presentation - sales & distribution at itc

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A study of sales & distribution of ITC

By: Group 11 (DoMS, IIT Roorkee)

Saurabh Paul 12810073Saurav Kumar 12810074Shailendra Shankar Gautam 12810075Sharad Srivastava 12810076

About ITC Ltd.Company Profile:

ITC was established on August 24, 1910

Indian public conglomerate company headquartered in Kolkata, West Bengal, India

ITC's gross revenue for FY2013 stood at Rs. 43044 crores and market capitalization of Rs. 244245 crores

The company is currently headed by Yogesh Chander Deveshwar (Chairman)

It employs over 25,959 people (as on 31st March 2013) at more than 60 locations across India.

Among India's Most Valuable Companies by Business Today. 2

About ITC Ltd. (Contd.)

Vision

• Sustain ITC’s position as one of India’s most valuable corporations through world-class performance, creating growing value for the Indian economy and the Company’s stakeholders

Mission

• To enhance the wealth generating capability of the enterprise in a globalising environment, delivering superior and sustainable stakeholder value

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About ITC Ltd. (Contd.)

FMCG

Hotels

Agri-Business

Packaging

Paper Boards

IT

Diversified Product Categories:

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Objective

To create, communicate and deliver superior value to consumer though effective sales and distribution management.

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Problem Statement

Causes:– Lack of proper training to distributor’s salesmen.– Poor Infrastructural support (TPS software not updated on regular

basis).– Inefficient sales strategy (territory allotted to salesmen doesn’t

consider sales potential of region).

Effect:– Problem of product recall by salesmen.– More focus on sales target rather than business expansion. (Salesman

focuses more on large outlets which purchases in large volume).– Poor level of motivation among sales staff.

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Context

Time Context: 2010

Viewpoint: Y C Deveshwar

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Background

Sales Management means “the planning, direction, and control of personal selling including recruiting, selecting, equipping, assigning, routing, supervising, paying and motivating as these tasks apply to personal salesforce”. – American Marketing Association

• The objectives of sales management are sales volume, contribution to profit and continuing growth.

“We … recognize that selling only works when everything is right for the customer—when we deliver value.”

– Rick Makos (President, NCR-Canada)8

Strength Strong brand recognition Experienced Management Diversified Product Portfolio Well established distribution network

Weakness Dependence on tobacco revenues Negative Connection of Tobacco Low export levels

Opportunity Low per capita consumption of personal care products Untapped rural market Collaboration with foreign players e-retailing

Threat Competition both Domestic & International Ban on smoking Competition from unbranded products High competition from established companies

SWOT Analysis

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Presence of ITC Ltd..

NORTH Division

EASTDivision

SOUTH Division

WEST Division

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Sales Hierarchy of ITC

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Recruitment

• Assistant under Training (AUT) Top B-

Schools

• Sales Trainee Other

B- schools

• Lateral Recruitment (for the post of AE) by BM and HRM

Employee References and

Consultancy12

Level 5

Quality of hire

Level 4

Level 3

Level 2

Recruitment (Contd.)

Written Test - 3 sections. Total of 55 questions. Numerical - 15, Analytical - 20, Verbal - 20 questions.

Group Discussions / Business Plan Competition

Interview round 1st Round

Level 1CV Short listing

Interview round 2

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Training and Development

Induction Training

On Job Training

Internal Training

Competency Development

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Training and Development (Contd.)

Sales Trainee

Duration: 1 week

Place: HO

Induction Training:

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On Job TrainingDistributor’s Sales Person & Supervisor

Top distributors

3 Salesman are selected

New Entrant (S. Trainee & AUT)Duration: 3 days

New Sales Personnel

Training Through NIS

Process

On Job Training:

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For

Sales Trainee

and A

UT

Duration: 1 month

In Branch office

Internal Training:

17

Branch Manager recommends AE and AM

for training

Location: Head Office

Duration: 6 Days


Competency Training:

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Compensation (Contd.)

