sdm project group 2

8/8/2019 SDM Project Group 2

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Comparing the Sales and

Distribution Structures of ITC and

PepsiCo

Group 2


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Contents

EXECUTIVE SUMMARY ................................ ................................ ................................ ....................... 3

SALES AND DISTRIBUTION: ITC ................................ ................................ ................................ ........... 4

COMPANY OVERVIEW ................................ ................................ ................................ .................... 4

SALES FORCE STRUCTURE ................................ ................................ ................................ .............. 5

SALES FORCE COMPENSATION AND INCENTIVES ................................ ................................ ............ 6

TRAINING................................ ................................ ................................ ................................ ....... 6

MEASURING SALES FORCE PRODUCTIVITY ................................ ................................ ..................... 8

TARGET SETTING ................................ ................................ ................................ ............................ 9

CHALLENGES IN MANAGING SALES TEAMS ................................ ................................ .................. 10

SALES BUDGETING ................................ ................................ ................................ ....................... 11

TERRITORY ALLOCATION ................................ ................................ ................................ .............. 14

CHANNEL CONFLICTS ................................ ................................ ................................ ................... 15

SALES AND DISTRIBUTION: PEPSICO INDIA HOLDING PVT. LTD. - FRITOLAY DIVISION ....................... 16

COMPANY OVERVIEW ................................ ................................ ................................ .................. 16

SALES FORCE STRUCTURE ................................ ................................ ................................ ............ 17

SALES FORCE COMPENSATION AND INCENTIVES ................................ ................................ .......... 18

TRAINING................................ ................................ ................................ ................................ ..... 18

MEASURING SALES FORCE PRODUCTIVITY ................................ ................................ ................... 20

TARGET SETTING ................................ ................................ ................................ .......................... 20

CHALLENGES IN MANAGING SALES TEAMS ................................ ................................ .................. 20

SALES BUDGETING ................................ ................................ ................................ ....................... 20

TERRITORY ALLOCATION ................................ ................................ ................................ .............. 21

CHANNEL CONFLICTS ................................ ................................ ................................ ................... 21

COMPARISON ITC AND PEPSICO ................................ ................................ ................................ ...... 22

CONCLUSION ................................ ................................ ................................ ................................ ... 23

APPENDIX ................................ ................................ ................................ ................................ ........ 24


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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 managers 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 SIFY Program which they use. That

gives them the sales forecasts. PepsiCo has the annual forecast divided into CE (CustomerExecutive) 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 OVERVIEWITC 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, Food 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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SAL

S F

STRUCTURE

The sales force structure is bei di ided i to t o categories, ITC employees and their

hierarchy and the distributor sales force.

The following is the hierarchy of ITC from Regional Sales Manager (RSM to AreaExecuti e (AE).

At the channel partner level, supervisors and direct sales personals are hired. This hiring is

done by the channel partner. (Indicated in Red)

Under each Area Executive there are 6-7 supervisors who in turn manage the Direct Sales

Officers (DSO). The DSOs are responsible for taking 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 weekly for NTD. Also, cigarette sales

happen on cash (no credit) and NTD sales happen on credit.

1 or 2, eachhandles 6-7supervisors

2 in each of the abovecategory

Cigarettes / Food/Personal Care

Cigarettes / Food/Personal Care

Responsible for adistrict(2-3 states, ITC Term) RegionalSales Manager

Branch Manager

Assistant Manager

Area Manager

Area Executive

Supervisor

Daily Sales Officer


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SA ES FORCECOMPENSATIONANDINCENTIVES

The sales force comprising of the Daily Sales Officers (DSOs) 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 DSOs 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

SKUs in the different outlets and incentives are accordingly determined.

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. 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

Executives, wherein the selling process is reiterated and problem solving done. The training

includes the following -


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ITC came up with a training program known as Kamal Ka Funda. The sales force was

encouraged to undergo the training and the concept of Kaun Karega Kamal wasused. ITC

tied incentives and rewards forthe sales force to undergo the training program and excelin it.

This would in the end help ITCin improving its sales.

Initial planningand preparation of the targets of the dayand the strengths and weaknesses of the beat to be visited

How to start the Day?

Includes exchange of friendly greetings with the retailowner,negotiation, pushing for new products, etc.

SellingProcedures

Checking the movement of stock placed earlier, feedbackofcustomer opinions, etc.

Stock Checking

Checkingavailability of the products indifferent SK 's, etc.

Availability

Comparing the visualdisplay to those ofcompetitors andensuring proper placement, placement ofbanners andposters, etc.

Visibility

Solvingany problem facedby the retailer, feedback,replenishment requirements, etc.

Freshness


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MEAS RING SA ES FORCEPRODUCTIVITY

Within ITC, the productivity of the sales force could be measured route wise,

product wise, or customer wise. Generally speaking, an objective way of measurement can

be done in two ways:

i. The lines per call or line productivity (i.e. number of product categories sold in anoutlet)

ii. The number of productive outlets or call productivity (i.e. outlets in which theretailers give order) per route of the salesperson

For example, figuring out answers to questions like How many outlets billed at least once in

a month? or What 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 to save

up on time and enhance the selling process further.

