector in the economy and its principal constituents are Household Care, Personal Care and Foods and Beverages. The total FMCG market is in excess of Rs. 85,000 Crores. It is currently growing at double digit growth rate and is expected to maintain a high growth rate. FMCG Industry is characterized by a well established distribution network, low penetration levels, low operating cost, lower per capita consumption and intense competition between the organized and unorganized segments.
The foods category in FMCG is gaining popularity with a swing of launches by HUL, ITC, Godrej, and others.
Safal is also trying to tap the opportunities in the FMCG sector and working hard to make a mark in the FMCG sector.
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PROJECT BRIEF
Safal is trying to make its entry into the ever growing FMCG sector in India.
Despite of tough competition in the sector from existing leading players such as Nestle, Dabur, Parle etc., Safal has a huge potential to make a stand in the market because of high quality product it offers.
Product distribution is of paramount importance in achieving the desired sales. Aproper channel creation needs to be done so that the products have a wideavailability with the consumer. The effectiveness of distribution coverage is veryimportant.Understandingof thedistributioncoverageisimportantforthemanufacturer to plan and implement effective distribution strategy. Our studyshows that there are a number of channel partners involved such as distributors,Wholesalers, retailers and consumers.
The project deals with a well defined distribution channel for the sales anddistribution of Safal products which includes processed merchandises such asjuices, jams, ketchups, RTS, nectars, purees and pickles.
Channels are the means by which one sells products to the customers. ChannelDevelopment and Optimization helps identify those sales channels and processesthat yield the highest return for one’s company.
ChannelStrategyincludesrecommendationsforbothidentifyingandmanaging channel partners. Many companies are not getting the sales growth, market penetration and customer share they should because of ineffective channel design and deployment.
The distribution channel creation will help Safal to move into the general trade in Delhi-NCR region thereby increasing the sales and the market share in the processed food category.
The business is proposed to target 10,000 retail outlets in Delhi-NCR region.
Presently Safal has a turnover of about 32 crores per annum through its 375 outlets in Delhi-NCR region.
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By entering into the General trade the sales would increase further because the availability of the product to the consumers would increase.
In the project the whole of Delhi-NCR is divided into 14 zones. For each zone a distributor is appointed who will help in targeting the whole of the market.
Type of distributors Safal wants to appoint
The distributors we are appointing are agents who are working for FMCG products and have a good knowledge of the market .We are not targeting distributors working for big companies like HUL because they won’t put in efforts to push our products in the market. We are targeting the distributors who are working for medium ranged companies such as Amul.
The methodology followed in the study is basically primary data collection which involves surveying the retailers which is followed by planning meetings with the distributors so as to convince them about our model and turn them into official distributors of Safal.
Study of the channel partners that is retailers & distributors is done through the questionnaire method.
There are certain limitations which arise due to difficulty in collecting the data. Sometimes the retailers are reluctant in giving the information or the information which is provided by the retailer is not correct.
The target market for Safals products includes the women of the house, Children, teenagers, in home consumption and out of home consumption.
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OBJECTIVE
The following objectives would be met by to understand the retail business &development of distribution channel for the Safal merchandise in Delhi-NCR region.
To capture the consumer base of the area & suggest the ways to increase the same.
To do the focus activities in the outlet & surrounding area for increase the sale of fresh
fruit and vegetable products.
To analyze the overall ambiance of outlet & work on booth management –visual
merchandising / rack display etc.
Generate brand equity at the markets we are catering to as well as within the supplier and
distribution networks.
It would help in increasing the sales of Safal products by entering into the General trade
and increasing the availability of the product to the consumers.
It would also help Safal to increase its market share in the processed food category by
competing and moving ahead of strong players in the industry.
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SCOPE
The study focuses on different aspects related to the sales and distribution of Safal Products. The main aspects of study that would be covered are:
Overview of the FMCG sector.
Overview of the processed food sector.
Understanding of the distribution network and how it works in an FMCG sector.
Understanding on what type of distributors are interested in the distribution of products such as juices, sauces, jams and pickles.
Understanding of the channel partners in a channel & competitors.
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RESEARCHMETHODOLOGY
The project aims to create a distribution network for Safal. For this we need tomake a list of probable distributors in the given target market.Methodology used in our project comprises of primary data collection from thetarget market. The method used in the primary data collection is:-
Data Collection
1. Survey method
It involved surveying the target markets. NCR(Noida) region
Booth No. 802 Noida (Sector 15)
818 Noida (Sector 30)
819 Noida (Sector 36)
835 Noida (Sector 44)
We consider the suggestion about 200 people that about 1percent of foot fall on booths in one year.
2. Questionnaire method
This method is followed by asking questions to the customers. Open ended questions were asked .Questionnaires were meticulously prepared keepingin mind the important points. Open ended questions allow the respondents topresent their views without barriers.
.
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Sampling technique
The sampling technique so selected for the project is convenience sampling technique. The selection of the retail outlets is done as per the convenience. No fixed sample size was fixed for the survey.
The sampling technique used for preparing the list of probable customers is Random sampling.
LOCATION FOR THE SURVEY
NCR(Noida) region.
Booth No. 802 Noida (Sector 15)
818 Noida (Sector 30)
819 Noida (Sector 36)
835 Noida (Sector 44)
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ORGANIZATIONAL OVERVIEW
Indian economic reform process commenced in 1991, it is only in the last five to seven years that the country’s GDP has accelerated well past the 7 to 8 per cent per annum growth rate. There is clear evidence of discernible increase in purchasing power in many parts of the country and rising affluence in many urban pockets.
Globalization, urbanization, relaxation of import policies, rising income, growth of organized retailing, economic growth, impact of visual media and changing lifestyles and food habits have opened the doors for the various processed foods and beverages in the market.
There are a large number of players in the market selling processed foods like Kissan, Nestle, ITC to name a few.
