Group 2
Contents EXECUTIVE EXECUTIVE SUMMARY SUMMARY ..................... ............................... ............ ...................... ................................ .......... ..................... ................................ ........... ..................... ....................... .. 4 SALES AND DISTRIBUTIO DISTRIBUTION: N: ITC........................ ITC................................ ........ ..................... ............................... ............ ....................... ................................ ......... ........... ........... 5 COMPANY COMPANY OVERVIEW........ OVERVIEW.................. ..................... .............. ... ....................... ................................ ......... .................... ................................ ............ .................... ........................ .... 5 SALES FORCE FORCE STRUCTURE STRUCTURE .................... .............................. ............ .. .................... .............................. ............ .. ........................ ................................ ........ .................. .................. 6 SALES FORCE COMPENSATION COMPENSATION AND INCENTIVES....... INCENTIVES................... ...................... ............. ... ..................... ............................... ............ ................ ................ 7 TRAINING ......................... ................................ ....... ....................... ................................ ......... .................... ................................ ............ ..................... ............................... ............ .......... .......... 7 MEASURING MEASURING SALES FORCE PRODUCTIVIT PRODUCTIVITY Y ..................... ................................ ........... ..................... ............................... ............ ........................ .......................... 8 TARGET SETTING .................... ............................... ............. ....................... ................................ ......... ..................... ................................ ........... ..................... ............................. ........ 10 CHALLENGES CHALLENGES IN MANAGING MANAGING SALES TEAMS TEAMS ...................... ................................ .......... ..................... ............................... ............ ...................... ...................... 11 SALES BUDGETING................. BUDGETING........................... ............... ..... ....................... ................................ ......... .................... ................................ ............ ..................... ........................... ...... 12 TERRITORY ALLOCATIO ALLOCATION................ N.......................... ................ ...... .................... .............................. ............ .. ........................ ................................ ........ .................. .................. 15 CHANNEL CONFLICTS................ CONFLICTS.......................... ................ ...... ...................... ................................ .......... .................... ................................ ............ .................... ....................... ... 16 SALES AND DISTRIBUTION: DISTRIBUTION: PEPSICO PEPSICO INDIA INDIA HOLDING HOLDING PVT. PVT. LTD. LTD. - FRITOLAY FRITOLAY DIVISIO DIVISION N .................... ....................... ... 17 COMPANY COMPANY OVERVIEW........ OVERVIEW.................. ..................... .............. ... ....................... ................................ ......... .................... ................................ ............ .................... ...................... .. 17 SALES FORCE STRUCTURE .................... .............................. ............ .. .................... .............................. ............ .. ........................ ................................ ........ ................ ................ 18 SALES FORCE COMPENSATION COMPENSATION AND INCENTIVES.... INCENTIVES.............. ...................... .................. ...... ..................... ............................... ............ .............. .............. 18 TRAINING ...................... ................................ .......... ....................... ................................ ......... .................... ................................ ............ ..................... ............................... ............ ........ 19 MEASURING MEASURING SALES FORCE PRODUCTIVIT PRODUCTIVITY Y ..................... ................................ ........... ..................... ............................... ............ ....................... ....................... 20 TARGET SETTING .................... ............................... ............. ....................... ................................ ......... ..................... ................................ ........... ..................... ............................. ........ 20 CHALLENGES CHALLENGES IN MANAGING MANAGING SALES TEAMS TEAMS ...................... ................................ .......... ..................... ............................... ............ ...................... ...................... 20 SALES BUDGETING................. BUDGETING........................... ............... ..... ....................... ................................ ......... .................... ................................ ............ ..................... ........................... ...... 20 TERRITORY ALLOCATIO ALLOCATION................ N.......................... ................ ...... .................... .............................. ............ .. ........................ ................................ ........ .................. .................. 20 CHANNEL CONFLICTS................ CONFLICTS.......................... ................ ...... ...................... ................................ .......... .................... ................................ ............ .................... ....................... ... 21 COMPARISON COMPARISON ITC AND PEPSICO PEPSICO ...................... ................................ .......... ..................... ................................ ........... ....................... ................................ ......... ...... 22 CONCLUSION................. CONCLUSION........................... ............... ..... ....................... ................................ ......... .................... ................................ ............ ..................... ............................... ............ ... 23 APPENDIX APPENDIX .................... .............................. ............ .. ....................... ................................ ......... .................... ................................ ............ ..................... ............................... ............ ........ 24 2|Page
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EXECUTIVE SUMMARY
While ITC and PepsiCo are strong competitors of each other, it is seen that the way they reach their consumers is quite different from each other. Invariably, it is difficult to predict which of the two companies is better in Sales and Distribution parameters as each have a significant market to which they cater to. While the organisation structure of ITC is deeper, PepsiCo has a flatter and unique structure. Each strives to keep their sales force motivated with lucrative incentive schemes. For ITC, on meeting 95% of the sales target, the DSO gets the prescribed incentive. On achieving sales greater than 95% up to 120%, the incentive is scaled up on a pro-rata basis. On achieving sales greater than 120%, no further incentive is given. However, PepsiCo likes to incentivise their employees even when they achieve 50% target in 15 days. Both the companies invest in training and training is centrally managed by the organisation. PepsiCo goes all out in giving freedom to their employees to choose different training programs. They are given training cards which they can swipe for any such program after their manager¶s approval. ITC uses different parameters to measure the productivity of the sales person. PepsiCo uses different tools to do that, information regarding the tools was deemed confidential and hence not divulged by the ASM. ITC set sales targets at ~20% over the previous month sales including seasonality factors and offers. This is fed into their forecasting software which is a part of the µSIFY Program¶ which they use. That gives them the sales forecasts. PepsiCo has the annual forecast divided into CE (Customer Executive) targets depending on the territories. Each CE then divides the target into a per week target. Per week target is divided into per day targets and given to the salesman. While the territory allocation is more or less the same for both the organisation, the different channels used to reach the consumers give rise to different channel conflicts which the ASMs shared with the team.
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SALES AND DISTRIBUTION: ITC COMPANY OVERVIEW
ITC is one of India's foremost private sector companies with a market capitalisation of nearly Rs 97,883.64 cr and a sales turnover of over Rs. 23,247.84 cr. ITC had been known as a tobacco company for long. It had a strong presence in the cigarette market in India with brands like Wills, Gold Flake, Bristol and a deep penetration across India. Due to its excessive dependence on tobacco products, a diversified portfolio was always on the cards for the management. In 2002 ITC started diversifying into various businesses utilising the surplus cash flow generated from its core cigarette business. In May 2002, ITC entered into branded wheat flour market by introducing Aashirwad Atta. In December 2002, ITC launched John Players as a mass market apparel brand. In 2003, ITC entered the branded biscuits market with the Sunfeast brand. It also created presence in packaged ready to eat food segment "Kitchen of India". In July 2005 ITC stepped into exclusive range of body care products through Essenza Di Wills for both men and women in July 2005. It has launched Fiama Di Wills, Vivel and Superia brands of personal hygiene products catering to different SEC and has become a major FMCG player. In spite of all this, cigarettes and tobacco business still is the main driver of revenues and profits. From the distribution point of view, ITCs products are categorised into Tobacco Division (TD), Non-Tobacco Division (NTD) and Foods. Tobacco Division deals with cigarettes, Non-Tobacco with personal care products and incense sticks ( Agarbattis) and foods division deals with Bingo, Sunfeast, and Aashirvad. The apparel distribution has not been considered in this case. These divisions are also referred as Cigarettes, F ood and Personal Care. For a better understanding of the distribution process, we met ITC channel partner Mr. Sujit Behera and Area Executive Mr. Debashis Misra.
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S
SF
S
The sales force structure is bei
di ided i to t o categor ies, ITC employees and their
hierarchy and the distr i butor sales force. The following is the hierarchy of ITC from R egional Sales Manager (R SM to Area Executi e (AE).
