Study on Dabur India Limited
Operating Arena Portfolio: Dabur operates in diverse FMCG
categories. The company has been segregated under different
divisions as per the nature of the products they handle. Family
Products Division (FPD) Health Care Products Division (HCPD) Dabur
Foods Dabur Auyurvedic Specialties limited (DASL)
Pharmaceuticals
Products that fall under the various divisions are as follows:
FPD Shampoo (Vatika Heena, Vatika anti dandruff) Hair Oil (Amla,
Jasmine, Vatika, Anmol) Oral Care (lal dant manjan, Binaca brush,
B.T. Powder) Dabur Honey Rose Water (Gulbari) HPCD Dabur
Chywanaprash Pudina Hara Hajmola (Pills, Candy) FOODS Fruit juice
(Real, Real Activ) Lemon juice (Lemoneez) Grounded Pastes
(Hommade)
DASL deals with all the ayurvedic products of the company Dabur
pharmaceuticals looks after OTC products. Segments they are in :
Dabur deals in many product categories and each category deals in
separate segments of the economy. Dabur Foods division has products
mostly for the upper class and upper middle class economy segments.
Similarly the Vatika range of shampoos and hair oil are also
targeted at this segment. Hair oils like Dabur Amla and Anmol are
for the middle class and lower middle class of the economy. The
biggest brands of Dabur i.e. Dabur Chywanprash, Pudin Hara, Hajmola
Tablets and Dabur Honey are the companies cash cows, these products
have been attractively priced and are consumed by a range of
customers from Upper Class to lower middle class segments of the
economy.
ITC Ltd. Kolkata
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Supply Chain Logistics Stock Flow - Model they operate on
between the Factory to the Outlet:
Factory
Mother Warehouse
C&F In Lucknow
Stockist
Super Stockist
Wholesale
DSSub-Stockist
Retail
Wholesale
DS
Retail ITC Ltd. Kolkata 2
Factory to Mother Warehouse: The goods flow from the factory to
the mother warehouse, which is company owned with its own
employees. The factory is situated at Ghaziabad and the mother
warehouse is located at Ghaziabad and varansi. Mother Warehouse to
C & F Agent: The stock in Lucknow C & F is received from
the mother warehouse at varansi. The frequency of shipment is
weekly. Physical Movement Road / Rail : All the stock movement that
takes place between the Factory to the retailer is by road and
means of transportation are Trucks from Factory to C & F to
Stockist/Super Stockist. Further ahead the stock is usually moved
in Vans/ Tempos etc. C & F to Stockist/ Super stockist The
distinction between the super stockist and stockist here is that
the former is for the rural markets i.e. below 20,000 population
and the stockist is for the urban markets. The stockist of Dabur
studied at Kanpur M/S U.V. Trading is both a stockist for specific
markets of the city and a Super Stockist for rural markets near
Kanpur. Stockist to Retailer In the urban markets the stock
movement from the stockist to the retailer happens through two
channels: The WD direct salesmen which service specified outlets on
a predetermined route plan. The Wholesalers who buy from the
stockist and sell in the retail.
In the rural markets there is another trade member in the
channel the substockist, super stockist who is based out of an
urban location handles a group of sub-stockist present in different
rural markets to whom he supplies the stock. The sub-stockist
further distributes the goods to the wholesalers and retailers in
the markets through his salesmen and Dabur employees called as
Interim Sales Representative (ISR) or pilot salesmen.
