Table of Contents
1. Acknowledgement
2
2. Table of Content
3
3. Glaxo Smith Kline
4
4. Product Portfolio
4
Nutritional
5
Over the Counter
6
5. Distribution Structure
8
6. Hierarchy in GSK
10
Territory Sales Executive
10
Distributor Sales Representative
11
Merchandisers
13
Distributors
13
7. How to choose a distributor
14
8. Sales Force Training
14
9. Deciding Sales Target
14
10. Products
15
11. Offers and Schemes
16
Wholesaler Schemes
16
12. Issues Identified and Solutions
17
13. Appendix 1: Photos taken from Field Visit
23
14. Appendix 2: Field Visit Detail
25
Glaxo Smith Kline
Glaxo Smith Kline is headquartered in UK and has a wide variety of businesses like the pharmaceuticals, biologics, vaccines and consumer healthcare. It is the fourth largest pharmaceutical company. The GSK conglomerateemploys conglomerateemploys over 100,000 employees employees worldwide, in 37 countries and over 40,000 employed in Sales & Marketing. GSK India
In India, GSK is one of the market leaders with a turnover of Rs. 3021 crore and a share of 4.2 percent. GSK leads in several therapeutic s egments - Dermatology, Vaccines, AntiParasitic. GSK has 4 products in the top 50 brands, and the top four GSK products are Augmentin, Calpol, Zinetac and Ceftum. GSK's vaccines division is ranked first in a fastgrowing vaccines market. Some leading products in India are Varilrix, Havrix, Rotari x, Synflorix, Cervarix, Infanrix and Engerix B. GSK Consumer Health Care segment is equally strong and has a variet y of products in its portfolio. The operations of the consumer consumer healthcare segment are kept different from the pharmaceutical segment and run as different entities. Product Portfolio
GSK has its presence in consumer healthcare as well as in pharmaceuticals. GSK Consumer Healthcare: GSK is present in this segment under two dimensions viz.
Nutritional and Over the Counter drugs. drugs.
3. Nutritional Horlicks ”The great family nourisher”
Horlicks is the leading health food drink in India and as the “Most trusted drinks brand” ( Economic Times Survey, 2004) in India. It is currently the most widely consumed beverage in India after bottled water. Horlicks has always been a popular brand in Indian market. It has flavors ranging from Vanilla, Toffee, Elaichi, and Chocolate which offers “ple asurable nourishment”. Horlicks accounted for 85% of revenue of GSK in India in the year 2010.
Horlicks Ninja
Junior Horlicks
Mother’s Horlicks
Horlicks Lite
Horlicks Biscuit
Boost ”Boost is the secret of winning energy”
Boost is malt based Health food drink which was launched in 1975.Boost
has
huge
market
share
in
South
India
approximately 26% while overall market share is around 13.6%. Horlicks was the first HFD to use celebritiy endorsement and differentiate itself in terms of energy proposition. The brand ambassador for this has been KapilDev, Sachin Tendulkar, VirendraSehwagand M S Dhoni.
Maltova ” The yummy choco - malt drink”
Maltova is a chocolate health drink which was acquired in 2000 from Jagajit Industries Limited. It is considered to be fun health drink which is extremely tasty and makes nourishment enjoyable. Viva
“ Start
to a bright and healthy day”
4. Over the Counter Crocin “your trusted paracetamol”
Crocin is over-the-counter medicine which enjoys the trust of households for over 3 decades. Crocin has evolved from a pain, body ache relieving drug to a household medicine and a brand of choice and trust. It offers range of products like Crocin Advance, Crocin Pain Relief, Crocin Cold and flu and crocin drops in the baby range products.
Eno ” Eno…Gets to work in 6 seconds”
Eno the most global product of GSK is a 100 year old brand which enjoys its presence in more than 40 countries. India serves as the second largest market after Brazil for ENO.It is available in both sachets and bottles in various flavours like orange, lemon, masaumbi, guava. Iodex “Pain should not come in the way of your life”
It’s a heritage brand in India since 1919. It is one of the leading brands in the topical pain relief segment with a range of variants that provide quick and effective relief from head,neck, back joint and muscular pain. Sensodyne
Sensodyne offers a range of oral care products for sensitive teeth. The range of products includes toothbrushes, toothpastes, mouthwash and dental floss.