Responsible for a di strict (2-3 states, C erm)
Regional Sales
Ci garettes / Food/ Personal Care
Branch
i garettes / Food/ Personal are
ssistant
2 in each of he above category
rea
1
r , ach handles supervisors
anager
anager anager anager
rea xecutive Supervisor aily Sales ff icer
At the channel par tner level, supervisors and direct sales personals are hired. This hir ing is done by the channel par tner. (Indicated in Red) Under each Area Executive there are 6-7 supervisors who in turn manage the Direct Sales Off icers (DSO). The DSOs are responsi ble for tak ing and replenishing the orders to the retailers. There are separate DSOs for Tobacco and Non-Tobacco Division because the replenishment is daily for tobacco products whereas week ly for NTD. Also, cigarette sales happen on cash (no credit) and NTD sales happen on credit.
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SALES FORCE COMPENSATION AND INCENTIVES
The sales force comprising of the Daily Sales Officers (DSO¶s) are managed by a Supervisor. Both the DSO and the Supervisor are on the indirect payroll of ITC, i.e., the distributor pays the salary to the DSO and the supervisor and in turn is reimbursed by ITC. All the other Managers are on the direct payroll of the company. The compensation package of a DSO and supervisor mainly comprises of two parts, the fixed pay and the variable pay. The compensation for different DSO¶s differs in the variable pay component only. For a DSO, the fixed pay is Rs. 2750 per month. The monthly variable pay includes a payment of Rs. 120 per km travelled by the DSO while making the sales calls, along with incentives given for the targets achieved. For the Supervisor, the fixed pay is Rs. 3500-5000 per month. The monthly variable pay includes travel allowance (their travelling is lesser than that of the DSO), along with incentives given for the targets achieved. The overall sales targets are decided based on the number of bills raised per stocking of SKU¶s in the different outlets and incentives are accordi ngly determined. On meeting 95% of the sales target, the DSO gets the prescr ibed incentive. On achieving
sales greater than 95% up to 120%, the incentive is scaled up on a pro-rata basis. On achieving sales greater than 120%, no further incentive is given. A DSO generally earns around Rs. 1000-1500 as incentives in a month. TRAINING
Success in sales for any organization is dependent on tremendous knowledge of the products, the market that is served and precise application of professional selling skills. ITC believes in the fact that sales professionals are made and not born. ITC provides extensive training to its sales force, covering all the facets of the training process. It follows a six step process of selling, on which training is imparted to the sales force. A training program is conducted for the sales force for 2 days, twice a year by the Area
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Within ITC, the productivity of the sales force could be measured µ route wise¶, µ product wise¶, or µcustomer wise¶. Generally speaking, an objective way of measurement can be done in two ways: 1.
The lines per call or line productivity (i.e. number of product categories sold in an outlet)
2.
The number of productive outlets
or call productivity (i.e. outlets in which the
retailers give order) per route of the sal esperson For example, figuring out answers to questions like ³How many outlets billed at least once in a month?´ or ³What is the number of SKUs that were billed for a particular outlet?´ can be effective in measuring the productivity for every DSO (Daily Sales Officers). With volumes rising and data to be managed by the sales teams also increasing, ITC has sought to strengthen the sales process through automation of the sales. The sales process consists of three major processes ± collection of order from the retailers, preparation of order bills, and delivery of order to the retailer. All the three processes have been automated t o save up on time and enhance the selling process further. The DSOs use ³Palmtop based applications´ which are used in place of the order books to collect the orders. The Palmtops are seamlessly integrated with the Local Distributor¶s accounting software (which is the SIFY software) which in turn has functionalities such as order and bill management, receivable management and performance management. The list of the retailers is loaded to the palmtop and the DSO will go to the given list of retailers to provide them with service. Order capture can also be done with the help of the Palm tops. The rates of the products and the SKUs can be loaded in the palmtop along with the schemes for each product. The DSO need not carry a sheet for the price list. Thus the whole operation can be made paperless with the data being collected in the palmtop and transferred to the data server.