Safal has also forayed into the processed food market with a product line which comprises of juices, nectars, RTS, ketchups, jams, pickles, purees and squashes. Safal has a strong equity in fruits and vegetables space and hopes to leverage that.
India’s FMCG sector is the fourth largest sector in the economy and its principal constituents are Household Care, Personal Care and Foods and Beverages. The total FMCG market is in excess of Rs. 85,000 Crores. It is currently growing at double digit growth rate and is expected to maintain a high growth rate. FMCG Industry is characterized by a well established distribution network, low penetration levels, low operating cost, lower per capita consumption and intense competition between the organized and unorganized segments.
The foods category in FMCG is gaining popularity with a swing of launches by HUL, ITC, Godrej, and others.
Safal is also trying to tap the opportunities in the FMCG sector and working hard to make a mark in the FMCG sector.
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FMCG INDUSTRY AND OVERVIEW
Products which have a quick turnover, and relatively low cost are known as FastMoving Consumer Goods (FMCG). FMCG products are those that get replacedwithin a year. Examples of FMCG generally include a wide range of frequentlypurchased consumer products such as toiletries soap, cosmetics, tooth cleaningproducts, shaving products and detergents, as well as other non-durables such asglassware, bulbs, batteries, paper products, and plastic goods. FMCG may alsoinclude pharmaceuticals, consumer electronics, packaged food products, softdrinks, tissue paper, and chocolate bars.
India’s FMCG sector is the fourth largest sector in the economy and createsemployment for more than three million people in downstream activities.
ItsprincipalconstituentshareHouseholdCare,PersonaCareandFood& beverages. The total FMCG market is in excess of Rs.85, 000Crores. It is currently growing at double digit growth rate and is expected to maintain a high growth rate.
Growth Prospects
Large Market
India has a population of more than 1.150 Billions which is just behind China.
According to the estimates, by 2030 India population will be around 1.450 Billion and will surpass China to become the World largest in terms of population. FMCG industry which is directly related to the population is expected to maintain a rebus growth rate.
Spending Pattern
An increase is spending pattern has been witnessed in Indian FMCG market. Thereis an upward trend in urban as well as rural market and also an increase inspending in organized retail sector. An increase in disposable income, of household mainly because of increase in nuclear family where both the husband and wife areearning, has leads to growth rate in FMCG goods.
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Changing Profile and Mind Set of Consumer
People are becoming conscious about health and hygienic. There is a change in the mind set of the Consumer and now looking at “Money for Value” rather than “Value for Money”.
Advantages to the sector
Governmental Policy
Indian Government has enacted policies aimed at attaining international competitiveness through lifting of the quantitative restrictions, reducing excise duties, and foreign investment and food laws resulting in an environment that fosters growth. 100 percent export oriented units can be set up by government approval and use of foreign brand names is now freely permitted.
Central & State Initiatives
Recently Government has announced a cut of 4 per cent in excise duty to fight with the slowdown of the Economy. This announcement has a positive impact on the industry.
But the benefit from the 4 per cent reduction in excise duty is not likely to be uniform across FMCG categories or players. The changes in excise duty do not impact cigarettes (ITC, Godfrey Phillips), biscuits (Britannia Industries, ITC) or ready-to-eat foods, as these products are either subject to specific duty or are exempt from excise. Even players with manufacturing facilities located mainly in tax-free zones will also not see material excise duty savings. Only large FMCG makers may be the key ones to bet and gain on excise cut.
Foreign Direct Investment (FDI)
Automatic investment approval (including foreign technology agreements within specified norms), up to 100 per cent foreign equity or 100 per cent for NRI and Overseas Corporate Bodies (OCBs) investment, is allowed for most of the food processing sector except malted food, alcoholic beverages and those reserved for small scale industries (SSI).
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SWOT ANALYSIS OF FMCG SECTOR
Strengths:
Low operational costs Presence of established distribution networks in both urban and rural areas Presence of well-known brands in FMCG sector
Weaknesses:
Lower scope of investing in technology and achieving economies of scale,especially in small sectors
Low exports levels Products, which illegally mimic the labels of the established brands.
These products narrow the scope of FMCG products in rural and semi-urban market.
Opportunities:
Untapped rural market Rising income levels, i.e. increase in purchasing power of consumers Large domestic market- a population of over one billion. Export potential High consumer goods spending
Threats:
Removal of import restrictions resulting in replacing of domestic brands Slowdown in rural demand Tax and regulatory structure.
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SUB-SECTOR INFORMATION
The food processing industry is rankedfifth interms ofproduction, consumption, export and expected growth.
Food processing in India is gaining equal importance as agriculture or any otherindustry and is vital to the Indian economy as it acts as a linkage betweenmanufacturing industries and agriculture. Offering employment to around 13-15million people around the country, the food processing sector contributes about 14per cent to the GDP. In 2006-07, the food processing sector was estimated atUS$82.6 billion, growing at 13 percent per annum.The success of processedfoodbusiness requires intensivedistribution.Ourretailuniverseisverycomplex. There are about 12 million retail outlets in India. More than 80 per centof these retail outlets are run by small family businesses which use only householdfragmented and unorganized.
MARKET INFORMATION
We are therefore a “nation of shopkeepers” and the retail industry is highly. There are a large number of companies in the market in the processed food. Theleading processors and the various companies are listed below. The market size for the food processing sector was 82.6US $ Billion in 2006-07.
Leading Processors
Multinationals : Pepsi Foods, Hindustan Lever, Brooke Bond, Lipton,Bangalore; Nestle, New Delhi;
Large Indian companies: Godrej Foods, Parle Products. In addition, several state co-operative federations (in Maharashtra,Karnataka and Punjab)
are active.
Industry Structure
Industry is highly fragmented Around 4,100 processing units, of which, over 85% units are in small andmedium sector,
predominantly in the west and north zones. Location of units determined by proximity to raw materials, markets.
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Fig. I - Production Trend in FMCG sector
The processed food market has a huge potential .The following is the data given for the scope of processed fruits and vegetables.
