Sales and Distribution ManagementGroup 7

LBSIM, New Delhi

Flow of Presentation

Company Overview

Product Specifications

Business Model

Market Classification, Segmentation

Sales Organization Structure

Sales Force Motivation

Forecasting, Distribution Model

Coke vs. Pepsi

Logistics, Product Flow

Performance Management

Promotional Schemes

Margins & Financials

Recommendations

Company Overview

Coke re-entered India in 1993

Coke India comprises of:

Coca-Cola India

Hindustan Coca-Cola Beverages

Franchisee bottling operations

Coke globally serves 500 brands in 200 countries @ 1.7 billion servings per day

Operates a franchised distribution system 1889

Market Cap: $167.25 Billion (Global)

Revenues: $46.542 Billion (Global)

Employees = 25K direct & 150K indirect (India)

Product Specifications

Contd.

Promotional Schemes Soft drinks:

600ml 1case + 2x500ml soda free

600ml 2case + 5x500ml soda free

2 litre 1case + 2x500ml soda free

1.25litre 1case + 1.25litre Limca free (1.5litre out of stock)

Juice:

1.25litre 1case Mazaa + 1.25litre Mazaa free

Water:

5box (15x5) + 1box free

Energy drink:

1box (24pcs) + 4pcs free

Business Model

Manufactures & distributes Concentrates

Syrups

Bottlers make the final beverage through COBO

FOBO

Each bottler has an exclusive territory

Actual formulations are tightly held trade secrets

Business Model

Coca-Cola India ManufacturesConcentrate, Beverage

base and Syrup

Regional Bottlers Manufactures finishedCOBO/FOBO Bottles/Cans/Fountain

Syrup

Customers

Consumers

Market Classification

Market Classification

Geographical Area Competition

GeographicalInternationally Coke segments its product Country & region wise

Variations as per tastes & income

CompetitionPresence of players such as: Pepsi

RC Cola

Segmentation Model

Outlet Type

Grocery

Restaurant

Convenience

of

<200 200-499 500-799 >800

Outlet Volume

ConsumerChoice

Organizational Structure

Chair Person

G.M.

Marketing Manager Accounting Dept. Shipping Deptt.

Factory Manager

Marketing Manager Production Manager

Quality MechanicalControl Engineer

Sales Manager O/S Sales Manager (Base) Shipping Manager

Sales Officer Sales Officer

Sales Supervisor Sales Supervisor

Sales Man Sales Man

Distribution Officer

Shipping Officer ShippingPersonnel Manager

Sales Organization Structure

AGM

Sales Manager

Area Sales Manager

Sales Executives

Market Development Executive / Pre-sellers

Recruitment & Selection

Coca-Cola recruitment process is well established, they give ads in newspaper, company’s website, institutions,etc.

Coca-Cola recruits MT’s from premier B schools.

They mostly offer PPO’s to the Summer Interns.

SELECTION PROCESS INVOLVES: Group Exercise

Interview

Presentations

Psychometric tests

Situational Exercises

Training

Coca-Cola India partners with Indian School of Business (ISB) to launch the Coca-Cola – ISB Retail Academy

The ‘Parivartan’ program –

Training small town retailers. Coke’s new strategy involves training retailers (around 6,000 of them) in a program launched by the Coca-Cola University

Performance Ratings

Exceptional performance –EP

Contributions significantly exceed the stated objectives in terms of quality, quantity and timeliness

Successful performance – SP

Contributions meet and sometimes exceed the objectives, which are based on challenging goals

Developing performance – DP

Contributions meet some / most but not all of the objectives and performance improvement is necessary

No Performance – NP

Contributions frequently do not meet the stated objectives

Sales Force Motivation

Incentives based on quarterly performance

No. of units and/or total revenue, work as a base for incentives

Every executive needs to add new outlets every year to get UNIT incentives

Target achievers are recognized by giving:

TV, Fridge, etc.

Certificates / trophies

Lunch / outing with senior management, etc.

Foreign trips for managerial level & above

Rewards at Coke

Yearly Basis

Mo

nthlyBasis

QuarterlyBasis

•Employee salary increment•Grade Jump, Designation change•Annual incentive Plan (AIP) (for

business performance, but fixed)•Personal Progress report (PPR) (Annual Appraisal)

•Making the move (MTM, sales target achieve)•Monthly turn hall (extraordinary performance)

•Employee of the Quarter (EOQ, non sales)•Sales Dangle context•Gold Context

Forecasting

Combination of top down and bottom up approach

Forecasts based on factors such as:

Historical data

Economic parameters

Seasonal variation

Festivals, ceremonies, etc.

Weekly reviews to adjust monthly forecasts

Forecasts are region-wise, they are further broken down

into cities, towns and villages by sales managers

Distribution

Distribution Routes

Key Accounts

Examples: Clubs, fine dine restaurants, hotels, Corporate houses etc.