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The image partwithrelationship ID rId16 wasnot found inthe file.
A detailed sales analysis can be carried out based on the output from the SIFY software, in terms of the different sales per call, the number of products sold for each bill, the number of order taken etc. The performance of each salesman can thus be tracked from this, on a daily basis. Hence the advantages of having ³Sales Force Automation´ in ITC¶s distribution are manifold, and have been very useful in enhancing sales productivity and also being able to measure the same. Measuring the sales force productivity also becomes important when it comes to announcing incentives for the sales personnel. The DSOs being on an indirect payroll with sometimes the variable pay determined by the number of kilometres travelled and the number of outlets serviced, the incentives are decided based on the sales reports generated at the distributor¶s end at the end of each day. Besides, data mining softwares enable stocking and pricing decisions while also predicting sales tr ends and responding to them quickly enough. TARGET SETTING
ITC is a company which as such doesn¶t set targets. In the Tobacco Division (TD) they do not set sales targets as such because, it is a primarily saturated market with a mature demand. The demand variation is minimal at 1-2% every month. The sales are marginally higher in winter at around 3-4%. The Tobacco Division includes products like Matches (Aim), Candies (Candyman) and Agarbattis also as they are distributed in the same shops where cigarettes are available. They set targets with focus on availability in every outlet possible. Hence, they believe in the philosophy of availability of stock rather than sales volume targets. The same holds true for its Non Tobacco Division (NTD). However here they set sales targets at ~20% over the previous month sales including seasonality factors and offers. This is fed into their 10
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forecasting software which is a part of the µSIFY Progra m¶ which they use. That gives them the sales forecasts. ITC¶s foods section or the NTD section has an emerging market with brands like Sunfeast and Bingo catching up fast in the markets. Therefore forecasting and proper demand estimation for target setting becomes essential. ITC has target setting which happen for each district (each state is called a district in ITC lingo). Then the targets are broken up into targets for circles. That is then divided a mong the different channel partners to cover. ITC follows a 24hrs replenishment cycle limit, i.e. whenever an order is placed by an outlet; it is replenished within 24 hours. For Modern Trade outlets targets are set centrally and the replenishment is done centrally by ITC warehouses. Channel Partners are not involved in the process. CHALLENGES IN MANAGING SALES TEAMS
The sales teams are given a daily set of goals and quotas; these are always realistic goals and stress is on an improvement over past performance. For example, the goal could be an improvement of 20% over the past month¶s sales performance, but µ inputs¶ and µ seasonality¶ are always taken into account before deciding on such targets. Clarity is maintained when it comes to allocating accounts/territories/products to sales personnel. ITC¶s Area Executive, who revealed that he has around Rs 120 crores riding on him every year (the total market size of ITC in Orissa was more than Rs 330 crores per annum), said that he always took special care in communicating expectations to the salespeople and took feedback from them every now and then. This was essential so as to ensure no clash of priorities among the salespeople and also keep them sufficiently motivated. Incentives are always a sure way of keeping them motivated. Rewards and payments are kept clear and consistent, with commission based on defined results. The expected results were in turn determined based on the sales for ce productivity. Resource provision in terms of giving the right tools and equipment is also taken care of. This is to enable the sales force to focus on their jobs and keep a track of the targets. The sales force uses ³palm-top´ based applications, the objective of which is to enhance sales productivity. Other resources like car/travel allowance ar e also provided. 11
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Training programs have been designed to respond to the challenge of having to manage an underperforming team. These training programs are conducted by the Area Executives themselves. It is imperative that strengths and skills are developed for the sales people, and constructive feedback is given to them at a ll times. Besides keeping a check on their performance, Area Executives and Channel Partners always try and make sure that they remain supportive of their sales teams and they talk with them and discuss the reasons if issues crop up. The pressures that the sales personnel face on a daily basis are understood, and it is kept in mind that these people do have lives outside of their jobs. In addition, opportunities for growth - different territories, new products, and new team ± are offered at regular intervals. SALES BUDGETING
Sales¶ budgeting happens in a meeting at the national level yearly and all channel partners of ITC are invited for the same. Sales budgeting includes fixing of the sales targets, margins of the channel partners, sales force compensation, Mobile allowance, travel allowances etc. The sales budgeting is done by the Assistant Manager for a category in a state. The sales budgeting is done on the basis of tonnage per district per category (state) and is distributed circle wise. On an average 2.65% mark up margin is given to the channel partners. However they are also reimbursed for fuel charges, salary for the drivers, loaders, helpers and Daily Sales Officer. DSOs are reimbursed for travel up to 30 kms per day. The breakup of the same can be seen for Annapurna Traders (a Channel Part ner in BBSR) in the following image.
