A Study of Distribution Channel of Nestle in Bhubaneswar

Company Profile:

Nestlé S.A. is a Swiss multinational food and beverage company headquartered in Vevey, Switzerland. It is the largest food company in the world measured by revenues.

Nestlé's products include baby food, bottled water, breakfast cereals, coffee, confectionery, dairy products, ice cream, pet foods, and snacks. 29 of Nestlé's brands have annual sales of over 1 billion Swiss francs (about $ 1.1 billion), including Nespresso, Nescafé, Kit Kat, Smarties, Nesquik, Stouffer's, Vittel, and Maggi. Nestlé has around 450 factories, operates in 86 countries, and employs around 328,000 people. It is one of the main shareholders of L'Oréal, the world's largest cosmetics company.

Nestlé was formed in 1905 by the merger of the Anglo-Swiss Milk Company, established in 1866 by brothers George Page and Charles Page, and Farine Lactée Henri Nestlé, founded in 1866 by Henri Nestlé. The company grew significantly during the First World War and again following the Second World War, expanding its offerings beyond its early condensed milk and infant formula products. The company has made a number of corporate acquisitions, including Crosse & Blackwell in 1950, Findus in 1963, Libby's in 1971, Rowntree Mackintosh in 1988, and Gerber in 2007.

Nestlé has a primary listing on the SIX Swiss Exchange and is a constituent of the Swiss Market Index. It has a secondary listing on Euronext. In 2011, Nestlé was listed No. 1 in the Fortune Global 500 as the world's most profitable corporation. With a market capitalization of $233 billion, Nestlé ranked No. 9 in the FT Global 500 2013.

Nestlé is the biggest food company in the world, with a market capitalization of roughly 191 billion Swiss francs, which is more than 200 billion U.S. dollars.

In 2011, consolidated sales were CHF 107.6 billion and net profit was CHF 10.43 billion. Research and development investment was CHF 2.02 billion.

Sales by activity breakdown

27% from drinks

26% from dairy and food products

18% from ready-prepared dishes and ready-cooked dishes

12% from chocolate

11% from pet products

6% from pharmaceutical products

2% from baby milks

Sales by geographic area breakdown

32% from Europe

31% from Americas (26% from US)

16% from Asia

21% from rest of the world

Nestle owns and operates about 6,000 brands, with a huge variety of products including dairy,

chocolate, ice cream, coffee, bottled water, infant food, confectionery and pet foods. The

company’s top six brands generate more than 70% of its total revenues.

Nestle India:

Nestlé India is a subsidiary of Nestlé S.A. of Switzerland. With eight factories and a large number of co-packers, Nestlé India is a vibrant Company that provides consumers in India with products of global standards and is committed to long-term sustainable growth and shareholder satisfaction.

The Company insists on honesty, integrity and fairness in all aspects of its business and expects the same in its relationships. This has earned it the trust and respect of every strata of society that it comes in contact with and is acknowledged amongst India's 'Most Respected Companies' and amongst the 'Top Wealth Creators of India'.

Nestlé's relationship with India dates back to 1912, when it began trading as The Nestlé Anglo-Swiss Condensed Milk Company (Export) Limited, importing and selling finished products in the Indian market.

After India's independence in 1947, the economic policies of the Indian Government emphasized the need for local production. Nestlé responded to India's aspirations by forming a company in India and set up its first factory in 1961 at Moga, Punjab, where the Government wanted Nestlé to develop the milk economy. Progress in Moga required the introduction of Nestlé's Agricultural Services to educate, advise, and help the farmer in a variety of aspects. From increasing the milk yield of their cows through improved dairy farming methods, to irrigation, scientific crop management practices and helping with the procurement of bank loans.

Nestlé set up milk collection centers that would not only ensure prompt collection and pay fair prices, but also instill amongst the community, a confidence in the dairy business. Progress involved the creation of prosperity on an on-going and sustainable basis that has resulted in not just the transformation of Moga into a prosperous and vibrant milk district today, but a thriving hub of industrial activity, as well.

Nestlé has been a partner in India's growth for over nine decades now and has built a very special relationship of trust and commitment with the people of India. The Company's activities in India have facilitated direct and indirect employment and provides livelihood to about one million people including farmers, suppliers of packaging materials, services and other goods.

