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Summer Internship Report
Company Name:
FieldFresh Foods Pvt. Ltd. (Del Monte), Bengaluru
Project Title:
Analysis & optimization of sales and distribution network, Brand promotion and Merchandising
By
Sai Krishna MPGDM-IB
Roll No.23
Under the guidance of
Mr. Y V Vijay Kumar Prof. Ramki Area Sales Manager Faculty FieldFresh Foods Pvt. Ltd. KJ Somaiya Institute of Management Bengaluru Studies and Research,
Mumbai
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K J Somaiya Institute of Management Studies & Research
Certificate from Summer Project Guides
We approve this Summer Project Report titled “Analysis & optimization of sales and distribution network, Brand promotion and Merchandising” as a certified study in management carried out and presented in a manner satisfactory to warrant its acceptance as a prerequisite for the award of Post Graduate Program in International Business for which it has been submitted. It is understood that by this approval we do not necessarily endorse or approve any statement made, opinion expressed or conclusion drawn therein but approve the Summer Project Report only for the purpose it is submitted.
Summer Project Report Examination Committee for evaluation of Summer Project Report
Name Signature
1. Faculty Examiner
2. PG Summer Project Co-coordinator
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Acknowledgement
On this opportunity I would like to extend my sincere thanks to my college, K.J Somaiya Institute of Management Studies and Research, Mumbai and to Field Fresh Foods Pvt. Ltd., for offering me a unique platform to earn exposure and garner knowledge in the field of sales and distribution of premium FMCG products. This project was a great learning experience and provided me an up close insight of how the sales & distribution, merchandizing and promotional activities are carried out. I am especially thankful to my guide Mr. Vijay Kumar for the kind support and guidance that he extended to me throughout the project.
I also want to convey my sincere thanks to my college faculty Prof Ramki, SIMSR who has been guiding me throughout the project. He was there to help me out at all possible situations.
Last but not the least I would like to express my profound gratitude and thanks to each and every employee of Field Fresh Foods Pvt. Ltd. who knowingly or unknowingly have contributed in their own ways to the successful completion of this project.
Sai Krishna M
PGDM(IB)-023
SIMSR, Mumbai
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ABSTRACT
The project was aimed at understanding and then analyzing the sales and distribution channel of Field Fresh Foods and the methods in which the company is currently carrying out promotional activities for their Del Monte range of products. Del Monte, an international conglomerate in food industry has recently entered the Indian market. While the market potential is huge, the competition is also fierce. Typical of the FMCG market almost all the major FMCG players wage a price war. Del Monte products are positioned as premium products. To reach the target segment and convince them of assured high quality which is the Del Monte promise is a challenging job. The sales and distribution network is the backbone of any FMCG company. In my project, I started off with the feasibility study of usage of perforated sheets as a promotional material in private vehicles. Following which I studied the sales and distribution model of Del Monte products in Bangalore city focusing on Modern Trade outlets which included stand alone super market outlets. I gave the feedback about how the present Distribution model is working and also gave suggestions for optimization of sales and distribution network. The issues with retailers and distributors regarding the products were reported to company. I was also looking after point-of-sale promotions of Del Monte products at the supermarkets that I was allotted.
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ContentsAcknowledgement…………………………………………….……………………………………………………………3
Abstract…………………………………………………………………………………………………………………………….4
Chapter 1 - Introduction
Topic………………………………………………………………………………………………………………………………….6
Objectives of Study……………………………………………………………………………………………………………6
Research Methodology……………………………………………………………………………………………………..7
Conclusion………………………………………………………………………………………………………..……7
Chapter 2 - About the Company and Industry
About the FMCG Market in India ..............................................................................…...8
About the Company .……………………………….……………………………………………….………………………14
About the products………………………………….………………………………………………………………………19
Chapter 3 -Theoretical Framework
Milk Run Model………………………………………………………………………………………………………………..22
Methods of Distribution……………………………………………………………………….………………………….23
Chapter 4- The Project
Feasibility Study…………………………………………………………………………………………….…………………25
Sales and distribution……………………………………………………………………………………………………….26
Modern Trade……………………………………………………………………………………………………………………27
General Trade…………………………………………………………………………………………………………………..30
General Issues with Product/Packaging and Other Issues……………………………………………….32
Recommendations…………………………………………………………………………………………………………….33
Visibility contract……………………………………………………………….………………………………………………35
Brand promotion………………………………………………………….……………………………………………………35
Chapter 5 - Summary………………………………………………………………………………………………………36
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Topic
The objective of my project was aimed at understanding the sales and distribution channel of Field Fresh Foods and how the company is carrying out promotional activities for Del Monte range of products the city of Bangalore. Del Monte is a recent player in the processed foods industry in India. While the market potential is huge, the competition is also fierce. Thje competition stems from the fierce price war amongst the players. Del Monte products are of premium category with emphasis on quality. To reach the target segment and convince them of assured high quality is a challenge the company has embarked upon. The sales and distribution network is the backbone of any FMCG company. In this project, I have studied the sales and distribution model of Del Monte products in Bangalore city. After the analysis of the distribution channel, I was asked to give feedback on how the present Distribution model is working and also provide suggestions for optimization of sales and distribution network. The issues with retailers and distributors regarding the products were reported to company. We also did market research for one of the promotional material, perforated sheet. We found out the reasons why it was not successful in Bangalore. While we promoted Del Monte products at all possible outlets, from small bakeries to big hypermarkets, my area of focus was on standalone Family malls which come under the purview of Modern Trade.