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Very often in the sales budget gift items and discounts for the distributors/ retailers are also included as shown in the following image.
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TERRITORY ALLOCATION
Territory is allocated in a district (A state) in the form of circles (usually one or two cities depending on size). Each circle is further divided into different zones on the basis of geography where each zone is catered to by an exclusive channel partner. In Bhubaneswar Circle, there are 4 exclusive channel partners, each with a distinctly defined geographic area. Each does around 1.5 - 2 crores of sales on an average per month. This helps in reducing replenishment time thereby allowing for faster recovery of working capital by the retailers (who are able to sell the stock on the same day). Zones are defined distinctly to avoid infiltration (explained in detail under channel conflict) by other distributors. Inside each zone covered by a channel partner, there are around 6-7 daily salesmen who take care of collecting orders from different stores. A sample beat plan for DSOs is shown below. The image partw ithrelationship ID rId19 wasnot found inthe file.
Replenishment is done on the same day. Replenishment for NTD is done by trucks which operate on beat plans as shown below (Annapurna Traders).
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CHANNEL CONFLICTS
One of the major issues that can impede a distribution network is µchannel conflict¶. While admitting that channel conflict is a live issue, Mr. Debasis Mishra (ITC Area Executive) did however mention that ITC tries to resolve such issues, if and when they arise, across a table by calling a meeting among the concerned parties. Sometimes these meetings between channel partners are fairly regular, about 3 to 4 times in a year, and are convened by the Branch Managers to apprise themselves of the prevailing scenario. These meetings are most of the time routine affairs, and can act as ³appraisal time´ for the channel partners themselves. One major reason behind channel conflicts, as mentioned by the AE, was (in his own words) ³infiltration´. With respective territories having been allocated beforehand, within the strict purview of which the SOs (Sales Officers) were supposed to operate, there was no scope for any of the channel partners venturing into the other¶s territory. However an instance was narrated to us where the Sales Officer in refusing to visit a particular outlet (due to µego - centric¶ issues with the retailer), ended up servicing another outlet located beyond the territory assigned to him in order to meet his daily target. These situations, albeit very rare, were to be avoided as they could lead to channel conflicts and are best described as cases of infiltration. The resolution was invariably sought by the AE, and all issues betwee n aggrieved Channel Partner settled across a table by adopting a calm and patient a pproach.
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SALES AND DISTRIBUTION: PEPSICO INDIA HOLDING PVT. LTD. - FRITOLAY DIVISION COMPANY OVERVIEW Snacks ma ket in India is divided into 2 main divisions: 1.
Salty Snacks (Potato chi s K rkure
2.
Traditional (mixture
iscuits etc.
hujia moong dal etc.
Fritolay deals in oth the divisions. PepsiCos oods company Frito-Lay is the leader in the randed salty snack market and all Frito Lay products are ree of trans-fat and MSG. It manufactu res: Lays Potato Chips Cheetos extruded snacks Uncle Chipps and traditional snacks under the Kurkure and Lehar rands. The companys also has a high f i re reakfast cereal Q uaker Oats. PepsiCo is the market leader in snacks. For a etter understanding of the distri ution process we met PepsiCo Fritolay Area Sales Manager for Orissa Mr. Koushal Kumar and Mr. Rajesh K. Padhi, CE, Bhubaneswar. PepsiCo Fritolay Orissa- Salient Features The whole business has four routes to the customer: 1.