The Company continuously focuses its efforts to better understand the changing lifestyles of India and anticipate consumer needs in order to provide Taste, Nutrition, Health and Wellness through its product offerings. The culture of innovation and renovation within the Company and access to the Nestlé Group's proprietary technology/Brands expertise and the extensive centralized Research and Development facilities gives it a distinct advantage in these efforts. It helps the Company to create value that can be sustained over the long term by offering consumers a wide variety of high quality, safe food products at affordable prices.

Nestlé India manufactures products of truly international quality under internationally famous brand names such as NESCAFÉ, MAGGI, MILKYBAR, KIT KAT, BAR-ONE, MILKMAID and NESTEA and in recent years the Company has also introduced products of daily consumption and use such as NESTLÉ Milk, NESTLÉ SLIM Milk, NESTLÉ Dahi and NESTLÉ Jeera Raita.

Nestlé India is a responsible organization and facilitates initiatives that help to improve the

quality of life in the communities where it operates. Creating Shared Value says that for our

business to be successful in the long run, it must consider the needs of two primary stakeholders

at the same time: the people in the countries where we operate and our shareholders. Across our

business and value chain in India we continue to ensure that we respond to social needs and

environmental issues whilst improving our performance at the same time.

‘Creating Shared Value’ or ‘Saanjhapan’ as we call it in India is about the impact of our business

and engagement through it. The areas of greatest potential for joint value optimization with

society for us are Nutrition, Water and Rural Development. These are therefore at the core of our

business strategy and operations.

Nestlé S.A. announced the establishment of the first R&D Centre in India in 2010, a part of the

global R&D network. The foundation stone for the new Centre was unveiled on 22nd of

September, 2010, in Manesar, Haryana.

Mr. Subodh Kant Sahai, Honourable Minister of Food Processing Industries, Government of

India, was the Chief Guest for the ceremony. Also present at the ceremony were His Excellency

Mr. Philippe Welti, Ambassador of Switzerland, Mr. Ashok Sinha, Secretary for Ministry of

Food Processing Industries, Mr. Klaus E. Zimmermann, Global Head of R&D Centres, Nestlé

S.A., and Mr. A. Helio Waszyk, Chairman and Managing Director, Nestlé India Limited. Mr.

Zimmermann commented that the event not only marked Nestlé’s continuing long-term

commitment to R&D, but also celebrated the building of Nestlé’s first R&D Centre in India. He

mentioned that the R&D Centre would allow Nestlé to offer consumers in India and beyond, the

choice of tasty, healthy, and nutritious products. Mr. Waszyk emphasized that the Nestlé Board’s

decision to establish an R&D Centre in India at the request of Nestlé India, would be an

additional competitive advantage. It would help accelerate the Company’s growth and at the

same time contribute towards reducing nutritional deficiencies in the country.

Nestle Product SKU’s and Margins

The margin of C&F is 2.5%. The margin of distribution is 5.8% and the margin of retailer is 12% whereas if schemes are added it adds up to 14-18%. Some of the latest SKU’s of products are:-

BABY n ME Maternal Nutrition Supl 24x400gIN 330.00BAR ONE Jar Promo 20(35X13g) IN 5.00CARAMEL ECLAIRS pbg 30(100x3.8g) IN 100.00CARAMEL ECLS pbg 36(100x3.8g)PR Munch IN 100.00