Objectives of Study
Understanding the sales and distribution network of Del Monte Give suggestions for optimization of sales and distribution network Carrying out promotional activities Merchandizing
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Research Methodology:
Primary research: All the data pertaining to the sales and distribution channels were collected as a part of daily field visits which were extensive and laborious. My daily field visits included visiting the distributor’s office and accompany the distributor’s salesman in studying the market.
Secondary research: Other data about the company like Sales figures, Advertisements and such have been collected through internet. Also the facts and figures about the FMCG Company have been collected through secondary research.
Conclusion
In my project, I was entrusted to study the sales and distribution channels of Del Monte products in Bangalore city especially focusing on the Modern Trade channel. I gave the company feedback on how the present Distribution model is working and also gave suggestions for optimization of sales and distribution network. The issues with retailers and distributors regarding the products were reported to company. We also did market research for one of the promotional material, perforated sheet. We found out the reasons why it was not successful in Bangalore.
Having learnt of the good response from the retailers whose customers praised the high quality of the products and it’s good taste, company is expecting to capture a huge market share. Presently the chunk of company’s profit is coming from Modern trade divisions which include big departmental stores and stand alone supermarkets. However the company is also banking upon the general trade channels to provide for a substantial share in the overall sales pie.
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About the FMCG Market in India
The Indian FMCG sector is the fourth largest sector in the economy and creates employment for
three million people in downstream activities. Within the FMCG sector, the Indian food
processing industry represented 6.3per cent of GDP and accounted for 13 percent of the
country's exports in 2003-04. A distinct feature of the FMCG industry is the presence of most
global players through their subsidiaries (HUL, P&G, Nestle), which ensures new product
launches in the Indian market from the parent's portfolio. Demand for FMCG products is set to
boom by almost 60 percent by 2007 and more than 100 per cent by 2015. This will be driven by
the rise in share of middle class from 67 per cent in2003 to 88 per cent in 2015.
The key characteristics features are a strong MNC presence, a well-established distribution
network, intense competition between the organized and unorganized segments and low
operational cost. Availability of key raw materials, cheaper labor costs and presence across the
entire value chain gives India a competitive advantage.
The FMCG market is set to treble from $11.6billion in 2003 to $33.4 billion in 2015. Penetration
level as well as per capita consumption in most product categories like jams, toothpaste, skin
care, hair wash, etc. in India is low indicating the untapped market potential. Burgeoning Indian
population, particularly the middle class and the rural segments, presents an opportunity to
makers of branded products to convert consumers to branded products. Growth is also likely to
come from consumer 'upgrading' in the matured product categories.
With 200 million people expected to shift to processed and packaged food by 2010, India needs
around $28 billion of investment in the food-processing industry.
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Government Policy
The Government has enacted policies aimed at attaining international competitiveness through
lifting of the quantitative restrictions, reduced excise duties, automatic foreign investment and
food laws resulting in an environment that fosters growth.
Completely export oriented units can be set up by government approval and use of foreign
brand names is now freely permitted.
Automatic investment approval (including foreign technology agreements within specified
norms), up to100 per cent foreign equity or 100 per cent for NRI and Overseas Corporate
Bodies(OCBs) investment, is allowed for most of the food processing sector except malted food,
alcoholic beverages and those reserved for small scale industries (SSI). 24per cent foreign
equity is permitted in the small-scale sector. Temporary approvals for imports for test
marketing can also be obtained from the Director General of Foreign Trade. The evolution of a
more liberal FDI policy environment in India is clearly supported by the successful operation of
some of the global majors like PepsiCo in India.