Traditional Trade
2.
Modern Trade
3.
Institutional selling
4.
NCD (New Channel Development - e.g. Hospitals, bus stand etc.
5.
Wholesale Channels
Traditional Trade covers about 22,000 stores all over Orissa. The market is divided into two types: 1.
Urban
2.
LTC (Lower Town Class - Rural and semi-urban
The rivals of Fritolay in Orissa market are 1. 17
ITC snacks |Page
2.
Shivdeep Prakash food based out of Indore andother local players
SALES FORCE STRUCTURE
The sales force structure is being divided into two categories, PepsiCo employees and their hierarchy and the distributor sales force. The following is the hierarchy of PepsiCo: Z
al Sales Ma ager (F r 3 states
Area Sales Ma ager (F r a state
C st
er Exec tive
(Sa e as SO
RSA (C
tr ls Distrib t rs
Excl sive Sales a * (O
e by Distrib t rs
Sales Trai ee
The exclusive salesman are under the Distributor but work on the RSA¶s instructions during emergency needs, it is unique to PepsiCo. SALES FORCE COMPENSATION AND INCENTIVES
The compensation and incentive slab is defined for each level and is decided by the supervisor in the upper level viz. the ASM decides the salary of a CE and so on and so forth. The salary consists of a fixed part and a commission part. 18
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The incentives are decided by the target achieved. The incentive is decided as and when the target is set. For example 1.
For 100% target achieved in a month
2.
50% target achieved in 15 days
3.
Weekly targets achieved etc.
The compensation is also decided for each of the brand targets; say a certain amount of sales of Kurkure will lead to earning of bonus. This is decided by the ASM and is mostly used when certain brand underperforms for a period of time. One unique feature of this organisation is that incentives are also linked to certain S KUs. This is decided by the ASM and the RSM for that region. TRAINING
Success in sales for any organization is dependent on tremendous knowledge of the products, the market that is served and precise application of professional selling skills. PepsiCo strongly believes in a continuous training process for all its employees. They have a Development Centre run by the company. The supervisor sends the subordinate sales force to the Development Centre in a fixed period interval. In the DC, they conduct different kind of psychometric and other tests and find the weak areas of the employee. According to the results of the test a training calendar is prepared for the employee. The trainings include: 1.
Skill based training
2.
Communication training
3.
Leadership training
4.
Frontline training etc.
PepsiCo were the first in India to introduce the Training Card, which acts like a credit swipe cards. The card can be used for payment of Training courses attended at a third party organization. The employee informs the Regional Training Officer about the expenses of the training beforehand and the RTO approves it and credits the training card with that amount. The training card can also be used in buying books and other skill enhancement materials.