5. The Distribution Structure
The distribution structure of GSK is pretty similar to any other FMCG company with slight modifications. The products are manufactured at a factor y and then from there it is sent to various depots across India. In Delhi the depot is l ocated in Eastern Delhi. The goods are then sent from the depot to the various Distributors and Sub Ds. Distributors cover the urban area while Sub-D is responsible for the rural areas. The operations of a distributor can be defined in three parts –
GT – General Trade
MT – Modern Trade
ALC – Army Canteen, Indian Government, Railways, etc
General tradecaters to the retailers and wholesalers. Wholesalers are people who give the product to other retailers and shops as shown in the diagram above. Modern Trade generally
caters to the supermarkets or hypermarkets like Auchaan and Big Bazaar. They directly get the products to these places from the Depot. ALC caters to the various canteens of the arm y or government of India, again a different partner takes car e of these places. Generally the prices of products at these places are the lowest. In the general trade segment the retail sales cater to the various kinds of places. These are – 1. GM GR – These are the local grocery or kirana stores or the nearby general stores. These kinds of shops have the maximum reach and are present everywhere. Majority of the sales also happen from these kinds of shops. 2. Chemist – These also form a major part of the sales of the GSK. Over the counter medicines as well as the consumer healthcare products since many of these have nutritional aspect to it. 3. MD Chemist – These are the chemist which generally sells products only when they have the prescription available. 4. Self Service – These are standalone shops which offer variet y of products just like that of any supermarket but they are not part of any chain. People buy the products themselves and later bill it. 5. Bunk – These are small shops like a local paan shop which have very limited products and that too in limited quantity.
6. Hierarchy in Glaxo Smith Kline
The head of the sales is the Vice President Sales. Under him are the Regional Heads, generally defined area wise like that of North, East, etc. And then each region has many ASMs who work in a particular region. For example under Regional Manager (North) are many ASMs. There is one ASM for Delhi, one for West Uttar Pradesh and likewise. Under each ASM in urban areas there are Territory Sales Executives. Territory Sales Executives
TSEs are allotted a Distributor each, some have even two distributors under them. It depends on the size and volume of work. In the Delhi region there are a total of 9 distributors and these are being handled by 8 TSEs. TSEs regularly visit the distributor mostly on a dail y basis and get the reports and other information. At times they also go along with the salesperson (DSR) to the market to interact with the various shopkeepers and get feedback from them or issues which they might be facing.
TSEs are the contact between the Distributor and the GSK. Just like anywhere else they also function as per the various sales targets assigned to them and they in turn push the DSR and distributor to achieve those targets. Distributor Sales Representative (DSR)
The DSRs are the sales force of GSK. These are the people who go to the shops ever y day, take orders, cut the bills and give the information to the Distributor. This device has all the information needed and the bills are cut according to t he shops against whose name the bill is cut as different shops have different schemes or offers running depending upon the classification of the shop or the amount of order which they give. DSRs generally cover somewhere between 30-40 shops on a particular beat. Once the DSRs return they sync their device with the computer and they have software calle d Forum which accepts all the orders and bills are made. The Distributor then uses these bill cuts to assort the products and then it is delivered the next day. Generally the assortmen t is done in the evening while the loading on van is done the next day and delivery van leaves for the market. The vehicles generally used are tempo, Champion or Ace. The DSRs currently use a handheld device which will very soon be replaced by Tablets which will be given to DSRs. This will make the job easier simplify the process as well. The DSRs are on the payroll of the distributor while incentives if any are given by the company based upon their sales target. DSRs are also supposed to carry 5 POS materials with them daily and put them up at the shops on their beat. These POS materials contain things like posters and danglers. As far as the rewarding for DSRs is concerned, they are given cash based incentive by GSK. Apart from that TSE at times take the DSRs out for a party in his persona capacity while the
distributor at times may give some kind of bonus during festivals but it is not consistent and may vary. The DSRs receive around Rs. 15,000-18,000 salary including PF, etc. Selection of DSR
The DSRs are selected by the distributors and GSK has minimal role to play in it though they can give suggestions while the selection regarding the s election. The general points to be kept in mind while selecting the DSR are –
He should be able to do proper simple calculations. Should be 12 th pass
Should be well versed in communication
The willingness to work should be there
Generally while selecting, the distributor will select a DSR who takes less money as that will save him the cost and hence at times this may lead to hiring of not so efficient sales people. Feedback Mechanism employed
DSRs are the people who are the ears of the company in the market and hence TSEs try and get the feedback from them regarding the market positi on and situation. The feedback mechanism generally involves the face to face conversati on where the TSE and the DSR interact directly. Or if feedback about the sales is required then that can be collected through the sales figure of that product from the Forum Merchandisers
Apart from this publicity technique the company also has Merchandisers who are r esponsible for POP ad POS. These people are not like DSRs as they are not r esponsible for any sales as such neither do they have to take orders. These people are paid b y the company and distributors simply provide them with the material for the publicity.