The Indian government has abolished licensing for almost all food and agro-processing
industries except for some items like alcohol, cane sugar, hydrogenated animal fats and oils
etc., and items reserved for the exclusive manufacture in the SSI sector.
Quantitative restrictions were removed in2001 and Union Budget 2004-05 further identified 85
items that would be taken out of the reserved list. This has resulted in a boom in the FMCG
market through market expansion and greater product opportunities.
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Central and State Initiatives
Various states governments like Himachal Pradesh, Uttaranchal and Jammu & Kashmir have
encouraged companies to set up manufacturing facilities in their regions through a package of
fiscal incentives.
Jammu and Kashmir offers incentives such as allotment of land at concessional rates, 100 per
cent subsidy on project reports and 30 per cent capital investment subsidy on fixed capital
investment upto $63,000. The Himachal Pradesh government offers sales tax and power
concessions, capital subsidies and other incentives for setting up a plant in its tax free zones.
Trends
The boom in various consumer categories, further, indicates a latent demand for various
product segments. For example, the upper end of very rich and a part of the consuming class
indicate small but rapidly growing segment for branded products. The middle segment, on the
other hand, indicates a large market for the mass end products. The BRICs report indicates that
India’s per capita disposable income, currently at $556 per annum, will rise to $1150 by 2015 -
another FMCG demand driver. The spurting the industrial and services sector growth is also
likely to boost the urban consumption demand.
An estimated double-digit growth over the next few years shows that the good times are likely
to continue.
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Growth Prospects
With the presence of 12.2% of the world population in the villages of India, the Indian rural
FMCG market is something no one can overlook. Increased focus on farm sector will boost rural
incomes, hence providing better growth prospects to the FMCG companies. Better
infrastructure facilities will improve their supply chain. FMCG sector is also likely to benefit
from growing demand in the market. Because of the low per capita consumption for almost all
the products in the country, FMCG companies have immense possibilities for growth.
If the companies are able to change the mindset of the consumers, i.e. if they are able to take
the consumers to branded products and offer new generation products, they would be able to
generate higher growth in the near future. It is expected that the rural income will rise in 2007,
boosting purchasing power in the countryside. However, the demand in urban areas would be
the key growth driver over the long term.
The increase in the urban population, along with increase in income levels and the availability
of new categories, would help the urban areas maintain their position in terms of consumption.
At present, urban India accounts for 66% of total FMCG consumption. However, rural India
accounts for more than 40% consumption in major FMCG categories such as personal care,
fabric care, and hot beverages. In urban areas, home and personal care category, including skin
care, household care and feminine hygiene, will keep growing at relatively attractive rates.
Within the foods segment, it is estimated that processed foods, bakery, and dairy are long-term
growth categories in both rural and urban areas.
Industry Analysis
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A. Key Success Factors:
a) Distribution-related KSFs:
A strong network of distributors
Efficient and responsive supply chain
Ability to secure favourable display space on retailer shelves
Robust relationship with retailers
b) Marketing-related KSFs:
Strong brand recall
Motivated Sales team well equipped with the product knowledge
Point of Sale advertising
Special offers and bulk buy deals for retailers
Attractive product packaging
c) Other types of KSFs:
High product quality standards
Product innovation capabilities with respect to new product launch and time to market
d) Industry’s Dominant Features:
Industry growth rate: The industry is growing at the CAGR of 9%.
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Number of rivals: In certain product categories, such as, ketchup and sauces, the
industry is dominated by a few large companies but overall it is fragmented into many
small and regional companies.
Number of buyers: Market demand is fragmented among several buyers across the
country and hence buyers do not enjoy much of bargaining power
Degree of product differentiation: Product of other companies is less differentiated
leading to heightened price competition.
Product Innovation: Development of new and differentiated products is important
B. Industry Driving Forces:
Booming modern retail
Increasing globalisation of industry leading to several foreign companies foraying into
India
Changes in consumer behaviour marked by increased health consciousness and
adoption of urban and outgoing lifestyle
Burgeoning middle class with increased purchasing power
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About the Company
FieldFresh Foods Pvt Ltd.:
An Indian business giant and a Philippine conglomerate have come together to create
FieldFresh Foods Pvt. Ltd.