Future Consumption

Examples: Departmental stores, Super markets etc.

Immediate Consumption

Examples: Small sized bars and restaurants, educational institutions etc.

General

Distribution

Area wise distribution & promotion schemes

Focus on high traffic locations

Railway stations

Bus stand

Coke India distributes using 2 routes Direct

Indirect

Direct Route Market

Plant Warehouse

Indirect Distributor MarketRoute

Cont. 3 COBO Regions – 27 COBO units

1 FOBO Region – 12 FOBO units

} COBO

Company owned bottling operations

FOBO

Franchisee owned bottling operations

Distribution Structure

Direct Indirect

Direct

On Order

&

ReadyStock

Manufacturing Plant

Primary

Company Owned Depot

Secondary

Retailers(Diamond / Gold / Bronze)

Tertiary

Customers

COBO

FIFO3 Day

Inventory

Home DeliveryAgent

Distribution Structure

Direct Indirect

Indirect

Distributors

cover:

500-600 outlets

Manufacturing Plant

Secondary

Distributors

Secondary

Retailers(Diamond / Gold / Bronze)

Tertiary

Customers

FOBO

Requirements to become distributor:

• Capacity to hold 5 days stock

• FDA license

• Shop establishment certificate

• Electricity bill

• Address proof

• Bank statement

Pepsi IndiaCOMPANY

COBO FOBO

WAREHOUSE

C & F DISTRIBUTOR

SALESMEN SALESMEN

WHOLESALER SLUMS RETAILER

RETAILER CUSTOMER

CUSTOMER

Delhi-NCR

Full Coverage - 59 No return

RoutesRetailers’

Loss

Owned & contracted vehicles 56 – Owned Vehicles

Transporting VansRetailer Handling

1 Driver + 2 Loaders

45– Pre- sellers

Distributors FunctionsPARAMETER

Bulk Breaking Depends upon location

Warehousing Storage & safety

Transportation Distributor to retailer

Market Information Customer IntelligenceCompetitor Intelligence

Sourcing Consumer tastes & preferences

Maintaining a) Signagea) Visual Merchandising b) Interior ambienceb) Banners, posters, etc. c) Overall environment

Problems faced by distributor• From company : discounts/incentives given at the end of the

month

• From retailer : bad debts/run away

Logistics

PARAMETERS

1) Average order sizea) Distributor to company Based on Demand, Seasonb) Retailer to Distributer

2) Order placementa) Distributor to company Phone

b) Retailer to distributer Distributor Representative

3) Transit Time 2 Days

4) Order frequency Daily

LogisticsPARAMETERS

5) Inventory Maintained 1 day

6) Unsold/DamagedReplaced

Merchandisea) A/C Keeping

7) Technology b) Stock keepingc) Complaint Handling

8) Mode of Transportation Company vehicle(company to distributor)

9) Transportation Expensesa) Company to Distributor Company

b) Distributor to retailer Distributor

10)Warehousinga) Storage Capacity Minimum 30 m2

b) Ownership Owned / Rented

11) Stock keeping responsibility Stock keeper

Flow of The Product

•Pre-seller goes on his route and books the orders

•Order is registered on the server through GPRS on the spot

•Order is

processed• Loading the

•Load sheet is vehicles is donereleased

by the C&Fpeople

On a tablet or Blackberry

Contd.

•First vehicles •Trucks return toleaves at 6am •Product delivery depot •Records are

•All vehicles •Unloading takes•Empty bottles talliedleave by 9.30am place

are collected•Cash submission

CannotOnly cash

except for atake more few

than order

Performance Management

RED Strategy – Right Execution Daily

Tool to measure the performance of the distributor in the outlet by setting some standard or parameter of execution.

RED

Check Visi-Cooler Management

Availability of the product in the outlet

Check the activation in the outlet

Market Developer checks 25 outlets a day and report to HCCBL on the score of 100.

Margins

Margins per crate (comprising 24 bottles of 300 ml each) is Rs 20.

On the 200 ml pack size, margin is Rs 16 per crate.

Sales of the more affordable 200 ml pack size account for about 60 per cent of its total carbonated soft drink (CSD) sales.

Non-CSD business accounts for 15 per cent.

Outsourced distribution so that trucks and other equipment needed for the purpose are no longer owned by the company.

Financials

Coco-Cola

Profit Margin

a) To distributors 1-1.5%b) To retailers 2-3%

Advance payment

a) to company 1,00,000b) for refrigerators 5,000

Credit terms and policies

i) Credit amounta)Company to distributor N/Ab)Distributor to retailer Can provide.

ii) Credit period One month(for retailers)

Learning’s

The real time order processing system through use of technology helps reduce the lead time

24hrs working i.e. the loading cases in the night saves valuable time

RecommendationsPre-sellers shouldn’t be looked at as an extra cost. On the contrary, since their

inception sales have risen

Order devices at Diamond outlets can facilitate quicker order placement

thank you