Distributor
As describes earlier in the Delhi region (including Gurgaon), there are a total of 9 Distributors. In GSK, the distributor margin given is at 4.7% and within this amount they have to take care of all the activities like paying the DSRs, paying for the deliv ery van, the equipment which they use for the purpose of sales, opportunity cost, inventory cost, and credit among other things. Distributors get the products from the depot around twice a week. It varies from distributor to distributor as it will depend on the volume of sales happening in the region. The distributor which we visited was located in the Nangal Raya and it was called Madan Medicos. The total sale for this distributor is around 1 crore/month and it is an exclusive distributor for GSK consumer healthcare products. A total of 10 DSRs work for this distributor and the effective coverage of the number of outlets are 1800. The kind of exchange which the distributor has with a particular outlet that is in either cash or credit is based on Distributor’s discretion. An outlet which has been doing business with the distributor from along time can get products on credit while those outlets which are comparatively newer or those which do not enjoy a good credibility in the market, they are dealt with directly in cash. 7. How to choose a distributor?
While choosing a distributor the GSK representatives keep in mind the following things –
Financially strong and has the potential of carrying out the tasks assigned
He should be able to cover a wider area and have proper knowledge about the geographical area in which he is operating
The market reputation of the Distributor should be strong so that even the re tailers feel confident in doing business with him
Willingness and Motivation should be high so that he can work as per the c ompany norms and policies
8. Sales Force Training
Sales staff goes through a training program which happens twice a year. An event is also held where they give awards and prizes to the DSRs bas ed upon their performance and the feedback which the TSE gives about them. During this day long event a session is held on the product knowledge as well. GSKs mantra for sales force is PASSION. Passion sales call steps to be followed at every outlet are – Planning, Approach, Store Check, Sell & Secure, In-Store Merchandising, Outstanding Collections & News.
9. Deciding the Sales Target
Every year in January the sales target are decided. The sales target is decided at the regional level keeping in mind the following factors –
GDP growth of the economy
Any new product launch that might boost sales
Industry growth which is expected in that period
For example the growth rate in sales decided for th is year is 25-30%. Also the retail outlet coverage for the Madan Medicos beats has been increased to 2400 from the current figure of 1800.
10. The Products
The major products sold along with their margin and expiry is shared below. For Horlicks it contains all variety and kinds of Horlicks. The margins shared here are those as provided to the retailers by the distributor. The margin for a particular product is decided based upon what the competitors are providing and then accordingly the margin for GSK’s product is set. As is pretty evident the margin provided for the OTC products is much higher than that for Nutrient products and this is understandable also considering the market for the same.
Products
Expiry
Margin
Horlicks
1 year(For Woman and
8%
Mother Horlicks – 9 months) Eno
2 years
20%
Crocin
2 years
22.6%
Sensodyne
2 years
15%
GSK Biscuit
6 months
12%
Iodex
2 years
20%
Foodals
6 months
6%
11. The Offers/ Schemes
The offers or schemes are regularly updated by GSK and this revision is done on a monthly basis. The information about each scheme or offer is also communicated to the outlets through leaflets. Currently for the month of July, the various offers are as shown in the picture –
Wholesaler Schemes
Various kinds of schemes are running for wholesalers. One of them is as defined
Silver: Rs. 10,000 per month
Gold: Rs. 50,000 per month
Platinum: Rs. 2 lakh per month
Diamond: Rs. 5 lakh per month
Elite > Rs. 5 lakh per month
Based upon the amount of products bought the points of each wholesaler keeps on increasing and is incremented automatically in the system when the bill is cut. The wholesalers can redeem the points by logging onto a dedicated website for this purpose and receiving their gifts. GSK also has the policy of foreign trips for some of the Elite category wholesalers.