FieldFresh Foods Pvt. Ltd., is a venture between Bharti Enterprises and Del Monte Pacific
Limited, to offer fresh and processed fruits and vegetables in the domestic as well as
international markets, including Europe and the Middle East.
Brand Del Monte has 118 years of rich international heritage during which it has been
synonymous with quality and taste. The brand originated in the US and is now available all
across the globe. The Del Monte range of branded processed food products includes Fruit
drinks, Ketchup & Sauces, Packaged Fruits and the Italian Range consisting of Pasta, Olive Oil
and Olives/Jalapenos and a Culinary range which is aimed at HORECA, Foodservices and QSR
industries.
Del Monte was brought to India in 2007 by a joint venture between Bharti Enterprises and Del
Monte Pacific Ltd. The JV is called FieldFresh Foods Pvt Ltd.
Bharti Enterprises is one of India's leading business groups with interests in telecom, agri
business, financial services, retail and manufacturing. Del Monte Pacific Ltd, headquartered in
Manila, Philippines, is engaged in the production, marketing, and distribution of Del Monte
products in the select Asian markets.
Del Monte Pacific also holds exclusive rights to produce and distribute food and beverage
products in the Indian subcontinent.
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The company will produce, market and distribute farm fresh products that address the needs of
today’s consumer. With a range of delicious and superior tasting products, FieldFresh Foods
Pvt. Ltd., looks forward to becoming one of the most trusted providers of premium quality fresh
farm products, processed foods and beverages.
With the synergy between Bharti’s dynamism and Del Monte’s heritage of over 100 years, the
company aims at becoming a leading player in the foods & beverages segment in India.
FieldFresh Foods Pvt Ltd besides offering Del Monte range of Food & Beverage products, also
sources and markets fresh produce for domestic as well as export markets. The company's
vision is to be the most trusted and innovative provider of branded fresh fruits, vegetables and
processed food products in India.
Bharti Enterprises:
India’s leading business group, Bharti Enterprises has interests in telecom, agri-business,
insurance & retail. With over 100 million customers, Bharti’s flagship unit, Airtel Ltd., is the
country’s leading private sector provider of telecommunication services.
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Del Monte Pacific Limited:
Based in Philippines, the company is engaged in the production, marketing, and distribution of
premium branded processed foods and beverages. Del Monte Pacific also holds exclusive rights
to produce and distribute food and beverage products in the Indian subcontinent.
Quality Excellence at FieldFresh
FieldFresh ensures best-in-class facilities, business practices and quality standards through
technological innovations, international quality management systems and food safety
initiatives. Our Quality Management System (QMS) operates on:
• Right First Time
• Zero Tolerance
These are achieved through critical interventions in processes wherever applicable, so that only top-class quality products reach the end consumers.To pave the way in farming practices, the company has complied with Global GAP guidelines not only in company managed farms but across all partner farms. The growing partners are spread across the following states:
• Punjab - Baby Corn, French Peas• Maharashtra - Sweet Corn & Baby Corn• Gujarat and Andhra Pradesh – Mangoes
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The state-of-the-art laboratory facilitates physical, chemical and microbiological analysis of the raw materials and packaging materials through the entire manufacturing cycle. Continuous focus on packaging development and innovative solutions has enabled FieldFresh to meet the superior packaging requirement of customers.
At FieldFresh, food safety and consumer health is the top most priority. This is clearly reflected in the manufacturing facility and packhouse being certified under:
• Food Safety Management Systems (FSMS) (ISO:22000:2005)• BRC – British Retail Consortium
Environment Health & Safety (EHS) is an integral part of FieldFresh business practices. Focus on EHS is driven through:
• Process Mapping• Regulatory and Food Safety Audits• Reviews of Certifications
The Technical team is also focused on critical processes and development for new initiatives on new products.
Certifications
The Good Agricultural Practices and QMS have enabled us to achieve highest levels of standards and certifications.
Exports
FieldFresh Foods has focused on building a robust Fresh Exports business model in vegetables-primarily Baby Corn and Sweet Corn. Some of the other greens exported are French Beans and Green Chillies. All farms, where both Baby Corn & Sweet Corn is grown are Global GAP certified farms.
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Agri Centre Of Excellence (ACE)
FieldFreshAgri Centre OF Excellence (ACE) at Ladhowal, Ludhiana, Punjab was inaugurated by Dr. Manmohan Singh, Honourable Prime Minister of India on 27 th September, 2006. ACE comprises of 300 acres of farming, developed for open and protected cultivation.