Fruits & vegetables processed (1997-98) - 1.2 million MT (Rs 850 crores -US $151 million)
Exports of processed fruits & vegetables - Rs 390 crores (US $ 91 million) Fruits & vegetable processing in India has been growing at 13% per annum
Leading brands (Indian) Jams: Kissan. Sauce/Ketchup: Kissan, Maggi Tomato Puree: Godrej Fruit Juice: Frooti,, Real,
Tropicana Pickles: Mother’s Recipe, Tops Chips/Extruded Snacks: Lays,
Uncle Chips Frozen vegetables: Safal
Table I - Leading brands in India
1) JUICES
The organized fruit beverage market which includes nectars, drinks and juices isamong the fastest growing segments in the beverages category and was valued atUS$0.3 billion in2006-07, growing at annual rate of 25 percent. While the fruitdrink sector dominates the market with a 77 percent market share, the fruit juiceand nectar sector accounts for 23 percent of the market. The advent of liquidpackaging cartons (Tetra Pack) has helped in increasing the sales of fruit juices inIndia.
The entry of large brands into the fruit juice market in Tetra Pack Packages has hada good impact on the growth of this sector.
However, more than 90 per cent of the sales are through the unorganized routesuch as juice centers, street corner shops, kiranas, convenience stores etc.
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Brand Market share (in% approx)
Real 60
Non-Synthetic Tropicana 33
Other 7
Frooti 38
Synthetic Mazza 35
Others 27
Table II- Major Players and their market share
2) KETCHUPS
Ketchup is gaining a momentum in the processed food category and slowly andsteadily creating a niche for itself. In India the ketchup market is of about Rs.150-180 crore. It is expected to increase by about 25% in the coming years.
Ketchup penetration is about 13% in urban India & 3.7 % nationally. The mainsize that is consumed is the 650g ketchup.
The major players in the ketchup category in India are:-
1. Nestle’s Maggi (Approx. 52% Market Share)
2. Kissan (Approx. 43% Market Share)
3. Heinz (Approx 3% Market Share)
Maggi Hot & Sweet (200 gm) is way ahead in this game with 75 per cent ‘goodvisibility, followed by Kissan’s 1,000 gm with 50 percent visibility.
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3) JAMS
Jams market in India is growing at a steady rate. The jam market is Rs. 100 croremarket and growing at the rate of 10%. The jams are provided in different tasteand flavors. The penetration of fruit jams in India is very low at 3 per cent, withurban penetration in the country being 9 per cent and rural penetration being 0.3percent. Kissan from Hindustan Unilever and SIL from Marico are the most popular brands in the country. While Kissan (HUL) has a market share of 74 percent, SIL (Marico) accounts for a share of 11 per cent. There are a lot of localcompanies producing jams in India.
4) PICKLES
The Pickle category in India is dominated by Tops Foods. The follower of Tops is Mothers Recipe. Recent launch is of Nillons pickles in the market.There are a large number of unorganized players in the market catering to pickles.
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Why we require a Channel Partner?
Products need to be made available in adequate quantities, in convenient locations and at times when customers want to buy them. Channel intermediaries/partners are those organizations who facilitate the distribution of products from producers to customers. Channel of distributor is the means by which products are moved from producer to the ultimate customer. They serve several specialized functions that enable manufactures to make their goods available to their consumers at the right place at right time.
Manufacturers produce large quantity of limited range of products whereas customers usually want only a limited quantity of wide range of goods. Channel members reconcile these conflicting situations. A related function is breaking bulk. A wholesaler buys large quantities from a manufacturer and then sells smaller quantities to retailer. Manufacturers can produce large quantities while customers are offered limited quantities at point of purchase.
Manufacturer to Consumer:-
This is also known as direct marketing and it includes use of personalselling,directmail,telephonesellingandinternet.Companycontactcustomers directly through salespersons, mail, telephone orinternetandmake sales. The products are sent directly to customers by the manufacturer
Manufacturer to Retailer to Consumer:
Retailers have grown in size like Wal-Martetc., growth in retailer size meansthat it has become economic for manufacturers to supply directly to retailers.These retailers use their enormous retail sales to avail concessional prices.
Manufacture to Wholesaler to Retailer to Consumer:
For small retailers with limited order quantities the use of wholesalers makes economic sense. Wholesalers buy in bulk from the producers and sell smaller quantities to numerous retailers.
Manufacturer to Agent to wholesaler to Retailer to Consumer:
In this method, goods are sold to an agent distributor and then they are responsible to market the good. They sell the good to wholesalers and retailers.
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Fig. V- Different Distribution Channels
The distribution channel which Safal will use is the one with only 1 intermediary i.e. distributor/Agent which will distribute further to wholesaler and retailer.
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Producer
Producer
Producer
Producer
Consumer
Consumer
Consumer
Consumer
Retailer
Retailer
Retailer
Wholesaler
WholesalerAgent
C & F Agent
Carrying and Forwarding agent act on behalf of the company. Hiring a C & Fagent is like setting up a company depot which is handled by the agent. Goods aretransported to agent’s warehouse and from there they are dispatched to all thedistributors. All the billing is done by the agent but on behalf of the company.
C&F agent has the responsibility of all the logistics from the manufacturer till it these agents do not contact the distributors. This is done by the company. All thepayments are collected by distributors and claimed settled by the C&F agent.
C&F agents are given all expenses incurred by them. For example, staff salary, transportation claims etc. C&F agents charge service charges from the company in lieu of providing all these services. It is either on percentage margin of the business done or as fixed service charges. Mostly these service charges are fixed in nature, for example, Rs25000/month.
The claims of expenses can be settled in two ways by the agent. Firstly, these claimed can be deposited directly to the company without getting the agent in between and secondly, by claiming it through the agent. The claims are thus deposited with the agent and they send the same to the company for clearance.
