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  • 1. Study of Distribution Network of ITC Shampoos

2. ITC HISTORY ITC LimitedParent Company ITC LimitedCategory Consumer Products, Hotels & ServicesSector Public & ConglomerateTagline/ Slogan100 Inspiring years; 100 years 1 mission India first Henry Overton Wills on August 24, 1910(as Imperial Tobacco Company of India)Founder STPSegmentProducts and services for daily needsTarget Group Every Indian household especially the middle classPositioningEnduring Value. For the Nation. For the Shareholder. 3. ITC Business Portfolio ITCInformationPaperboards, Paper Hotels Lifestyle Retailing FMCGAgribusinessTechnology and packaging Matches, IncenseEducation and Cigarettes Foods PCPSticksStationarySoapsShampooVivelFiama Di WillsSuperia 4. A Brief Overview Rs. 2900 croreShampoo Marketin India Other Players :Dabur, Wipro Growth ofIndustry : 15%pa Major Players : FMCGHUL and P&G ITCs Share :Revenues:5% (despite12,955 cr. being a very ITC : alate entrant)Rs.18,000+ cr. Rs. 145 cr.turnover Revenue contributioncompanythrough shampoos 5. What is Channels of DistributionDistribution is the process of making a product or service available for use orconsumption by a consumer or business user, using direct means, or usingindirect means with intermediaries.Product distribution (or place) is one of the four elements of the marketing mixIt can be of the following ways 6. Distributors of PCP in India The total number of distributors in India of ITCis 5027 in PCP products. Some of the Major cities include the metrocities Nagpur, Ahmedabad, Kochi, Jaipur,Hyderabad . etcIn Mumbai it is divided into 3 regions Each region consists 6-8 distributors having atotal 25 distributors. 7. Territory division in Mumbai 6-8 distributors per 3 of 4 Every City consists subMumbai divided intoregion : Acities ofCity 1 , City total : regions23 distributors2,total of 12 regions A City 3 8. SWOT AnalysisStrengthWeaknessOpportunity Threat ITC has a strong ITC is still Tap rural marketsand experienced dependant on itsand increase Strict govtmanagementtobacco revenuespenetration inregulations and . Strong brandand people have urban areas policiespresence, excellent cheaper substitutes Mergers and regardingproductsand other brandsacquisitions to cigarettesadvertising 2.Hotel industrystrengthen the Intense and Diversified product has not been able brandincreasingand servicesto create a huge More publicity ofportfolio market sharehotel chains to competition ITC limited increase market amongst otheremployees overshare FMCG25,000 people companies andhotel chains FDI in retailtherebyallowinginternationalbrands 9. Distribution Channel Process 10. Distribution ChannelDistribut3rd Party WSPorCompanyFee Based ServiceFreightProduction atCFA atRs.100HaridwarBhiwandi TOT on Case to CaseFixed Basis : Decided by CentralMargin:Rs. 102Rs.100Office3.5%Rs. 95Distributor pockets 3.5%OrganizedRetail Rs.103.510% on Bottles 24% onSachets Rs.113.85End Unorganized Customers Retail 11. Credit flow across the Chain No credit offered to distributor Goods delivered strictly on cash, cheque, RTGSbasis. Distributor offers 7-15 days credit to retailers. Margins of Distributor includes an interestcomponent towards the credit he offers downthe chain 12. Flow of Damaged Products Only replacement of Damaged Products, NoITCreimbursements Paid DistributorMay Replace RetaileMayr ReimburseDamaged Goods MovingBack to ITC Consum er 13. Achieving Economies of ScopeDistributorSingle distributorSingle Sales team forfor all 3 verticals entire PCP:Soaps, Shampoos andAgarbattis 14. Distribution of Distribution @ Kamla Enterprises 1600 retailers under this distributor- Malad & Goregaon Deals with 7 salesmen handle Soaps and Shampoos 1 Salesman handles 6 beats 1 beat per day 15. Sales tracking sheet 16. Linking IT FORUM system Sales persons use PDA to transfer information into theFORUM system. Database consolidationhappens every evening. Uses FORUM IT system to monitor distributionactivities, link distributors with company, track orders, etc The system helps to track inventory,determine reordering levels other than being a one-stop-shop for all the information about salespersons and retailers 17. -Key Strategies 18. Selection of Distributors Exclusivity of distributors is strictly maintained in ITC Company leverages its brand and high inherent demandof its products in the market to enforce exclusivity ondistributors Not possible for smaller manufacturers to forceexclusivity, as they dont enjoy bargaining power withdistributorsAdvantages No need to push products through distributors as theyhave access to only ITC products Saves on extra margins company gives to distributors tolure them in ITCs favor 19. Area Wise Strategy- Organised Retailersvs Unorganised Retailers MumbaiArea selection Areas with High Areas with lowaccording to Standard standard of livingstandard of livingof LivingSKU and keySachets of Superia Bottles of Fiama Diand Vivel selected asProducts Wills and Vivelthe key productDistributor margin decidedProfit Margin by company on the basisDistribution margin is of no. of retail outlets offixed for all distributors key A/Cs in the territory Share of Sachet byShare of Bottles by revenue revenueSuperia 80 20Vivel 60 40Fiama Di20 80Wills 20. What is SKU Stands for "Stock Keeping Unit," and is convenientlypronounced "skew. SKUs may be a universal number such as a UPC codeor supplier part number or may be a unique identifierused by a specific a store or online retailer. Mainly used to track the inventory using their owncustom database system. When shopping online or at retail stores, knowing aproducts SKU can help you locate the exact product ata later time. 21. Choice criteria of distributors/retailers (80-20 rule) ITC is a late entrant in the shampoo market Currently enjoys 5% of the market share Fiama Di Wills : Oct, 2007 Vivel : June, 2008 Superia : August, 2008 Strictly follows 80:20 principal to gain economiesof scale first Selects the first 20% of the most profitableretailers for ITC in a particular territory Out of the total 1 lakh retailers in Mumbai, it todayserves only 24000 retailers 22. The Way Forward Exploring Small unbranded Salons a majorconsumer of Shampoos New ITC under the process of Channels exploring these sales outlets Pushing High Introduction of reward points atretailer endMargin Highest points for Fiama Di Products Wills, Lowest for Superia Pilot Project in Mumbai Exclusive ITC Retailer been incentivized tostock only ITC products Retail Outlets 23. By group 8Tripti MadhushreeNikeshCelistinAlan Abhimanu Kumar SinghAakash Thakkar