The activities that have gone into making ACE a centre of excellence are:
• Partner Farming• Farmer Training• Open Cultivation• Crop Development• 132 acres of Micro Irrigation• 42 acres of Spanish designed protected cultivation• Bell Peppers and Cherry Tomatoes grown in Glass Houses • Chilly Nursery in Green Houses • Cauliflowers in Net Houses• 24 x 7 technical support to the partner farmers
A state-of-the-art processing facility and pack-house has been set up with vegetable processing capacity of over 250 tons and a cold-storage capacity of 500 metric tons built over 7500 sq. metres. The facility takes pride in the following certifications:
• GLOBALGAP Certified Operations• ISO 22000 Certified Packhouse• BRC (British Retail Consortium) Certification for the Packhouse
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About the Products
The Del Monte product range includes:
Fruit drinks: Pineapple fruit drink with pulp, Pineapple Orange fruit drink, and Four
seasons fruit drink (Pineapple, Mango, Orange and Guava), Green Apple and Orange
Packaged fruits: Pineapple Slices, Pineapple Tidbits, Prunes, Mango Pulp(Sweetened),
Fiesta Fruit Cocktail and Peach Halves
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Corn: Regular and Sweet Corn
Ketchup & Sauces: Tomato Ketchup, Zingo & Twango Sauces
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Italian Range: Range of dry Pasta, table Olives and Olive Oil
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Theoretical Framework
Milk Run Model
Del Monte Distributors use “Milk Run” model for the distribution of their products. A milk run is typically a route in which a delivery van either delivers product from a single to multiple retailers or goes from multiple suppliers to a single retailer. In other words, a supplier delivers directly to multiple retail stores on a truck or a truck picks up deliveries for many suppliers of the same retail store.
The diagram below shows how a milk runs model of single supplier and many retailers work.
The company has divided their distribution channel into two parts General trade and modern trade. General trade consist of bakeries, small kirana stores, retail stores and medium size deartmental stores.It is a huge business and the fact that the mass of India still purchases their grocery items from local kirana stores. It becomes very important for the company to have a robust sales and distribution network in genearl trade. Whole of the city is divided into areas depending on the geographical location of dealers. The dealer has the responsibility of catering to demand whole area surrounding it.Their were 7 dealers and each dealer had 700 outlets in his area. Modern trade constitutes stand alone supermarkets, Hypermarkets and supermarkets which are a part of retail chain spread across the country. There are three distributors for modern trade. Milk run is helpful since in our case very frequent and small deliveries are
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needed on a regular basis and either a set of suppliers or a set of retailers is in geographic proximity. The dealer has around 700 outlets in his area and the delivery is divided on the basis of routes. Since all the stores are in geographical proximity and the deliveries are small this model is very successful.
Some of the salient features of Milk runs model are• Milk runs help to reduce the transportation costs by consolidating shipments to multiple
stores on a single truck.• Milk runs allow deliveries to multiple stores to be consolidated on a single truck,
resulting in a better utilization of the truck and somewhat lower costs.• The use of milk run is helpful if very frequent, small deliveries are needed on a regular
basis and either a set of suppliers or a set of retailers is in geographic proximity.• Helps to reduce the amount of inventory to be kept as a safety stock in the warehouses.
High degree of coordination and synchronization required among the members of supply chain
Methods of Distribution
Method 1Ready stock unit: In ready stock unit, the company appointed salesman, 1 driver and a helper from dealer go in a delivery van. They go to each store and according to the order that retailer places, it is immediately delivered. Delivery vans usually contain all the products in substantial quantity but if it is not avalaible at that moment the order is noted and delivered later. A receipt is made for the same and whole of the order is given on credit. Sometimes only driver and sales guy are there depending upon the distributor.
Method 2In the second method the salesman appointed from Del Monte takes order from stores which he visits on his motorcyle. He covers all the stores on a prticular route in a day. He gives the order list to dealer at the end of the day. The order list consists of products to be delivered, quantity and address of retailer. The next day the delivery van goes on the same the route and delivers the at the given address. The sales man on the other hand is on another route for the next day and this cycle continues.
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The Project
Feasibility of perforated sheet promotional material in Bangalore
Background:-
The Company Del Monte had launched perforated sheet with Del Monte brand printed on it as a promotional material which was a great success in Delhi. These perforated sheets basically acts like sun shield and to be put in the car rear windshield. The design of these sheets is such that while it blocks the incoming sun light, the visibility is not hampered. Such perforated sheets are already in use in buses where the large glass area provides for ample space to put these materials. The Company wanted to replicate the success of this promotional material in Bangalore too but it proved to be a failure, reasons for which we shall discuss below.