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Super Stockiest
Super stockiest are the middlemen who buy in large amount from the manufacturer and then sell them to distributors. These distributors are hired by the company only and not by the super stockiest, generally. Super stockiest is responsible to market the product to these distributors and all the expenses related to the job are paid by the stockiest only. Super stockiest cover all its expenses and profit in the margin of the product. That’s why they generally have high margins then distributors and retailers.
Billing and other paper work is done on the name of super stockiest and not on company’s name.
The biggest benefit of super stockiest is to those companies do not have to deal with the distributor.
Super stockiest can lead to undercutting in the market very easily by maintaining their expanses to the minimum which can be harmful for the company.
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Role of Distributor
The role of distributors is not only to make the Safal products available to the customers but they
will perform several other roles and functions as well for Safal unit. Some of those roles are
identified us and are summarized below:
Promotion
Promotion/marketing of the products in their territory is one of the most important functions of
the distributor. Many distributors use sales incentive programs to increase the customer traffic.
Mostly these sales incentive programs are provided by the company itself.
Financing
Distributor finance manufacturers operations by providing the necessary workingcapital in the
form of advance payments for goods. These payments are done evenbefore the products are
bought, consumed and paid for by the ultimate consumer.
Title
Distributor takes the title of the goods and trades them. This helps in diffusing therisks between
the manufacturer and distributor. This also enables distributor to bein physical possession of the
goods, which in turn enable them to meetcustomerdemand at the very moment it arises.
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Price Stability
Price stability can be maintained by distributor in order to absorb an increase in the price of the
products and continue to charge the customer the same old price. This is because of the inter-
middlemen competition. This can be done by the distributor by keeping their overheads low.
Information
Distributors play a major role in providing information about the market for our products.
Developments like changes in customer demography, media habits, entry of new competitors or
a new brand and changes in customer preferences are some of the information that we need from
our distributors. Since distributors are present in the market-place and they are closer to the
customer, they can provide these information’s at no additional cost.
The definition of a channel partner thus can be viewed from five different perspectives or
marketing flows presented as below:
‘
Fig. VI - Physical Flow of goods
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Manufacturer (Safal) Transporters and company
Manufacturer (Safal)
Customers Retailers Transporters
Fig. VII – Title Flow of Goods.
Fig. VII – Title Flow of Goods.
Fig. VII –Title Flow of Goods.
34
Manufacture (Safal)
Distributors Retailers Customers
Manufacture (Safal)
Distributors Retailers Customers
Manufacture (Safal)
Distributors
RetailersCustomers
WORKING OF A DISTRIBUTOR
The distribution of products is important for a company. Correct channel strategies are widely used by the company. The working of distributors is essential to understand. These are as follows:-
Transportation of product
The products are manufactured at the Safal plant and are transported to the Distributors by Safal.
The goods are unloaded at distributor’s warehouse and after that it is the sole responsibility of the distributor to take care of the product.
Selling of the product to the retailers
Distributor hires salesman who will market the good in the area. The number of salesman will depend on the area that needed to be covered and the nature of good. Generally, the company will specify the number of salesman that they think will be needed in the market but a distributor can appoint on their own judgment and experience.
Each salesman is given a part of the total area allocated to the distributor and their duty is to cater only to that particular area.Their job involves them to find all the prospective retailers that can keep our product and to convince them to buy from us. Their main job is to increase the sales of the good in the market.
Each salesman will take orders from their areas and then deliver those goods as soon as possible or when required by the retailer. They need to maintain the continuity of the service in the market and to see that all retailers maintain our stock.
It is important to maintain healthy relationship with the retailer by salesman, so that they will not shift easily to their competitors.
The movement of goods from the distributor to retailer is responsibility of the distributor.
Distributor has the job of collecting any information that they can related to the goods and the company, from retailers and customers.
Any customer complain, expiry of goods, damaged goods etc. hasto be taken care by the distributor and collect the same from retailer. They can make a claim of the same with the company.
It is also the duty of distributor to pass all the primary or secondaryschemes to the retailer.
Working of distributor as studied by us is as explained above but as a distributor is an independent member of the market and the working may vary according to distributors.
35
Terms and Responsibilities of Distributors
Commercial policy of manufacturer often lays down the terms and conditions and responsibility
for the distributors. Generally these include price policy, mode or terms of payments, returns
policy, territorial rights etc. These are explained as below:
Price Policy
This sets out the price at which the distributor will get the product from Safal and the discount
schedule. It also mentions the price at which distributor may sell the product. Generally, the
company is required by law to stipulate the maximum retail price (MRP). The exact price at
which the product is available to the consumer may change but it cannot exceed the maximum
retail price stipulated by Safal. The actual price may vary from MRP due to trade discounts,
scheme offered by Safal/Distributor/Retailer etc.
Payment Terms
These include the stipulations related to mode and terms of payment. For example, Safal accept
payment only in form of Cheque or Demand Draft, No cash is accepted. It also related to the
credit policy of the company.
36
Return policy
This indicates the warranty that Safal extends to the Distributor. Some firms offer spot
replacement and other takes time to settle them. Return policy should be laid down to avoid
conflicts between the two parties.
Territorial rights
Territorial jurisdiction of each of the distributors should be spelled out to avoid any territory
jumping. This will also be helpful in distributor’s evaluation. Safal has the policy of indicating
the area which each distributor will market and if any distributor jumps in other distributor’s area
then Safal can take actions against that distributor which may result in termination of contract.
Mutual Services and Responsibilities
These services and responsibilities can be promotional inputs, training, quality control, and other
administrative support. These services may strengthen the bond between distributor and the
manufacturer.
All these terms and conditions will be later discussed under the head “Terms and Conditions for
Safal Agency”.
37
UNDERCUTTING
Undercutting is the process which occurs in the market place to push the product into the market place.