CERELAC STA2 Whe App Chry BIB 24x300g IN 165.00CERELAC STA3 Whe Ri Mxd Fruit 24x300g IN 170.00CERELAC STA3 Whe Ri Mxd Veg 24x300g IN 167.00CERELAC STAGE 1 Rice Bag In Box24x375gIN 112.00CERELAC STAGE 1 Rice Bag In Box24x375gIN 115.00CERELAC STAGE 1 Rice BIB 24x300g IN 138.00CERELAC STAGE 1 Whe Apple BIB 24x300g IN 148.00CERELAC STAGE 1 Wheat Apple BIB24x375gIN 125.00CERELAC STAGE 1 Wheat BIB 24x300g IN 138.00CERELAC STAGE 1 Wheat BIB 24x375g IN 115.00CERELAC STAGE 1 Wheat BIB 24x375g IN 119.00CERELAC STAGE 1 Wheat BIB 24x375g IN 137.00CERELAC STAGE 2 Rice Veg BIB 24x300g IN 162.00CERELAC STAGE 2 Rice Veg BIB 24x350g IN 166.00CERELAC STAGE 2 Rice Veg BIB 24x375g IN 121.00CERELAC STAGE 2 Rice Veg BIB 24x375g IN 122.00CERELAC STAGE 2 Whe Honey BIB 24x300g IN 162.00CERELAC STAGE 2 Whe Orange BIB24x300g IN 162.00CERELAC STAGE 2 Whe Orange BIB24x375g IN 135.00CERELAC STAGE 2 Wheat Honey BIB24x350gIN 161.00CERELAC STAGE 2 Wheat Honey BIB24x375gIN 121.00CERELAC STAGE 2 Wheat Honey BIB24x375gIN 129.00CERELAC STAGE 3 Mixed Fruit BIB24x350gIN 165.00CERELAC STAGE 3 Mixed Veg BIB 24x375g IN 124.00CERELAC STAGE 3 Mixed Veg BIB 24x375g IN 129.00CERELAC STAGE4 MU 5 Fruit BIB 24x300g IN 180.00CERELAC STAGE4 MU 5 Fruit BIB 24x375g IN 123.00CERELAC STAGE4 MU Dal Veg BIB 24x300g IN 175.00CERL STA1 Whe Ri Khichdi BIB 24x300g IN 142.00CERL STA2 Veg Khichdi BIB 24x300g IN 165.00EVERYDAY Dairy Whitener Sachet 72x190gIN 71.00EVERYDAY DW 12x1 Kg IN 353.00EVERYDAY DW 20X750g IN 260.00EVERYDAY DW 288x20g IN 10.00EVERYDAY DW 32x400g PR Rs 20 off IN 145.00EVERYDAY DW 432x10g IN 5.00KIT KAT 1Finger 40(24x8.6g) N1 IN 5.00KIT KAT 2 Finger 18(40x18g) N1 IN 10.00KIT KAT 3 Finger 18(24x27.5g) IN 15.00KIT KAT 4 Finger 18(18x37.3g) IN 20.00KIT KAT 4F 18(18x37.3g) PR 1Unit Free IN 20.00KIT KAT 4F Fmly Pack (128x111.9g) IN 60.00KIT KAT Dark Multipack 120(3x27.5g) IN 60.00KIT KAT Fmly Pack 6X2F (128x108g) N1 IN 60.00

LACTOGEN 1 Inf Formula Tin 24x400g IN 280.00

LACTOGEN 1 Infant Formula BIB 24x400g IN 239.00LACTOGEN 1 Infant Formula BIB 24x475g IN 161.00LACTOGEN 1 Infant Formula BIB 24x475g IN 175.00LACTOGEN 2 FU Infant Form BIB 24x400g IN 238.00LACTOGEN 2 FU Infant FormulaBIB24x475gIN 172.00LACTOGEN 3 FU Inf Formula BIB 24x400g IN 237.00LACTOGEN 3 FU InfantFormula BIB24x450gIN 221.00LACTOGEN 3 FU InfantFormula BIB24x450gIN 237.00LACTOGEN 4 FU Infant Form BIB 24x400g IN 227.00LACTOGEN 4 FU Infant FormulaBIB24x450g 227.00MAGGI 2-MIN NDLS Mas 24x300g PR Mgc72 IN 40.00MAGGI 2-MIN NDLS Mas Hungroo 21x450g IN 55.00MAGGI 2-MIN NDLS Mas Hungroo84x112.5g IN 15.00MAGGI 2-MINN Masala Sachet 144x45g IN 5.00MAGGI 2-MINN Masala Sachet 252x35g IN 5.00MAGGI 2-MINN NDLS Guess Flavor 96x85g IN 14.00MAGGI 2-MINN NDLS Veg Atta 24x320gIN 78.00MAGGI 2-MINN NDLS Veg Atta 96x80 IN 18.00MAGGI 2-MINN NDLS Veg Atta 96x80 IN 19.00MAGGI 2-MINN NDLS Veg Atta 96x80 IN 20.00MAGGI 2-MINUTE NDLS MagicMas 96x72g IN 15.00MAGGI 2-MINUTE NOODLES FmlyPack16x540gIN 59.00MAGGI 2-MINUTE NOODLES Masala 12x600g IN 80.00MAGGI 2-MINUTE NOODLES Masala 16x450g IN 60.00MAGGI 2-MINUTE NOODLES Masala 24x300g IN 40.00MAGGI 2-MINUTE NOODLES Masala 48x150g IN 20.00MAGGI 2-MINUTE NOODLES Masala 48x180g IN 20.00MAGGI 2-MINUTE NOODLES Masala 96x75g IN 10.00MAGGI 2-MINUTE NOODLES Masala 96x90g IN 10.00MAGGI Cuppa Mania Ndl Yo Masala 48x70gIN 28.00MAGGI H&S 24x500g PR Pazzta Tom 64g IN 79.00MAGGI HOT & SWEET TCS Bottle 12x1kgIN 122.00MAGGI HOT & SWEET TCS Bottle 24x200g IN 42.00MAGGI Imli Sauce Doy 6(12x80g) IN 15.00MAGGI Masala-ae-Magic 10(9x40g) IN 20.00MAGGI Masala-e-Magic Sac 24(72x6g)IN FrH 3.00MAGGI Masala-e-Magic Sachet 24(72x6g)IN 3.00MAGGI Meri Masala Dumdaar Ndl 24x304g IN 45.00MAGGI Pasta Mushroom 96x64g IN 20.00MAGGI Pazzta Cheese 96x70g IN 18.00MAGGI Pazzta Cheese 96x70g IN 20.00MAGGI Pazzta Masala 96x65g IN 20.00MAGGI Pazzta Masala 96x65g PR GIFTS IN 20.00MAGGI Pazzta Masala Dbl Pack 48x130g IN 28.00MAGGI Pazzta Tomato 80x64g IN 18.00