Task:-
The Company had asked us to analyse the reasons of failure and at the same time try to diffuse the promotional material in the market.
Action & Outcome:-
In this regard I interacted with car owners or drivers on whether they would be willing to use that sheet for their cars. The locations selected for such interaction were Parking lots in malls, and other commercial areas where there were plenty of cars. Invariably, all the people I spoke to, refused to this idea citing one of the following reasons:-
They already have a sun film on their car’s windows and windshield They are not comfortable in carrying a Company’s advertisement. They were asking for some incentive for sporting the promotional material. Car drivers refused to this saying they need to take prior permission from car owners. It doesn’t get as hot and sunny in Bangalore as it is in Delhi, which made the sun screen
seem less attractive even in summer. They were sceptical that visibility would be hampered.
It was also observed during the above interaction that most of the people I interacted with were not aware of the Del Monte brand but I made use of the opportunity to make them aware of the brand and its product offerings even if they were averse to idea of using perforated promotional material. This exercise instead turned out to be a face-to-face promotion and perforated sheets were just a platform to start-off the interaction. I also observed that such face-to-face promotion was very effective as people were not only made aware of the Brand but could also be educated on the Brand, its history and of course its product offerings but the downside was the very limited reach we had.
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Sales and distribution:
India's economy is projected to grow at a fast rate over the next few years. With increasing
purchasing power and a rising middle class, the fast moving consumer goods (FMCG) industry is
posed to grow dramatically. To leverage opportunities, FMCG manufacturers and retailers are
developing and implementing deliberate strategies for gaining market access. FMCG giants like
Unilever, Marico, P&G, Nestle etc are constantly improving and modernizing their sales and
distribution network removing their bottle necks.
Del Monte has developed a strong distribution channel in a short span of time. I would like to
throw some light on sales and distribution network of Del Monte. Bangalore is the head office
of South India Del Monte operations.
The company has divided the distribution channel into two parts
1. General Trade
2. Modern trade
Modern trade constitutes stand alone supermarkets and supermarkets which are a part of
retail chain spread across the country. General trade deals with bakery, retail stores and small
kirana stores.
General Trade Modern Trade0
102030405060708090
Sales
Sales
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MODERN TRADE (STAND-ALONE)
OVERVIEW
The Co. has three distributors that serve the standalone departments stores across Bangalore.
Most of these outlets are individually owned operate like mom-pop stores but in an organized
fashion. Each distributor covers 6 different routes each day from Monday through Saturday. I
was working under Ghouri and Co, a distributor who handled around 65 stores in Bangalore
South and Central.
Unlike General Trade where the outlets are located in a cluster, the outlets are sparsely located.
A Sales Man typically serves 7-10 stores in a day, whereby the orders are taken and the delivery
is made the following day.
Normally, the activities performed are as follows:-
Take a count of the existing stock and note down in the order book
Estimate the potential order.
Consult the purchase officer/ store manager/ category manager for final order
placement.
Delivery made by the distributor the following day.
Payment collected either by the distributor themselves or by the Co.’s Salesman.
Credit period usually ranges from 15-30 days.
Put up point of sale promotional material.
Most of the stores that fall under the Modern Trade- Stand Alone category have decentralized
purchasing system even if the no. of outlets of that particular Co. is in several. Since the stores
are serviced weekly, the quantity ordered aren’t huge and typically the stores doesn’t keep off
the shelve stock, what all they have is there on the shelves.
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At present modern Trade (including Retail chains) account for 85% of the sales. This is mainly
because the products that Del Monte has under its portfolio in India are premium and suit the
lifestyle of modern audiences who buy their groceries from modern retail outlets. The higher
purchasing power and brand awareness also helps in the sale of almost all the products. The
following products sell well at modern retail outlets:-
California prunes
Canned fruits
Italian range including olive, pastas etc.
Juices
Again this is an overall movement of goods because movement each product depends primarily
on the location of the store and its customer base.