Process
The distributor gives the product to the wholesaler at a discounted rate known as cash discount. Wholesaler’s buy in bulk from the distributors and this discount is further transferred to the retailers. For example, let’s say that the distributor will get the product with a margin of 5% and retailer will get a margin of 15%. But retailer’s buys in small lots and distributor may keep stock worth in lakhs at a point of time. Wholesaler approach distributors and offer to buy in bulk for extra margins. A distributor may pass 17% margin and keep only 3% for themselves. It is done to clear stock faster. Wholesaler then passes the same goods at 16% margin to the retailers which are 1% more than they can get from a distributor.
This is done to increase the sales of product and push it into the market as the product is purchased in bulk and sold in the market.
Disadvantages
It may be disadvantageous for the distributor as he has to give some of themargins. But still he earns on the bulk trade and saves the transportation cost to deliver same goods to retailers and the go down cost.
It may also be disadvantageous for the company as retailers in some areas may sell the products at low prices than other areas and that would hamper the brand image of the company,
Sometimes companies deliberately take this step and create undercutting in market to push their product in the market. As retailer will earn more on the same MRP, they are interested to sell as much as they can. This can be done by giving the distributors high targets, so that in order to achieve that target they will sell on lower margins to wholesalers or any other way. Company like Fair and Lovely have earned a huge market share by this process at a point of time.
38
ARE THE CHANNELS OF DISTRIBUTION WHAT THE TEXTBOOKS SAY?
Theory and practicality are quiet different and this difference is very much seen in the working of channel of distribution. The study of various textbooks had lead us to following conclusion about the distributor:
1. Middlemen of many types are available to any manufacturer in any market towhich the company wishes to sell.
2. Themanufacturerhabituallycontrolsthese lectionandoperationof individual firms of the channel.
3. The middlemen respond willingly as selling agents for the manufacturer for a coveted group of customer to whom he sells.
But none of the above conclusions are perfectly true in the real sense.
In practice a businessman instead of a channel is likely to concern himself with suppliers and customers. His dealings are not with all the links in the channel but only with those who are immediately adjacent to him. He is not concerned about his products after they leave the hands of the middleman. The manufacturers may not even consider themselves standing at the head of the channel.
The following are the middlemen reactions:-
Wholesalers and retailers enjoy an excellent position from which to make keen judgments’ of a products probable success. The manufacturers force acceptance of the goods with advertising, high markup offers, free merchandise, combination schemes. These allow initial acceptance of the product by the middlemen.
39
Lack of vertical communication is a deterrent. There is an inability to obtain facts from their own immediate markets. This information can be used in promotion, packaging and pricing
Communication downward from the manufacturer is also faulty, placing in doubt that all links in channel are bound by common objectives,
The middleman is interested in selling any product which his customers desire to buy from him. The attractiveness is not to be judged by markup, offering advertising and the product but rather it is that whether it would fit the line or not.
The middleman is not a hired link in a chain forged by the manufacturer but it is rather an independent market, the focus of a large group of customer from whom he buys. Middlemen are free to choose whom to work with and whom not too. The middleman can grow to such an extent that his prestige is greater than the supplier and such case manufacture can have no policy with respect to that market. We cannot limit the role of middlemen nor can we control them fully. We need to maintain good relations with middlemen in order to keep our channel of distribution healthy. For example, Safal has to withdraw the customer scheme from the market and provide with trade discount just because customer scheme was not accepted by our distributor and in order to make sale, we need to lure them with trade discounts.
Middlemen complete our channel of distribution and thus, we are dependent on them. Distributors have developed them as independent market through their beneficial services.
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PRODUCT PORTFOLIO OF SAFAL
Theproductportfoliosof Safal include severity of products. Abrief understanding about these
products is essential to market the products.
JUICES-Under the fruit drinks the first segmentation is between real fruitdrinks and
synthetic drinks.
The real fruit drinks are based on natural fruit pulp or juice.
The synthetic drinks are synthetic products with fruit or other flavors.
Broad taste preferences could be another way to define the market. The marketis at
present also segmented on the basis of fruit pulp content. For the purposeof
segmentation, on the basis of fruit pulp content. For the purpose ofsegmentation, on
the basis of fruit pulp content, market can be segmented as:
1 Fruit juice with pulp content more than 80%, Brands falling in this category are Onjus,
Real, Tropicana (100% juice) etc.
Our juices boast of a quality manufacturing procedure and packaging. Variants of juices are
listed in the table. The juices are made from fresh fruits. Our juices are made by reconstituting
the juice concentrate which amounts for 85% pulp, Sugar, Natural identical colors and flavors are
added. Our juices do not contain preservatives. The preservative action is because of ascorbic
acid. It is also ideal for the foodservice establishments as it requires minimal storage space, them
to cater for large functions.
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2. Fruit Nectar- with pulp content from 40% to 80%. Life and X’s come in this category. Our
nectars are made by reconstitutuion.They contain nature identical colors and flavoring
substances.
3. RTS - These are ready to serve beverages which have a pulp content which is lower than that
of juices and nectars. Its consumption is aimed at consuming at a particular point of time. It
contains about 10% pulp. This Ready-To-Drink variant offers an option to retail operations
catering to customers looking for healthy, thirst quenching single serve options. The well-
designed packaging ensures that it stands out whether it be displayed in normal shelves or walk-
in chillers. Our RTS has about 13% pulp of the fruit it is made of in addition with the sugar,
acidity regulators and preservatives.
4.KETCHUP - Condiment consisting of a thick, smooth-textured, spicy sauce usually made from
tomatoes. The ketchups can be divided on the basis of thick and thin sauces. A recent launch of
tomato ketchup has taken place with improved packaging and sensory characteristics.
5.JAMS - Fruit jams are fruits, or vegetables, that have been prepared and canned for long term
storage. The preparation of fruit preserves traditionally involves the use of pectin as a gelling
agent, although sugar or honey may be
6.SQUASH - These belong to the synthetic beverage category. These are available in different
flavors and contain a high amount of sugar.