ITC Ltd. Kolkata
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Frequency of shipment The frequency of shipment is once a week
from the C & F agent to the Stockist / Super Stockist. The
stockist however maintains that a flexible ordering system is
followed and he can procure additional stocks (provided its a truck
load) by informing two days in advance.. Inventory they Hold at the
various levels: The C &F agent is supposed to maintain a stock
of 7 days at his godown as per the company norms. For the Stockist,
Super Stockist it is 21 days. The inventory levels as per company
norms for SWDs is 20 days but this increases to 60 days also during
the peak seasons. For retailers it is 15 days. Cash Flow Mode of
Payment from the Stockist/ Super Stockist to C&F or Company
Payment terms for the same The C & F agent maintains 20-25 pre
dated blank cheques from the stockist/super stockist. When the
order is placed the invoice is made and goods are shipped, after 10
days of invoicing the goods the C & F agent presents the cheque
to the bank. It was mentioned by the sales Officer that some of the
stockists make payments through a Demand draft for which they get a
1.5 % discount on the invoice price. Security deposit maintained by
the company Currently Dabur doesnt have any security deposit model.
Distribution Strategy Focus on active or passive distribution: For
the city of Kanpur there are 4 Dabur stockists dealing in FPD and
HPCD division. For other divisions Dabur has separate stockist. Of
the 4 stockist one of them is also a super stockist. Two stockist
cater entirely to the wholesale market in Kanpur and the other two
have both retail and SWDs. As per the SO of Dabur Mr Alok Gupta the
turnovers from different channels are as follows:-
ITC Ltd. Kolkata
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Stockist
Turnover (Lakhs) HCPD 3 20 15 6 FPD 12 40 35 19
No. Retail Outlets 900 1000 -
of SWDs
Turnovers Total as Super Turnover Stockist 15 30 60 60 25
U.V Trading MLKK LB Agency Shree ganesh
80 28 51
The Total Turnover of dabur in the Kanpur City is 1.6 crores and
in Rural it is 15 lakhs. Kanpur city has an estimated 4500 retail
outlets which means that the Market Throuughput of Dabur is around
42%. The super stockist at Dabur is servicing 22 rural markets at
present thus having at total of 22 sub stockist. Distribution
mechanism Dabur as mentioned earlier has different divisions and
their stockist have FPD and HCPD division under them. For each
division there is a basket of goods they offer and thus they have
separate salesman representing those divisions of Dabur in the
retail and wholesale. Classification of trade channel & how is
it used The trade channel is common till the C & F agent point
after which they have a separate channel for the Urban and Rural
market. Rural markets as per company norms are those having
population below 20,000. These markets are serviced by Super
Stockist who in turn pass the stocks to a sub-stockist present in
each rural market, therefore a super stockist has collection of
rural markets been serviced by sub-stockist. These sub-stockist
further distribute the stocks to the retail and wholesale channel
through there salesmen. For urban markets there are stockist who
services the retailers and wholesalers through the salesmen.
ITC Ltd. Kolkata
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Classification of Outlets & how is it used There are two
kinds of classification that Dabur does for its outlets the first
is based on Value of stocks they buy from the salesman per visit
and the second is the classification based upon the kind products
it keeps. As per the Value of stocks it buys from the salesman per
visit the outlets are of 3 categories. i. ii. iii. Class A: These
are outlets which buys stocks worth of Rs 1000/- or more on each
visit of the salesman. Class B: These outlets but stocks between Rs
500/- to Rs 1000/- per visit. Class C: These outlets buy stocks
below Rs 500/- per visit.
The second classification is in the based on the kind of
products it sells i. ii. iii. iv. General Store (GS) Provisional
Store (PS) Departmental store (DS) Chemist (C) Confectionary (CF)
Others (OTH): These are pan shops, STD booths etc.
v.vi.
The classification of outlets is basically used for giving
higher discounts to the outlets that buy more. The Display cycles
that come are also as per the outlet classification for example a
Class A or B Chemist store will be chosen for putting up the
Display of Dabur Baby Oil. Even the payment for similar displays is
different for different classes of outlets. Ready Stock / Order
Booking The company has a system of Order booking wherein the
salesman bring the order from the outlets and the next day a bajaj
auto goes and delivers the stock on the route of 2-3 salesmen as
per a route plan. Frequency of supply Both the retail and wholesale
channel is serviced once a week by the Dabur salesmen but on a
visit with the Dabur salesman it was found out that almost all the
retailers also buy Dabur products from the wholesale channel on a
monthly or fortnightly basis. Reason cited was that some products
are cheaper in the wholesale as compared to the stockist. It is
mainly because Dabur keeps coming with quantity purchase schemes
and cash discounts on different products which the wholesalers use
for buying in bulk and then keep selling the stock cheap after the
scheme has stopped. Frequency of visit of Company official to
stockist/Trade. Dabur has Sales Officers (SO) who are basically
look after the urban markets and has to visit the route of each
salesman atleast once in a month.