The DSOs use Palmtop based applications which are used in place of the order books to

collect the orders. The Palmtops are seamlessly integrated with the Local Distributors

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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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 dailybasis. Hence the advantages of having Sales Force Automation in ITCs 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 distributors

end at the end of each day. Besides, data mining softwares enable stocking and pricing

decisions while also predicting sales trends and responding to them quickly enough.

TARGET SETTING

ITC is a company which as such doesnt 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


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forecasting software which is a part of the SIFY Program which they use. That gives them

the sales forecasts. ITCs 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 among 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.

CHA ENGES INMANAGING SA ES 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 months sales performance, but inputs and 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. ITCs 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 force 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 palm-top based applications, the objective of which is to enhance sales

productivity. Other resources like car/travel allowance are also provided.


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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 all 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.

SA

ES BUDGETINGSales 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 Partner 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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TERRITORYA OCATION

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.

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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CHANNE CONF ICTS

One of the major issues that can impede a distribution network is channel 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 appraisal time for the channel partners

themselves.

One major reason behind channel conflicts, as mentioned by the AE, was (in his own words)

infiltration. 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 forany of the channel partners venturing into the others territory. However an instance was

narrated to us where the Sales Officer in refusing to visit a particular outlet (due to

ego - 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 between aggrieved

Channel Partner settled across a table by adopting a calm and patient approach.


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SALES AND DISTRIBUTION: PEPSICO

INDIA HOLDING PVT. LTD. - FRITOLAY

DIVISION

COMPANYOVERVIEW

Snacks market in India is divided into 2 main divisions:

y Salty Snacks (Potato chips, Kurkure, biscuits etc.)y Traditional (mixture, bhujia, moong dal etc.)

Fritolay deals in both the divisions. PepsiCos foods company, Frito-Lay, is the leader in the

branded salty snack market and all Frito Lay products are free of trans-fat and MSG. It

manufactures:

Lays Potato Chips, Cheetos extruded snacks, Uncle Chipps and traditional snacks under the

Kurkure and Lehar brands. The companys also has a high fibre breakfast cereal, Quaker

Oats.

PepsiCo is the market leader in snacks.

For a better understanding of the distribution process, we met PepsiCo Fritolay Area Sales

Manager for Orissa Mr. Koushal Kumar and Mr. Rajesh K. Padhi, CE, Bhubaneswar.

PepsiCoFritolayOrissa- SalientFeatures

The whole business has four routes to the customer:

1. Traditional Trade2. Modern Trade3. Institutional selling4. 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:

y Urbany LTC (Lower Town Class)- Rural and semi-urban

The rivals of Fritolay in Orissa market are


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y ITC snacksy Shivdeep/ Prakash food based out of Indore and other local players

SA ES 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:

The exclusive salesman are under the Distributor but work on the RSAs instructions during

emergency needs, it is unique to PepsiCo.

Zonal Sales Manage

For 3 s

a

es

Area Sales Manager(Foras

a

e

s

omer Executive

(Sameas S )

Sales Trainee

RSA

(Controls Distri utors)

Exclusive Salesman*

(Owned by Distributors)


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SA ES FORCECOMPENSATIONANDINCENTIVES

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.

The incentives are decided by the target achieved. The incentive is decided as and when the

target is set. For example

y For 100% target achieved in a monthy 50% target achieved in 15 daysy 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 SKUs. 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:

y Skill based trainingy Communication trainingy Leadership trainingy 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


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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 SA ! ES FORCEPRODUCTIVITY

The sales force productivity is measured by weekly review 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.

CHA ! ! ENGES INMANAGING SA ! ES 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.

SA ! ES 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 PepsiCo.


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TERRITORYA " " OCATION

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

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.

CHANNE " CONF " ICTS

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 ITC PEPSICO

Sales Force

Structure

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

Compensation

and Incentives

Incentive based on distance and

outlets coverred, no of bills made

and sales targets exceeded.

Incentives are also linked to

certain SKUs.

Training Kamal Ka Funda: ITC tied

incentives and rewards for the sales

force to undergo the training

program

First in India to introduce the

Training Card

Measuring Sales

Force

Productivity

1. Line Productivity

2. Call Productivity

3. Use of PalmTops

Weekly review meetings which

takes in account the amount of

Paperworkdone by the employee

over the week

Target Setting

and Sales

Budgeting

Happens at national level with

participation of all state level

managers and channel partners.

In TD no such explicit target

setting.

Set by ASM. Rest processes are

similar

Challenges inManaging Sales

Force

Keeping goals realistic and takinginto account both inputs and

seasonality before deciding on

targets.

Managing sales force becomes anissue during peak seasons when

Pepsico comes up with 2-3 new

flavours.

Territory

Allocation

Based on Geography and Sales

Volume. (District>Circle>Zone)

Based on Market Size.

(State>Circle>City>Zone)

Channel Conflict Infiltration between channel partner

zones.

Infiltration between traditional

and Non Traditional Trade

channels.


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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 companys 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 didnt 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

sdm project group 2

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