DAY ROUTE OUTLETS COVERED
Monday Indira Nagar, Domlur 15
Tuesday Marathahalli, Whitefield 11
Wednesday Wilson Town, Frazer Town,
Hennur Main Road
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Thursday Kamanahalli, Banasawadi 14
Friday Ulsoor, Indira Nagar 12
Saturday Kasthuri Nagar, K R Puram 04
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Issues in Modern Trade – Stand Alone Super Markets
1. The single most important issue was the start time of the daily route. Ideally the distributor should open office by 9 AM which enables the sales representative to start his route by 9:30 but mostly there are delays either on distributor’s side or the salesman’s side. This results in a late start by the sales man. Most stores do not give orders beyond lunch hour, due to which there is an unnecessary rush on the salesman’s part to get to the stores and get their orders before lunch.
2. The products in demand in modern trade are different from that in general trade. In G.T (general trade) mostly ketchup and juices are sold while in Modern trade (M.T) Pastas, Prunes, Fruit cocktail and Sweet corn are also sold in good numbers. Salesmen in modern trade are not able to explain the ingredients or the taste of the products. This lack of precise knowledge creates confusion in minds of retailers and brings about a certain degree of hesitation while giving orders.
3. Salesman does not emphasize the placement of products in the store shelf. Even if they do it is impossible to keep a check on the activities of the other salesman who push their product up front.
4. Salesmen sometimes do not understand the importance of putting point of sale promotional material or do not understand the right application of such material.
5. Route planning is an important issue and sometimes one needs to travel 30 kms to service 4 stores. Such issues are unavoidable since the products are new and no market can be risked by ignoring.
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GENERAL TRADE
General trade consist of bakeries, small ‘kirana’ stores retail stores and medium size departmental stores. It is a huge business and the fact is that the majority of consumers in India still purchases their grocerry items from local kirana stores. It becomes very important for the company to hace a robust sales and distribution network in genearl trade.Whole of the city is divided into areas depending on the geographical location of dealers. The dealer has the responsibility of catering to demand whole area surrounding it.The dealer with whom I worked had 700 outlets in his area.Certain features assosciated with genearl trade are
Large no. of outlets under each dealer Outlets are located in clusters Sales man has to be vigilant about any new store opened Has to frequently visit even those stores who have not given orders earlier and inforn
them about new products
The sales guy has to insure two important parts1.Order booking2.Delivery
Now the company follows two types of distribution methods1.Ready Stock Unit2.Order booking and delivery next day
1)Ready stock unit :In ready stock unit,the company appointed salesman,1 driver and a helper from dealer go in a ready unit.They go to each store and whatever the order that retailer places is immidiately delivered.Delivery van usually contains all the variety of products in substantial quantity but if it is not avalaible at that moment the order is noted and delivered later.A receipt is made and whole of the order is given on credit.Sometimes only driver and sales guy are there depending upon the wishes of dealer
2)In the second method the salesguy appointed from Del Monte takes order on his bike.He covers all the stores on a prticular route in a day.He gives the order list to dealer at the end of the day.The list consists of products to be delivered,quantity and address of retalier.The next day the delivery van goes to the route and gives delivery to the given address.the sales man on the other hand is on another route.This cycle continues.
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The delivery van also carries promotional posters,danglers banners etc.The dealer is given promotional products in adequate number and the sales person is told to put posters on all the outlets in that articular route.
Responsibility of sales man include He is the link between the company and dealer He persuades the retailer to try company products He informs the retailer about new schemes If it is not a ready stock unit he collects money back from retailer and give it to dealer He acts as a link between C&F(carry and forward) agent and dealer He puts posters,danglers and other promotional stuffs at appropriate place around retail
shop Adds new retail stores under the retail
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GENERAL ISSUES WITH PRODUCT/ PACKAGING & OTHERS:-
Originally the fruit juices had a paper wrapping which often got spoiled due to
condensation of water when refrigerated. This also sometimes resulted in rust on really
old packs. However, the present stock of cans come printed directly which leads to
better external appearance and makes it less prone to rust.
As the Del Monte is a new brand in India they don’t enjoy much of bargaining power
while negotiating with retailers. Hence, distributors generally sells the products on
consignment basis i.e. the retailers only make payment to the distributor only once the
entire stock gets sold and at times retailers used to return the stock complaining that
they are very slow moving items and make no payments. All this leads to delayed
payments or at times no collection making the distributor sceptical of the Del Monte
especially when compared to other well established brands.
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RECOMMENDATIONS
Having worked primarily with Modern Trade, The recommendations I gave to the company
were primarily aimed at optimization of the modern trade distribution channel. However,
certain ideas can be successfully implemented in general trade as well.