ITC Ltd. Kolkata
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Pricing and Trade margins ROI to the Distributor The ROIs been
offered at by Dabur to its stockist and Super stockist are between
30-36% and for the Sub Stockist it is 24%. Effective trade margins
at various levels: The Margins are offered at the invoice price
across the trade channel are as follows:1) For the Urban Market
Stockist 6% Wholesale Retailer 3% 10%
2) For the Rural Market Super Stockist Sub Stockist Wholesaler
Retailer 3.26% 4% 3% 10%
The C & F agent do not get any margins on the stock they
handle but get handling charges per CFC that comes to there Godown.
The rates are as follows:For CFCs kept at the C & F godown for
1) 1 week: 0.20/- per CFC 2) 1 to 2 weeks: 0.40/- per CFC 3) Over 2
weeks: 0.50/- per CFC Pricing to key outlets, SWD channel and Key
accounts: Dabur doesnt have any special price structure for
different outlets or key accounts, however they offer cash discount
based upon the amount of goods brought by the outlet. Value of
Goods Brought Discount 1% 2%
1) Below Rs 500 2) Between Rs 501 to 2500 3) Rs 2501 and
above
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The Wholesaler gets a cash discount of 3%. Hence the wholesaler
is able to pass on a share of this discount to the end consumer,
resulting in lower prices for the retailers than the stockist
route. Credit terms prevailing along the entire Trade chain. As per
the SO of dabur the company gives a credit period of 10 days to the
Stockist, Which he can pass on to the trade. But the Stockist
usually give a credit of 14-21 days. The stockist also sometimes
reduce the discounts or scheme margins in order to extend credit.
Infrastructure No of Distributors in the area of Study Exclusive or
Multi Co There are four distributors in Kanpur for Daburs FPD and
HCPD division. All these distributors are Multi Co Distributors.
Dabur Foods, pharma and DASL have separate distributors.
Distribution Costs as a % of turnover The WD of Dabur claims that
his distribution costs are usually 1% of his turnover. A major
reason for lower costs are the fact that all Dabur Stockist are
Multi company distributors for companies with competitive or
complementary products. The Stockist M/S Madan Lal Kapil Kumar
studied for analyzing the distribution cost has also got the agency
of Agrotech Ltd. and Nestle India. Therefore a major cost of
redistribution is optimized. The Vans carries the stock of all the
companies from the WD point to retail. Distribution Costs 1) DS
salary : 3500 * 6= 21000/2) Supply Boy and Driver =4000/3) Petrol=
1500/4) Godown rent = 3000/5) Admin. Staff & other
overheads=3000/6) interest on investment of 3 tempos (1.5 lakhs)=
1000/Total Distribution Costs: 33500/Turnover: 60 lakhs
Distribution Cost as a % of Turnover= .56%
ITC Ltd. Kolkata
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Structure / Hierarchy / internal linkages of the field team The
structure of the sales team at Dabur is as follows: Zonal Sales
manager (ZSM) Regional Sales manager (RSM) Area Sales manager (ASM)
Area Sales executive (ASE) Senior Sales Officer (Sr. SO) Sales
Officer (SO) Interim Sales Representative (ISR) Dabur has SOs for
each division and each SO looks after 5 to 6 stockist. Under each
SO there are 1 to 2 ISRs for the rural markets. The Role of a SO
includes coordinating the stock flow between the factory to the
stockist, monitoring the salesmen and ISRs, enforce display
guidelines, scheme checking, providing market information and
information about competitor activity in the region. The Interim
Sales representative (ISR) is a company employee and is the
counterpart for SO in the rural or village market. ISR works with
the salesmen of the sub-stockist in the village markets. The
Salesmen has a profile of order capture, coverage, ensure
merchandise visibility and other related activities relating to
competition intelligence, influencing retailers and space
management.