7. PUREES-These are majorly aimed for in home consumption and contain tomatoes.
8.PICKLES- They are available in wide flavors. Our pickles are made from fresh quality fruits and vegetables with condiments, oil and salt.
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Catalogue of Safal products:-
S.No. Material no. Product Category Material descriptionMRP(inRs)
1 72000314 Nectars MANGO NECTAR 200ML 152 72000313 MANGO NECTAR 1LTR 703 72000312 GUAVA NECTAR 1LTR 70
4 72000801 GUAVA NECTAR 200ML 15
5 72000811 RTS SAFAL MANGO DRINK 200ML
12
6 72000812 SAFAL LITCHI DRINK 200ML
12
7 72000813 SAFAL PINEAPPLE DRINK 200ML
12
8 72000814 SAFAL GUAVA DRINK 200ML
12
9 72000815 SAFAL PLUM DRINK 200ML
12
10 72000816 SAFAL PEACH DRINK 200ML
12
11 72000315 Juices SAFAL GRAPE JUICE 1LTR
70
12 72000319 SAFAL ORANGE JUICE 1LTR
77
13 72000320 SAFAL ORANGE JUICE 200ML
15
14 72000316 SAFAL MIX FRUIT JUICE 1LTR
77
15 72000317 SAFAL MIX FRUIT JUICE 200ML
15
16 72000330 Squash SAFAL LEMON SQUASH 700ML
70
17 72000332 SAFAL ORANGE SQUASH 700ML
70
18 72000331 SAFAL LITCHI SQUASH 700ML
75
19 72000321 Tomato Ketchup
SAFAL TOMATO KETCHUP IKG
89
20 72000322 SAFAL TOMATO KETCHUP 500GM
50
43
21 72000335 Tomato Puree SAFAL TOMATO PUREE 200.GM
14
22 72000306 Jams SAFAL APPLE JAM 500GM 6023 72000311 SAFAL PINEAPPLE JAM
500GM60
24 72000307 SAFAL MIX FRUIT JAM 200GM
30
25 72000309 SAFAL MIX FRUIT JAM 500GM
65
26 72000310 SAFAL MIX FRUIT JAM IKG
100
27 72000328 Pickles SAFAL RED CHILLI PICKLE 400GM
55
28 72000327 SAFAL MIX PICKLE 400GM
45
29 72000325 SAFAL LIME PICKLE 400GM
45
30 72000326 SAFAL MANGO PICKLE 400GM
45
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SWOT ANALYSIS of SAFAL
Strengths:
High quality product made by latest technologies and aseptically packaged. Products are available in wide varieties of flavors and are HACCP and ISO certified. Committed, capable and ambitious management, Flexibility in our operations so we can focus our efforts on the tasks.
Weakness:
Our distribution set up initially will be weak when compared to the others in the market. We will not be able to price our product lower than the others in the market as we are
producing a quality product.
Opportunity:
The market is in a growing stage and there are huge chances of growth in the sector. More and more people in the urban areas are getting health conscious and are making fruit
juice a part of their daily diet. Hence the market is growing. The government policies are expected and are showing trends to encourage the food
processing industry.
Threat:
Our competitors are wide such as Dabur& Real and they could harm us by getting aggressive in their promotional activities.
The competitors have strong brand images in the market because of their other businesses and their presence in the market from an early stage.
Indian market has characteristic of serving a wide variety people which is a challenge for all the marketers.
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Terms and condition for Safal Agency
Margin on Safal products for the distributor will be 5% on markup
The actual margin on Safal products is 5.25% but as VAT is deducted from this margin the absolute margin for the distributor comes out to be 5%
Margin on Safal products for the retailer will be 15%on markup
Rs. 10,000 will be reimbursed to the distributor as the salary of 2 sales persons per month
Rs. 20,000 will be given to the distributor to purchase shelf space from the retailers
Shelf space means that the retailer has to place our products at the shelf on eye level, so that customer can easily view our products as soon as they come to the shop. In short, our products should be easily visible to the customer.
Rs. 25,000 has to be deposited as security, if thedistributor is ready to take the agency of Safal
This security is refundable but it does not carry any interest. The security will be refunded when the distributor leaves our agency or when we leave the agent.
Minimum Rs. 1,00,000 has to be invested as working capital by the distributor
Against this amount stock will be delivered to the distributor, after that distributor can order any amount of stock as per the requirement of the distributor.
Safal gives replacement under the following circumstances:-
1. Expired stock with the distributor.
2. Damaged goods.
3. All consumer complains (attached with the copy of consumer complain)
Safal will not replace good if Rat cuts are found.
All these terms and conditions are discussed with the distributor in preliminary meetings
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FINDINGS
The survey of retail outlets in the zone 5 that is Anand Vihar yields data about 51 potential distributors. These distributors are working for various FMCG companies. These 37 companies have been broadly classified as follows:
1. Dairy Products
2. Snacks
3. Beverages
4. Ready to Eat
5. Confectionary & Cereal Products
6. Ketchups, Jams & Pickles
7. Other
In a particular category following companies have been included. These are as follows
1. Dairy Products
Distributor working for companies like Amul and Paras Ghee were interested inour proposal. Mother Dairy distributors did not show any interest.
2. Snacks
Distributors catering to snacks companies were interested in our proposal likeHaldirams Frito lays,Bikano and AC II. Piknik and Nissin did not show any interest.
3. Beverages
In the beverage category there are strong competitors of Safal so they were not interested in our proposal. Only Bisleri and Tata tea had a word with us.
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4. Ready to Eat
Distributors catering to ready to eat products were not interested.
5. Confectionary & cereal products
This category includes a wide range of products ranging from biscuits to bread,rice to breakfast cereal. This category showed a wide interest in our products, Ahaa,Jagat Rice, Dawat Rice, Britannia, Perfetti, Bonn and Rajdhani were interested in our proposal.
6. Ketchup, jams & Pickles
This category caters to companies who are our competitors, hence no company wasinterested.