12. Some Preliminary Issues Identified
How to keep a tab on the attendance of the DSRs and make sure that they cover all the outlets as assigned to them? Currently many a times the DSRs would not cover all the outlets that are present in their beat. This leads to loss of sales for GSK.
Wholesaler gives products to company’s retailers and sometimes at lower prices. Company wants direct billing. How to take care of this problem?
The supply van has to face many issues like No Entry or Outlet closed at times of delivery or outlet not accepting the order and wanting a change in it aft er bill is cut. Another problem being that supply van takes a lot of time to distribute materials in the market.
Channel conflict between general trade and modern trade. Many retailers buy from supermarkets instead if the distributor. Also, consumers prefer to buy from supermarkets because of better prices.
The ASMs and RSMs do not spend enough time in the field and at the end of the da y they are the people who formulate the schemes and various t argets.
These are some of the problems which we have been able to identify so far. The detailed recommendation on how to tackle these problems along with solutions would be shared in the next report.
The Problem 1: How to keep a tab on the attendance of the DSRs and make s ure that they
cover all the outlets as assigned to them? Currently many a times the DSRs would not cover all the outlets that are present in their beat. This leads to loss of sales for GSK. What they currently do : There is no fixed pattern to follow currently. Even if a DSR misses
certain shops on a particular beat no fixed che ck is there. If this becomes a habit then it will start showing in the sales from that particular beat and then TSE and the distributor will tr y to find the problem. Also, at times the shopkeeper might run out of products and it is then that he contacts the distributor telling that no one had come to service them. The Solution: Two solutions which can be thought of are – 1. DSRs currently cover the outlets assigned in their beats 6 days a week and take
the orders through the handheld devices. It is being proposed that the DSRs in metros would be given a tab. This will help them in taking orders better. At the same time, this could be used to keep a tab on the movement of the DSRs as well. Tabs could be fitted with GPS system and this will give a proper map of that particular beat to the DSRs. In order to keep a tab on the movement of DSRs, they could be asked to sign in when they visit a shop and the locati on would be noted. This will compel the DSRs to do their job honestly.
2. Other aspects that could be looked at are surprise visits by the TSE to the DSR
when on his beat and interacting with certain shopkeepers to gauge the performance of DSR. This could be done randomly and without prior notice. The problems to be faced in implementing the solutions
While implementing the second solution, there need not be too many problems though it will be dependent solely on the proactiveness of the TSE and there would not be any quantitative data to support it. While implementing the first solution, the main problem which can arise is that using a GPS in the tabs may lead to extra costs for the company and it may become expensive over a long period of time. Also, the DSRs would need to be taught the correct way to use the device as change from handheld to tab will take time for them t o get accustomed to.
The Problem 2: Wholesaler gives products to company’s retailers and sometimes at lower
prices. Company wants direct billing. How to take care of this problem? What they currently do: Not much is done at the moment. The Solution: Wholesalers selling to retailers who are covered directly under the distributor
or selling it to retailers at a lower price is very common in the FMCG industry. What happens is that even if the distributor doesn’t sell it themselves to the retailers, the retailers themselves approach the wholesalers to buy the products as the price at which it is sold by wholesalers is lower than what the distributor sells it to the retailers. A few ways to look at it is –
Maintain a good service to the retailer
The schemes which distributor offers to the retailer are not offered by the wholesalers
The hassles attached with getting the products from the wholesaler and transportation cost are avoided in case the product is procured from the distributor
Retailers will have to be made aware of these aspects. Also in certain cases if repeated complaints are received against a wholesaler then the company officials can take cert ain
actions like giving fewer schemes or reprimanding, though it is generall y not done as it can lead to loss of profit. The problems to be faced in implementing the solutions
The problem is such that it is being faced by all the FMCG companies and no definite solution as such exists. The best that can be done is try to minimise this problem by working on options as described above.