Position CTC (in Rs. Lakhs annually)

Variable

Branch Manager 18 - 20 20% of CTC

Assistant Manager 12 - 14 20% of CTC

Area Manager 8 - 8.5 20% 0f CTC

Area Executive 5.5 - 6.5 20% of CTC

Sales Trainee 2.5 - 2.6 20% of CTC

Variable salary is decided on the basis of performance and target met by sales personnel

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Performance evaluation of sales personnel

•Monthly Sales Target•Visibility Target

Monthly Target

•Sales Volume for each product category•Market share growth rate

Performance of the branch

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STAR WARS:

Quiz

Motivation

Updated

Performance evaluation of sales personnel

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Wholesale Distributor (WD)

WD

Salesmen Supervisors

Driver/ Thelawal

a

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WD employees: Recruitment and Compensation

• Their fixed salary is paid by the distributor but is reimbursed by the company.

• The variable salary of salesmen is decided on his meeting of sales target.

Recruitment:

The salespersons of distributors are appointed by the distributor himself in consultation with ITC officials

Compensation:

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Salesmen Evaluation and Compensation

• The compensation received by salesmen depends upon the target achieved by them

• Targets under consideration:1. Monthly sales target2. Product wise sales target3. Category wise


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Control mechanism:

• The performance and work of WD employees is evaluated by company’s officials weekly.

• Their daily sales order is monitored by Area Executive.• The salesmen is given a geographical territory which doesn’t

consider sales potential.• Salesmen has to cover 30 outlets each day.• They are given a beat plan for each day.• If a WD employee is not performing then the company can

sack him.


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Role of Salesmen:• Prospecting- Searching for new outlets• Targeting- Visiting potential outlets• Communicating- Informing about products and offers• An order taker- As per requirement in retail and

convenience outlet • Selling to retailers and convenience outlet• Servicing- Removal of damaged/expired(DND)products• Information gathering- About needs/ preferences of

customers• Allocating- Fixed time to each outlets• Cash collection


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Distribution Channel

FACTORY

CNF

WHOLESALE

DISTRIBUTOR

WHOLESALE DEALER

BASE

RETAILER

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Channel Type

Company

Wholesale Distributor

Wholesaler

Retailers

Consumer

Company

Wholesale

Distributor

Wholesaler

Consumer

Company

Wholesale Distributo

rRetailers Consume

r

2 -level Distribution Channel:

3-level Distribution Channel:

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Distribution Type

Exclusive (Textile)

Selective (Paper Boards & Cigarettes)

Intense (Other FMCG Products)

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Physical Distribution/Logistic

Mother Hub/Factory

Warehouse Service Provider

WD Godowns

Outlets

Central Warehouse

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Effective Working of Channel Members

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Performance is measured on following broad parameters:

Distribution Health (Outlet coverage,

availability, visibility levels, etc)

Business Health (Sales Performance

benchmarked to relevant Circle)

Effective Working of Channel Members (Contd.)

Score card for Measurement of WD Performance:

Bands Score

Platinum > 95%

Gold 85-95%

Silver 80-85%

Bronze Star 75-80%

Bronze 60-65%

Non Performing < 60%

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Essentials Check Bands Follow up actionNot Qualified Non Performing ReplaceNot Qualified Bronze On Notice

Not Qualified Bronze Star/ Silver On NoticeBM to revert with follow up

planQualified Non Performing On NoticeQualified Bronze On Notice

Time bound action plan

Qualified Bronze Star/ Silver Encouragement for further improvement

Actionable basis for WD evaluation:

Effective Working of Channel Members (Contd.)

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Alternate Choices

• Change in salesforce structure

• Improvement in sales management

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Improve Management• Proper training should be provided to salesmen.

• Salesmen should be regularly informed about the changing offers and schemes on the products.

• Territory allotted to salesmen should consider the sales potential and concentration of outlets in that area

• Salesmen should be provided incentive for adding new outlets.

• TPS should be updated regularly to show current stock details.

• The incentive of the salesmen should be based on the number of outlets served by them too rather than merely on sales volume .

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Thank You

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