7. Others
Companies interested under this category are Sundrop Oil and Everest Masala.
Inference- The inference which can be drawn is that the distributors working for the FMCG sector are not equally interested in the distribution of processed foods.A variation lies between distributors working for different companies, distributors catering to Confectionary and cereal products are the most interested as they get to cater to a different product line completely with no competitors,moreover the companies working in this category are not big companies so they are interested as this would give them an opportunity to expand their business.
Distributors catering to the snacks category are the next interested.This maybe because of no competition in the category.
The percentage catering to others and Milk Products are equally interestedthat is 13% each.
Distributors of Beverages and Tomatoketchups,jams and pickles are leastinterested because of the competitors they are working for. It includescompetitors such as Kissan,Dabur.
Other findings from the survey of distributors are as follows:
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1. The finding reveals that distributors are mostly working with two or more companies. Only 20% distributors worked with single companies such as Babajinamkeen.
Moreover some companies like HUL have only 6 distributors catering to whole of Delhi.Some companies like Haldiram have different set of distributors for different types of products.
2. Only 5% distributors sign a formal agreement with the company prior to taking thedistribution ship of the company. There is no formal deal between the distributors and the company.
Negotiations
The negotiations distributors ask for is very helpful for us to analyze and thereby modify our policies accordingly.
1. 15% of the distributors asked for van subsidies or secondary freight.
2. 40% of the distributors wanted increase in the margins given to them.
3. 10% of the distributors wanted to reduce or expand the territories given to them.
4. 50% of the distributors wanted the salesman salary should be increased.
5. 0.5% distributors wanted to have a running product so that they can push the product in the market.
Study of the negotiations helped us to understand what the distributors want in general and how can we change or modify our policies accordingly.
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Study of retail outlets and retailers
Retail outlets are the shops which directly sell the products to the consumers.
In NCR region, I have been appointed Zone 7 that is the Noidazone, the following were the findings of the retail outlets:
1. There are a large number of small unorganized retail outlets basically known as mom and pop shops or the kirana shops.These shops are generally owned by small business man either in partnership or proprietorship,
2. The grocer stocks non packaged, unbranded commodities such as rice, flour, and pulses, as well as branded fast moving consumer goods (FMCGs)
3. These shops are widely present in every area and the concentration mainly lies in the residential area.
4. In some area there are markets which have only wholesalers.
5. The format of these retail outlets is not very good and organized. The layout of these outlets is very simple.
6. There is a provision for shelf space provided by different companies. Shelf space refers to the space which companies give for displaying and advertising the product. These outlets have limited shelf space.
7. The retailers buy the products of different companies through the distributors appointed by the companies. The companies generally give a margin of about 15% in the processed food categories.
8. It was observed that the retailers try to push and sell the products for company giving those schemes and better margins than others.
9. In the processed food category juices are selling the most because of summer season. Amongst juices Real juices are selling the maximum.
10. The demand for juices mainly comes from middle and upper classsegment of the society.
11. Recent launch in the ketchup category is Del Monte sauces.
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Competitors Schemes and Margins
Category Brand Margins Customer Retailers
Schemes Schemes
Real 15% 3% extra
margin on
target sales
Tropicana 15% Free Glass with 3% extra
Juices every pack margin on
target sales
Saint 15% Buy 2, Get 1 Free
Onjus 20%
Tops 20%
Pickles Mother’s Recipe 37.5%
Nillons 15%
Maggie 10% Trade discount
of 6%
Ketchup Heinz 10%
Tops 12-13%
Del Monte 12-13%
Kissan 10%
Tomato Puree Dawar 10%
Kissan 10%
Squash Mapro 12%
Haldiram 10%
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Findings from the study of margins and customer schemes:
Tropicana provides a higher margin to the retailer than the normalmargins of other companies. On surveying it was found that they are notselling 100% juice at that price. They are selling ready to serve beveragewhich has much lower pulp content than that of juices.
The squash market is shrinking with only few players such as Kissan left in competition. Some other players are Mapro.
Consumer scheme are only available with Onjus and Tropicana juice in the market. As we have launched our products with consumer schemes like free bottle with a juice pack and ketchup dispenser with each ketchup bottle, it will be able to attract more customers.
Recent launches in the ketchup category are that of Del Monte sauces .These are easy flowing and have pieces of fruit and vegetables in it.
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DATA ANALYSIS AND INTERPRETATION
1. Are you aware about the schemes running on Safal Products :-
a) Yes b) No0
20406080
100120140160180
82.5 percent customers aware about the scheme on Safal Product.
2. If yes, through which medium did you come to know about the schemes?
a) Th
rough
Safal
Outle
t Owner
b) Disp
lay PoP at
Booths (Ban
ner, Poste
r, etc.
)
c) New
spap
er lea
flets
d) SMS
e) W
ord of m
outh
f) Others
…0
20
40
60
80
42.5 per cent customers know about the schemes by SMS.
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3. Did you avail the scheme on Safal Juices/ Nectar 1 litre ?
a) Yes b) No0
20
40
60
80
100
120
140
66.5 per cent cost customers was not avail about the safal Juices/ Nectar.
4. If No, then what is the reason?
a) Price b) Quality c) Better Schemes of Competitors
(Specify)
d) Any Other (Specify)
0
20
40
60
80
100
120
Price is main factor about the not avail theSafal Juices/Netar. Because 52.5 per cent customers said price is very high .
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5. Did you avail the scheme on Safal Frozen Peas 500g/1kg?
a) Yes (please specify size) b) No0
20
40
60
80
100
120
140
160
180
80 per cent customers said not about the Scheme on Safal frozen peas 500/1kg
6. If no, then what is the reason?
0
20
40
60
80
100
120
Reason behind ,55 percentcustomers saysbetter scheme not avilable and 25 percent says price is high.