1. The Co. should stress upon the dealers to start their day as early as possible, ideally 9
AM. This would ensure that the sales men have ample time to obtain their orders.
2. A well planned route map would considerably enhance the efficiency of the salesmen,
and ensure that orders are evenly placed throughout the week.
3. The reimbursement for the sales man should be performance based. Break up the salary
into fixed pay and variable pay. Give the petrol allowance also variable. The benefit of
this would be greater motivation for the salesmen to perform and deliver results.
4. Special training to be imparted to salemen to enable them to perform better-
In convincing the new as well existing retailers to buy more and more of Del Monte
products across range.
Exhaustive knowledge of the Del Monte brand and its products should be given to
them. They should be shown a ppt. on that in their regional language. This
knowledge will in-turn enables them to explain to retailers on the product’s USP.
Sales men should be given thorough knowledge of competitors’ product as most of
the questions they faced revolved around this only.
The Company should give tasting samples of the items to the sales men, so they
themselves understand the product and can more confidently pitch the products to
the retailers.
5. The Sales Officer should at random go on rounds with the sales men to monitor the field
activities and also talk to retailers about the issues they are facing, if any and should
update them on the company plans and new launches. This will improves the Co.’s
image in the mind of retailers and also the SO will know the prevailing issues and the
proficiency of the sales men.
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6. Sales men should also be asked and encourage to visit new stores and there should be a
target with respect to appointment of new retailers as buyers. Though this is not very
viable in modern trade as there are limited stores, this holds good for general trade.
7. Build strong relation with retailers and build confidence in him through various methods
like promotional tours, extensive sampling etc. This is crucial since the company is new
and the products are just increasing their presence. The company should also inform
him about ongoing promotions and running TVCs and give them an update about the
latest developments like soon to be operational Hosur factory which would help in
fostering retailers’ confidence in the company.
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Brand Promotion Activity
Visibility Contract:In modern trade as well as General trade, the company had brand promotional activity known as visibility contract. As per the contract, retailers were supposed have certain kind of display shelf provided by the company in their store. Depending on the store type this shelf contained different products. In a Supermarket, it ideally had the entire product range while ion smaller ‘kirana’ stores, the display shelf had only ketchups and juices. This method has proven to be quite beneficial for the company. However, after the initial period, the company has removed these shelves from stores where there is no perceptible change in sales even after the display.
Brand promotionFor any new entrant in the market, this is the most important aspect. The brand promotion is done with topmost priority by all the companies. Del Monte is no different from those. They rolled out their T.V advertisements in the month of April and they were aired on all T.V channels. (H.B.O, Star Plus, U.T.V, Sony etc.)Apart from TV, Internet and newspaper commercials, proper promotion at the point of purchase is very important.
For this the sales representative plays a very important part. Company gives each sales man a lot of merchandising to put it on its daily route. The company has Posters, Banners, Danglers hangers etc for this. The package containing all the merchandised material is kept with dealer. This material is kept in ready stock unit and as they go along the route Sales man and the helper from dealer put it at different bakeries, Retail outlets etc.
For the effective promotion there are some things to be kept in mind.
1. Proper training has to be given to Sales representative for placing promotional material at right place for maximum visibility.
2. According to the research done by company, the life of a poster is average 2 hours. So placing it in such a way 2 enhance its life to maximum should be the aim.
3. Retailer should be told about new promotional activities such as visibility contract.4. Sales man should ensure that the products are properly displayed at stores. In
hypermarkets sales man has to ensure that products are put at top of shelves.
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Summary
This project was aimed at understanding the sales and distribution channel of Field Fresh Foods and how the company is carrying out promotional activities for Del Monte range of products. Currently the majority of sales come from Modern Trade. However with the increase in awareness and the company’s investment in promotional activities, the company is expecting greater returns from general trade in terms of greater sales share. The company is also facing issues in retaining dealers but with the increasing sales, they believe this problem will be solved soon. Company is also involved in a lot of promotional activities and a trend statistic is being maintained now as to how strong have been the effect of promotional activities like merchandizing. wet sampling activity etc. Customers had given a feedback that they wanted to first try small quantity of these products before actually buying big volume. Thus Company has launched sachets and small bottles of all its variant of ketchups and they are planning to launch small tetra packs of juices. This will be feasible once the production of these juices start in the company manufacturing unit coming up in Hosur, TN. Most importantly, the company having understood the importance of the salespeople in the overall growth of the company is taking efforts to properly train salesman and also retain them.
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