MAGGI Pazzta Tomato 80x64g IN 20.00MAGGI Pazzta Tomato 80x64g PR GIFTS IN 20.00MAGGI Pazzta Tomato Dbl Pack 48x128g IN 32.00MAGGI Rich Soups Chicken Sac 48X53g IN 29.00MAGGI Rich Soups Chicken Sac 48X53g IN 38.00MAGGI Soup Mixed Veg 48x44g IN 39.00MAGGI Soup Tomato 96x54g IN 39.00MAGGI Soups Mushroom 48x43g IN 39.00MAGGI Tom Ket 12x1kgPR MAG Ndl Mas160gIN 120.00MAGGI Tomato Ket Pichkoo 4(12x90g) IN 15.00MAGGI Tomato Ketchup Bottle 12x1kg IN 97.00

MAGGI Tomato Ketchup Bottle 12x1kg IN 120.00

MAGGI Tomato Ketchup Bottle 24x200g IN 40.00

MAGGI Tomato Ketchup Bottle 24x500g IN 78.00

MAGGI TomKet 24x500g PR HungroondlsFr IN 78.00

MAGGI TomKet Pichkoo 4(12x90g) PR FrH IN 15.00

MILKMAID Prtsk SCM EOE Tin 48x400g IN 58.00

MILKMAID Prtsk SCM EOE Tin 48x400g IN 89.00

MILKYBAR CHOO 30(24x14g) IN 5.00

MILKYBAR CHOO Strawberry 30(24x14g) IN 5.00

MILKYBAR Eclairs Jar 20(160x 3.6g) IN 160.00

MILKYBAR Eclairs Jar 4(820x3.6g) IN 820.00

MILKYBAR MANGO CHOO 16(24x24g) IN 10.00

MILKYBAR Mould 12(24x18g) N1 IN 10.00

MILKYBAR Mould 30(30x9g) IN 5.00

MILO ACTIGEN-E Stabilo 24x500g IN 121.00

MUNCH 4X4 12(28x23g) N1 IN 10.00

MUNCH Chotu 18(55 x 3.6g) IN 2.00

MUNCH Maha 24(24x11.5g) N2 IN 5.00

MUNCH Maha Home (75x69g) IN 35.00

MUNCH Pouch 28x172.5g IN 80.00

NAN 1 Infant Formula BIB 30x450g IN 240.00

NAN 2 Follow-Up Formula BIB 30x450g IN 240.00

NAN 3 FU Formula BIB 30x450g IN 235.00

NAN PRO 1 INFANT FORMULA BIB 24x400g IN 390.00

NAN PRO 1 INFANT FORMULA Tin 30x400g IN 393.00

NAN PRO 2 FU FORMULA BIB 24x400g IN 368.00

NAN PRO 2 FU FORMULA Tin 30x400g IN 348.00

NAN PRO 3 FU FORMULA BIB 24x400g IN 366.00

NAN PRO 3 FU FORMULA BIB 30x450g IN 340.00

NAN PRO 4 FU FORMULA BIB 24x400g IN 360.00

NESCAFE CLASSIC Jar 24x25g N1 IN 55.00

NESCAFE CLASSIC Jar 24x25g N1 IN 60.00

NESCAFE CLASSIC Jar 24x50g IN 68.00

NESCAFE CLASSIC Sac 36(17x7.0g) IN 10.00

NESCAFE CLASSIC Sac 432x8g PR2g Fr N1 IN 10.00

NESCAFE CLASSIC Sac 96x50g PR Rs7 off IN 106.00

NESCAFE CLASSIC Sachet 25(96x0.8g) IN 1.00

NESCAFE CLASSIC Sachet 432x7.0g IN 10.00

NESCAFE CLASSIC Sachet 864x3.5g IN 5.00

NESCAFE CLASSIC Sachet 96x50g IN 65.00

NESCAFE CLASSIC Sachet 96x50g N1 IN 106.00

NESCAFE My First Cup Sac 30(96x0.7g) IN 1.00

NESCAFE My First Cup Sac 38(48x1.5g) IN 2.00