55
7. Did you try theNew& Improved Safal Tomato Ketchup 500g/ 1kg launched recently?
a) Yes (please specify size) b) No0
20
40
60
80
100
120
140
160
180
85 per cent customers said no and only 15 percent customerssaid yes.
8. If no, then what is the reason?
a) Pric
e
b) Quali
ty
c) Bett
er Sch
emes
of Competi
tors (Sp
ecify)
d) Any O
ther (Sp
ecify)
020406080
100120140
62.5 percent customers says price is main reason.
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9. If yes, please give your feedback on following parameters vis-à-vis Old Safal Tomato Ketchup:-
a)Quality & Taste b)Packaging c)Price d)Scheme0
20
40
60
80
100
120
140
160
Poor
No Change
Better
In safal Tomato Ketchup given parameters customers wants to change 75 percent price , 62.5 percent customers wants schemes and 50 percent customers wants to change in quality & taste.
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CONCLUSION
Distribution is an important part of the marketing mix. Channel creation needs to be done for the proper availability of goods with the retailers and hence the consumers. The effectiveness of distribution coverage is very important. Understanding of the distribution coverage is important for the manufacturer to plan and implement effective distribution strategy. Channel Strategy includes recommendations for both identifying and managing channel partners. Many companies are not getting the sales growth, market penetration and customer share they should because of ineffective channel design and deployment. For proper marketing of the products we need distributors who have a proper knowledge of the market and can aid in the proper distribution and downward communication to the retailers and this information can be used by the company to improve the products.
But it is seen that it is a herculean task to appoint good distributors for thecompany. The reasons can be following:
The availability of capital with the distributor is another important consideration. As the investment involved can vary from 5lakh/month to 201akh/month, distributor needs to see if they can arrange such kind of capital for the new proposal.
Negotiations from distributor’s side can produce some hindrance as well. It may not be in companies hand to fulfill all the requirement of the distributor and hence, not reach to an acceptance.
A distributor is not interested by the proposal we have presented in front ofthem. Distributor needs to check if whether the new proposal can be handledby them and if it will prove beneficial for them or not.
We should not go in for distributors working with the companies of our competing brands as it would only lead to time wastage as they would not be interested to distribute our product.
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The following can also be concluded:
In a FMCG industry dealing with processed foods and beverages if we need to develop a distribution network we need not consult all the distributors in the processed food segment, rather we should go for distributors dealing in confectionary & cereal products as they are most interested in the distribution as they are not distributing for any of the competitors and hence would put in full efforts for the distribution to take place efficiently. They also get a different product line to cater and can gain from the market experience achieved by marketing a new product.
It can be concluded that the manufacturer force acceptance of the goods with advertising, high markup offers, free merchandise, combination schemes. These allow initial acceptance of the product by the Distributors.
The middleman is interested in selling any product which his customers desire to buy from him. The attractiveness is not to be judged by markup, offering advertising and the product but rather it is that whether it would fit the line or not.
Thus, we can say that the distributor has gained an important position in the market.
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RECOMMENDATIONS
The following are the recommendations which Safal should adopt
Salary reimbursement that our company provides is same for each zone; it should be re-distributed according to different zones so that they can be justifiable for different areas.
Safal should also consider distributors who are currently working with Safal and Mother Dairy. They are working for different units but they can be easily contacted and as they are already associated with our company, they might be interested in expanding their business. Currently such distributors are the distributors of Safal Peas and Mother Diary Ice-cream and Curd.
Safal can provide services like van subsidies, godown charges to the distributor so that they are lured to work with the company.
Safal can provide the products to the distributor on credit basis as most distributors are willing to work on credit basis only.
There can be changes in the price policy
Safal can provide a running product with the products we are offering like Safal peas to boost up the sales. Product assortment can be done.
Safal can go in for aggressive promotions and advertising to make a presence in the market.
Instead of going for a single distributor in the given Zone, Safal can appoint more than one distributor so as to cater to whole of the area.
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Limitations
1) Non availability of the retailer.
2) Retailers reluctant to provide information about the distributors.
3) Change of phone numbers of the distributor.
4) Distributors not interested in Safal policies.
5) Non availability of investment required by the distributor.
6) Unacceptable terms and conditions put by distributors.
7) Other lucrative offers with the distributor at the same time.
8) Distributors already engaged with competitor of Safal.
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AnnexureQUESTIONNAIRE
Booth No. Name: Age: Contact No.
1. Are you aware about the schemes running on Safal Productsa) Yes b) No
2. If yes, Through which medium did you come to know about the schemes?a) Through Safal Outlet Ownerb) Display PoP at Booths (Banner, Poster, etc.)c) Newspaper leafletsd) SMSe) Word of mouth f) Others ……………..
3. Did you avail the scheme on Safal Juices/ Nectar 1 litre?a) Yes b) No
4. If No, then what is the reason?a) Price b) Quality c) Better Schemes of Competitors (Specify)d) Any Other (Specify)
5. Did you avail the scheme on Safal Frozen Peas 500g/1kg?a) Yes (please specify size) b) No
6. If No, then what is the reason?a) Price b) Quality c) Better Schemes of Competitors (Specify)d) Any Other (Specify)
7. Did you try the New & Improved Safal Tomato Ketchup 500g/ 1kg launched recently?a) Yes (please specify size) b) No
8. If No, then what is the reason?a) Price b) Quality c) Better Schemes of Competitors (Specify)d) Any Other (Specify)
9) If Yes, please give your feedback on following parameters vis-à-vis Old Safal Tomato Ketchup:
Poor No Change BetterQuality & TastePackagingPriceScheme
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REFERENCES
ARUN KUMAR AND N MEENAKSHI, 2006. Marketing management.
PHILIP KOTLER, KEVIN LANE KELLER, ABRAHAM KOSHY AND MITMLESHWAR JHA, 2009. Marketing Management
LAMB AND DANIEL ANDHAIR. Marketing Management
www.fnbnews.com
www.google.com
www.Financialexpress.com
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