ITC Ltd. Kolkata
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Compensation package of the field force and the dominant model
through which it is paid (Performance based incentive) The current
salaries been paid by Dabur stockist is around Rs. 3500/- per month
to its salesmen. This is a flat salary and the company doesnt
reimburse it. Dabur has got a system of incentives which are
brought out periodically. All the incentives that Dabur gives to
its employees are based on targets for the different products,
incentives are based on achieving targets of both 1) Volume of
sales 2) Value of sales Based upon the kind of schemes that are
coming in the next month and the sales trend of the past months the
SO sets targets for the stockist in the coming month which are
further broken down into targets for the salesmen based upon the
potential of their routes. The targets are set for both the volume
of the products SKU wise and the total value that is to be achieved
from all categories put together. Based upon these there are slabs
on which the DS earns incentives. The maximum incentive that a DS
can earn is around 1500/- in a month. FOCUS BRANDS Dabur has a
focus month for its slow moving brands, in this month special
activities are taken up to promote that brand which includes: i.
ii. iii. Attractive schemes (on purchase of 12 kgs of Hajmola candy
1 kg free) Special POSM Scratch Card for Retailers
The salesmen are given incentives on increasing coverage and
volumes, for example for Hajmola Candy the incentives were as
follows:i. Coverage: slabs were made for increasing coverage of
Candy on the present route of the salesmen. The norm was minimum
placement of 1kg candy at each outlet. % Increase a) 5% b) 10% c)
15% ii. Incentive Rs. 500/Rs. 750/Rs. 1200/-
Volumes: The next criteria for incentive is that of volumes,
each salesman is given a minimum target based on the potential of
his routes, on achieving above those targets there are slabs set as
follows:-
ITC Ltd. Kolkata
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% Volume Achieved a) 5% b) 10% c) 15%
Incentive Rs. 500/Rs.1000/Rs.1500/-
Based upon the coverage achieved and volume growth the salesman
gets a mean incentive of the two slabs he falls into. For example
if he has achieved 5% coverage but 15% Volume growth he gets Rs.
500+1500/2= Rs. 1000/- as incentive. COMPOSIT SERVICE INDEX In
order to increase its retail throughput Dabur has recently
introduced the concept of CSI. The aim of CSI is two prong 1) To
motivate the DS to perform better in the market 2) To appraise the
WD on his yearly performance. This has been introduced in the month
of august itself. As per it each DS is given a CSI DAYWISE SALES
REGISTER (see appendix) to fill up. Based upon his market working
the following parameters are calculated:1) Direct Coverage = No. of
O/Ls covered/No. of O/Ls norm 2) Effective Coverage = No. of O/Ls
billed/No. of O/Ls covered 3) Bill efficiency = No. of Bills made
in this month/ (No. of O/Ls covered * Frequency) 4)% Credit width=
No. of O/Ls credit given/No. of O/Ls to get credit as per norm 5)
Lines Sold in this month= No. of lines sold in this month/( No. of
Bills made in this month * Norm Per Outlet) The CSI is thus :
(1*2*3*4*5) * 100 Based upon this the CSI of each individual DS
comes based upon his scores there are slabs set and he will get an
incentive over and above his salary. The annual appraisal of the WD
is based upon a Consolidated CSI SALES REGISTER (see appendix) for
each month. The CSI scores are as follows 1) > 50: Model
Stockist 2) 40-50: Very Good 3) 30-40: Good 4) 20-30: Average
5)