NESCAFE SUNRISE Sac 14((144+8)x2.6g) IN 2.00

NESCAFE SUNRISE Sac 20((24+1)X10g) IN 10.00

NESCAFE SUNRISE Sac 32(132x1.2g) IN 1.00

NESCAFE SUNRISE Sac 4(60X10g) PR Cont IN 10.00

NESTEA Iced Tea Lemon Hang 12(10x100g)IN 25.00

NESTEA Instant Iced Tea Lemon 24x500g IN 110.00

NESTLE BAR ONE Ctln 16(24x26g) IN 10.00

NESTLE BARONE Ctln 24(30x14g) N1 IN 5.00

NESTLE Eclairs Polybag 30(120x2.6g) IN 60.00

NESTLE EVERYDAY DW 32x400g IN 145.00

NESTLE EVERYDAY DW 432x12g IN 5.00

NESTLE EVERYDAY Ghee CEKA 16 x 1L IN 330.00

NESTLE Milk Chocolate 24(24x18g) IN 10.00

NESTLE Milk Chocolate 28(12x36g) IN 20.00

NESTLE MILKYBAR Crispy 24(24x12g) IN 5.00

NESTLE MILKYBAR Crispy 24(24x13g)IN 5.00

NESTLE MUNCH ROLLZ 24x24x8g IN 5.00

NESTLE NESLAC 24x400g IN 180.00

NESTLE SELECTIONS (38x154.5g) IN 100.00

NESTLE Tablet 40(30x12g) IN 5.00

NESTOGEN 1 Infant Formula BIB 24x475g IN 118.00

NESTOGEN 1 Infant Formula BIB 24x475g IN 118.00

NESTOGEN 1 Infant Formula BIB 24x475g IN 124.00

NESTOGEN 1 Infant Formula Tin 24x450g IN 172.00

NESTOGEN 1 InfFormula BIB 24x400g IN 149.00

NESTOGEN 2 FU Inf Formula BIB 24x400g IN 149.00

NESTOGEN 2 FU Infant FormulaBIB24x475gIN 124.00

NESTUM STAGE 1 Rice Bag In Box 24x375gIN 75.00

NESTUM STAGE 1 Rice BIB 24x300g IN 95.00

NESTUM STAGE 2 Rice Dal BIB 24x375g IN 88.00

NESTUM STAGE 2 Rice Dal BIB 24x375g IN 114.00

NESTUM STAGE 2 Rice Dal BIB24x300gIN 105.00

NESTUM STAGE 3 Rice 3 Frt BIB24x300gIN 115.00

NESTUM STAGE 3 Rice Fruit BIB 24x375g IN 90.00

POLO Mini Dispensing Box 36(30X7.81g) IN 2.00

POLO Mini Jar 36(50x7.81g) IN 2.00

PRE NAN DS094-2 12x400g IN 375.00

SUNRISE PREMIUM Sac (96x50g) PR 10g F IN 48.00

SUNRISE PREMIUM Sac 360x13g IN 10.00

SUNRISE PREMIUM Sachet 25(120x1.3g) IN 1.00

SUNRISE PREMIUM Sachet 96x50g N1 IN 68.00

SUNRISE PREMIUM Sachet 96x50g N1 IN 83.00

Nestle India Bhubaneswar distribution network is as follows:

The goods reach from factory to C&F and C&F distributes it to distributors and super stockiest. Nestle considers super stockiest and distributors as same. Here the super stockiest re distributes it to rural areas. The next hierarchy in the channel is sub-stockiest. Re distribution happens after this level to Retailers (Organized trade and General Trade).