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MEASURING SALES FORCE PRODUCTIVITY
The sales force productivity is measured by weekly r eview meetings on Fridays. The meeting includes the paperwork of the work done by the employee over the week. There is no such automated procedure followed. TARGET SETTING
The targets in the state level are set by the ASM. The ASM then divides the target among the CEs according to the market size they control. The CE then divides the target among the RSA in a weekly basis. The RSA sets per day target among the salesperson. The salesperson tries to achieve this target daily. CHALLENGES IN MANAGING SALES TEAMS
The sales teams are given a daily set of goals and quotas; these are always realistic goals and stress is on an improvement over past performance. The major challenges happen during peak seasons when PepsiCo comes out with different flavours for a period of 2-3 months, for example during this puja Kurkure mustard flavour was launched in eastern India market as people have an appetite for mustard here. But these are limited time schemes and salespeople find it difficult to predict as to when to stop taking more orders before the scheme closes. They also face the challenges as faced in a normal FMCG sales force. SALES BUDGETING
The total sales budgeting is decided by the ASM. The ASM has complete autonomy in the sales budgeting. He decides everything of the sales budget from fixing of the sales targets, margins of the channel partners, sales force compensation, Mobile allowance, travel allowances etc. ASM also decides the schemes and allocates budgets accordingly. The schemes are mostly rationalized discounts SKU wise. The ASM also comes out with specific product wise schemes when a certain product registers lower than expected sales. Rationalization of SKUs is unique to P epsiCo. TERRITORY ALLOCATION
The territories are allocated based on the market size and a CE is appointed accordingly. For major markets like Bhubaneswar and Cuttack, the territory is divided into two parts and each 20 | P a g e
part is supervised by a CE. A vacancy for a CE is created only when two or more geographies meet a certain demand. Thus places like Joda, Barbil, Keonjhar and Baripada together have one CE whereas Cuttack and Bhubaneswar has two CEs each. CHANNEL CONFLICTS
The major channel conflict takes place when the distributor for non-traditional trade channel especially NCD (New Channel Development) push their products to the stores which come under traditional trade coverage. This occurs because Institutional, modern trade and NCD get high margin goods, so they find easy to push it to traditional trade route. To counter this, PepsiCo in collaboration with Neilsen conducts census and the data are provided to the CEs to keep an eye on the movement of stocks. The disputes are resolved by the CEs or their superiors and there are cases when distributors are warned not to repeat the same in the future.
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COMPARISON ITC AND PEPSICO
Parameters Sales Force Structure
ITC Extra level of Asst. Manager for each category
No such designation.
DSO work under Channel Partner/Distributor only
Exclusive salesman under Distributor but works on RSA instruction in emergency
Sales Force Incentive based on distance and Compensation and outlets coverred, no of bills made Incentives and sales targets exceeded. Training
PEPSICO
Incentives are also linked to certain SKUs.
³Kamal Ka Funda´: ITC tied First in India to introduce the incentives and rewards for the sales Training Card force to undergo the training program
Measuring Sales 1. Line Productivity Force Productivity 2. Call Productivity 3. Use of PalmTops Target Setting and Happens at national level with Sales Budgeting participation of all state level managers and channel partners.
Weekly review meetings which takes in account the amount of P aperwork done by the employee over the week Set by ASM. Rest processes are similar
In TD no such explicit target setting. Challenges in Managing Sales Force
Keeping goals realistic and taking into account both inputs and seasonality before deciding on targets.
Territory Allocation Based on Geography and Sales Volume. (District>Circle>Zone) Channel Conflict
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Managing sales force becomes an issue during peak seasons when Pepsico comes up with 2-3 new flavours. Based on Market Size. (State>Circle>City>Zone)
Infiltration between channel partner Infiltration between traditional and zones. Non Traditional Trade cha nnels.
CONCLUSION
We understood the distribution system of both ITC and PepsiCo and one key finding was that the distributor margin in ITC was based on volume but in case of PepsiCo, the distributor margin is related to the SKUs also. This was typical to PepsiCo only, as the targets were set based on the number of SKUs, for instance small pack of Kurkure would have a separate target and the margins dependent on whether it is achieved or not. Also, ITC reimburses the expenses incurred by the distributor for the sales process, which includes reimbursement for fuel and sales person salary and the total reimbursement depends on the annually decided target per distributor in the company meeting. In PepsiCo, distributors are allotted a fixed amount per month (amount was not disclosed) but is spent by the distributor on company¶s directives. PepsiCo also has a training card program which allows PepsiCo employee above CE to use it for any training expenses. Also, it has its own development centre which is used for training of CEs and ASMs. We didn¶t get any information on any such specialised training centre in ITC. We were also told that most of the ITC distributors keep only ITC products whereas it is a general phenomenon across distributors to keep multiple brand products. A clear understanding was that ITC has much better mutual relationship with the channel partners and it is actually a win-win situation and in FMCG product category, it matters a lot.
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APPENDIX
Image: Route Planning and Scheduling at the Distributor Office
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Image: Project Vajra, enabling the DSOs with Palmtops
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