Problem 3: The supply van has to face many issues like No Entry or Outlet closed at times of
delivery or outlet not accepting the order and wanting a change in it aft er bill is cut. Another problem being that supply van takes a lot of time to distribute materials in the market. What they currently do: Not much is being done in this regard as company believes that
these problems do not have a long term solution and are a part of the business The Solution: No Entry Problem - The supply van being currently used is Mahindra Champion (tempo). It
faces constraint regarding the time of operation and other stuff since it falls in the commercial vehicle category and commercial vehicle category are allowed to run on Delhi road only between 11 to 5 pm. One possible way to handle this situation is by having a vehicle which can carry stuff but is not affected by No Entry regulations. This vehicle can be Maruti Eeco. Considering the costs involved in going for such an option are discussed below –
Mahindra Champion
Maruti Eeco
Size
3400 x 1520
3675 x 1475 x 1800
Mileage
25 kmpl (Petrol)
15.1 – 15.5 kmpl (CNG)
Price
INR 1,80,000/-
INR 3,05,675/-
Rental Charges
INR 15,000/-
INR 20,0000/-
A detailed cost benefit analysis needs to be done to better understand the viability. Supply Van takes time to deliver – Arrangement of boxes in the supply vehicle is an option.
Arranging it in a cellular or U shaped format instead of haphazardly arrangement will help in saving the time when distributing products to the outlets. One other way is that preparing separate boxes for outlets which have a large order at the warehouse itself before loading on the van to save time. Outlet closed or not accepting order as per bill – This is a problem, the solution for which
is pretty hard to get and we have not been able t o find a good enough solution. This is pretty subjective in nature and varies from one route to another. The problems to be faced in implementing the solutions
Changing from Champion to Eeco may require more investment on the part of the distributor and No entry fines vary from time to time and do not have a fixed amount. Hence, it is difficult to quantify the data without proper analysis. Also, in arranging the products in the van, this needs to be followed on a regular basis. Also, preparing boxes in advance may consume time.
Problem 4: Channel conflict between general trade and modern trade. Many retail ers buy
from supermarkets instead if the distributor. Also, consumers prefer to buy from supermarkets because of better prices What they currently do: Company tries to keep both the parties happy by giving various
schemes but it is not of much help. The Solution: The price at which products are sold in hypermarkets and that at retail outlets
have a difference as at hypermarkets products are always sold at less than the MRP. One way to tackle this is that the difference in the schemes provides should be minimised so that even if a difference occurs then it is not very apparent. The problems to be faced in implementing the solutions
Generally, in modern trade they are able to better negotiate the deals with the company while genera trade retailers do not have that liberty and have to follow company’s directives. So, if company goes for minimising the difference then it may lead to less profit. Problem 5: The ASMs and RSMs do not spend enough time in the field and at the end of the
day they are the people who formulate the schemes and various targets. The Solution: The DSRs and TSEs should be asked for their views before formulating a
scheme and they should be an integral part of the planning procedure as these people are the eyes and ears of the company in the field. The problems to be faced in implementing the solutions
TSEs and DSRs may want targets or schemes which are beneficial for them so that they have to work less and get the work done easily and off course the bonus incentives are also easy to get.
Appendix 1: Photos taken from the Field Visit
Appendix 2: Field Visit Details Stores Visited:
a)
Samrat Confectioners, Sector – 14, Gurgaon
b)
Qwality Flour and Provision Store, Sector – 14, Gurgaon
c)
Emergency Medical Store, Sector – 14, Gurgaon
d)
Vivek Medicos, Sector – 14, Gurgaon
e)
Agarwal Modern Medical Store, Sector – 14, Gurgaon
Findings:
a) Commonly stocked products (in order of sales): Horlicks, Sensodyne, Boost, Eno b) Monetary incentives given to retailers for shelf space on monthly basis based on location, size etc. Range: 500 to 2000 rupees per month. Competitors also pay in the range of 500 to 1000 rupees per month. GSK merchandiser visit to check display of products on a weekly / fortnightly basis. c) GSK has credit policy of 1-2 weeks although not for new shops d) Gross Margins of 10%on food products and 15% on medicines comparable with competitors e) Goods return policies are strong – either goods are replaced or amount is adjusted in next billing cycle f)
Sales order placed once in a week (Tuesday or Wednesday)
g) Next day delivery for goods from distributor h) Horlicks 500g most sold product with 8-10 units sold per month, more units of Horlicks are stored by retailers. On an average, 15-20 units of Horlicks with 2-3 units per flavor are stocked. i) For medicines, separate distributors exist
j) Medicines have daily supply in comparison to weekly supplies of other GSK products k) As per retailers, retail chains like Big Bazaar have impacted their earnings as customer footfalls have decreased over time and their bargaining power has reduced.