Factory

Nestle has one C&F in Cuttack. It has three distributors and one super stockist in Bhubaneswar area. They are responsible for re-distribution to organized trade, general trade, rural reach and wholesalers.

As found according to the study we found that the C&F in Cuttack is Shree Mahabir Agencies situated in Phulnakhra.

Nestle is having 4 distributors in Bhubaneswar i.e.

S.No. Name Type Area1 Ajay Kumar Rahul Kumar Distributor (OT & GT) Old Town2 Jyoti Prakash Distributor Chandrasekharpur3 Hindustan Agencies Superstockist Rural Bhubaneswar4 Hindustan Agencies Distributor Rasulgarh

Counter Management:

The counters are classified as three types according to sales as One Lakh Plus, Less Than One Lakh and Greater Than Fifty Thousand and finally to Less Than Fifty Thousand. All sales are in INR. Based on the counter type the visits are classified. Similarly Orissa comes under West Zone. Nestle divided India into 4 zones as Kolkata Zone, Mumbai Zone, Delhi Zone and Chennai Zone. Bhubaneswar is classified as Tier 1 city.

C&F

Distributors & Super-Stockist

Sub Stockist Reliance Retail Distribution Center

Urban Retailers (OT & GT)

Rural Retailers

Modern Trade is classified into 3 tiers as per company guidelines:

Tier-I Big Bazaar, Pantaloons RetailTier-II The WorldTier-III Metro Bazar

Beat Planning:

The beats are covered by salesmen of distributors in the area. They are provided with palm tops and are supposed to go to every retail store of their territory and take orders. The indent is escalated to the distributors. There are total of 15 salesmen in Bhubaneswar area. In addition 2 sales officers are there to follow up and also check the issues in distribution and redistribution. The Bhubaneswar area is divided into areas and the target of salesmen is to cover at least 30 counters per day.

If area has more than 30 counters, then on the next day they are supposed to cover the remaining stores and the next area. Every salesman follows a six days cycle and again they start the same beat plan. Salesmen visit frequency depends even upon the store potential and type. If store has high sales then they visit two times a week. If a store is in rural or the sales potential is very low then they visit the store once for ten days. The order from distributors is collected on emails so as to have a sufficient know that how much stock is to be dispatched to the distributor.

There are almost 2500 retail outlets where Nestle products are available. There are 15 salesmen from distributor’s side and 3 from Nestle.

The 15 salesmen take care of beat covering, calls, orders, credit collection, complaint handlings, and 3 company salesmen take care of follow ups, new business developments, distribution orders and re-distribution.

How is beat planning done?

E.g. Saheed Nagar, Unit 4, Rasulgarh, VSS Nagar, P.D. Market, Nayapalli, Ashok Nagar, Sainik School, Chandrasekharpur, Khandagiri.

Consider, Saheed Nagar has 100 stores, Unit 4 has 40 stores, Rasulgarh have 200 stores, VSS Nagar has 40 stores and the target of each salesman is 30 calls per day.

So, total stores for this distributor: - 100+40+200+40=380

No.of salesmen required to cover beats: - 380/ (30 * 6) =2

So, 2 salesmen are required to cover 380 stores in 6 days.

Territory Management:

After more than a century-old association with the country, today, Nestlé India has presence across India with 8 manufacturing facilities and 4 branch offices. Nestlé India set up its first manufacturing facility at Moga (Punjab) in 1961 followed by its manufacturing facilities at Choladi (Tamil Nadu), in 1967; Nanjangud (Karnataka), in 1989; Samalkha (Haryana), in 1993; Ponda and Bicholim (Goa), in 1995 and 1997, respectively; and Pantnagar (Uttarakhand), in 2006. In 2012, Nestle India set up its 8th manufacturing facility at Tahliwal (Himachal Pradesh).

The 4 Branch Offices located at Delhi, Mumbai, Chennai and Kolkata help facilitate the sales and marketing activities. The Nestlé India’s Head Office is located in Gurgaon, Haryana. As said earlier Nestle divided India into 4 zones as Kolkata Zone, Mumbai Zone, Delhi Zone and Chennai Zone. Bhubaneswar is classified as Tier 1 city. Bhubaneswar comes under Kolkata Zone. Bhubaneswar is divided into four territories.

The four territories cover entire Bhubaneswar Urban and Rural. The four territories are:

1. Chandrasekharpur territory2. Old Town territory3. Patrapada territory4. Rasulgarh territory

Quota Management:

Quotas are derived from the national target and drilled down to individual area. The quotas are break down into the four zones. Based on the previous performance of each states and the market potential the percentage of targets are divided it to RSM. Similarly on the same basis RSM divides it to ASM. ASM gives the same to the salesperson as per their potential. The salesperson accordingly based on the prior sales to the distributor accordingly allocates the target. As accordingly the salesperson are incentivized based upon the targets they achieve. The incentives are decided by the Region HR, and moreover the salespersons are given stretched targets.

Sale Promotion/ Trade Promotion:

The Bhubaneswar area or any area per se doesn’t have any control or authority on the Nestle ATL activities. They are decided by the national office. The ATL activities are Newspaper

Advertisements, Public Relations, Hoardings, Radio announcements, TV ads. The BTL activities are controlled by Bhubaneswar area. Some of the BTL activities are sampling of products, visual merchandise in modern retail, in store activities, area wise branding activities etc. They can decide which stores can be considered for sampling, promotional activities like children quiz in schools etc. The company provides them budget for promotion activities and they are supposed to spend within for the BTL activities.

Schemes/ Discount Management:

Schemes and discounts are under the discretion of Regional Sales Manager. The schemes will be consistent and same within the state. The schemes are designed on the given budget. The schemes are also same for every distributor. The class wise discounts and schemes will be same. Nestles is a very conservative company and it doesn’t come into lime light anytime. The discounts, schemes and everything are not as per the competition but as per their seasonal trend. The effect of competition in the scheme design will be very less. But there are schemes under discretion of salesperson to distributors so as to get their quota filled from distributors and in return they will give 2 bags more without any cost to distributor.

Season Management:

The sales estimates are turned to monthly figures as per the seasonal trend analysis forecast. They consider the effect of seasonality in their monthly targets. If it is an off-season then the pressure will be bit less and so as the targets. They don’t stretch the targets. Similarly if it is a peak season then the targets are stretched and also the pressure. In festive season the same is applicable. The sales forecast approach they follow is seasonal/trend analysis forecast method. Nestle strives for ensuring Availability, Visibility and Accessibility. In case of festive season they plan the stock prior to 2-3 months so that they can ensure there is availability of stock during festive season and moreover they will see some schemes are associated with the product so as to increase enthusiasm among customers and during offseason they will float the product with extra gram-ages so as to pull the customers. For e.g. 10 gm free or price off like 2 rupees less.

Retail:

In the modern retail except Reliance retail everybody are procuring the products from distributors whereas Reliance Retail is procuring directly from C&F

Issues:

1. Undercutting: It happens when a particular product is in high demand. It takes place generally

border areas of different territories. Here, the distributers try to the lure the wholesalers of their

competitors to maximise revenue by selling them at prices lower than that of the competitors.

Again, they make profits by the inflated sales volume at lower prices.

2. General Trade asks for more schemes which is difficult from the point of view of RSM as company profitability is affected and moreover schemes are designed as per the zone’s budget.

3. Holding of less stock by distributors and retailers

4. Distributors Problem: It is because either due to financial problems persisting with the distributor and company operates on cash on counter model, so it becomes problem for distributor to have huge lump sum amount at the discretion to the salesperson while stock arrives. Sometimes, company push for more products and distributor is unable due to risk associated with it.

5. Territory Infiltration: Very often, distributers and wholesalers cater to the channel partners of

other distributers in different areas resulting infiltration of territories. Subsequently, this

phenomenon gives rise to undercutting of prices. Almost 60% times company knows that

infiltration happens, but they doesn’t stress about this issue to the salesperson and they take

infiltration serious when it happens at the main market area and when caught serious action are

taken. Even a distributor / retailer caught under such circumstances are legitimated to be

cancelling the license for distribution.

6. Competitors activities: Wherever they operate, it’s basically an oligopolistic market and the

price fluctuations are very less and moreover the company’s strategy has always been

conservative and it plays very smoothly in the market and it doesn’t hurt the sentiments or

business of other companies.

7. Off-take: Less-selling products are pushed in the market with the help of the distribution

network by introducing schemes and offers to attract the channel partners.