A Project Report

On

Distribution Channel

Of

Mahavir Straw Board Mills (P) ltd.

Submitted by:VIVEK MODI

(3049)MBA (2003-05)

NRIBM, AHMEDBAD

DATE OF SUBMISSION: 14TH JULY 2004

IN PARTIAL FULFILMENT OF M.B.A. PROGRAM

Acknowledgement

I am highly thankful to Mahavir Straw board

Mills Pvt. ltd. for granting me permission for summer

training in its esteemed organization.

I am highly grateful to Shri Anjani Taparia for

providing me proper guidelines, kind cooperation and

constructive criticism throughout my project.

I am also thankful to whole staff of Shri Mahavir

Strawboard Mills Pvt. Ltd. for their support and

coordination during the project.

I am highly obliged to all those who have helped

me directly or indirectly in successful completion of

this project.

Vivek Modi

Preface

As a part of our curriculum for MBA program we

are supposed to undertake industrial training for a

period of two months. In order to gain practical

knowledge as well as to access applicability of

different subjects we have studied throughout the

mba-1. This kind of training enables us to face the

real life situation of the market and allows better

insight to take the practical industrial problem.

I have undertaken this training at Shri Mahavir

Strawboard Mills Pvt. Ltd. The aim of the training is to

utilize the knowledge and fell about the marketing

management. It will increase our ability to perform

specific job systematically in a new way in industrial

environment when we will come out into the market.

We have done organizational study in which we

have gone through all the functional areas of the

organization. After this study we try to find out about

the organizational polices. I have also recommend

how the problems of the organizational can be

solved.

Content

General information

Introduction to marketing management.

Company profile.

Product profile

Hierarchy of marketing department.

Distribution channel network.

Selection and function of intermediaries.

Channel logistics.

Product life cycle and marketing strategy.

Competitive strategy.

Promotional strategy.

Human resource management

SWOT analysis.

Future plans.

Observations

Suggestions.

Conclusions.

Bibliography

General Information

Name of the company: Shri Mahavir Strawboard.

Registered office: 46, Strand Road, 3rd Floor,

Kolkatta-7

Branch Office: 187, Gali Batasan,

Chawadi Bazar,

Delhi.

C-1, 3rd floor,

Khadiya

Ahmedabad.

Location of plant: Power house road,

Mainpuri-205001

Auditor: S.M.Daga & Co.

Kolkatta.

Banker: Central Bank Of India.

Product of the company: Straw Board.

Sundry Straw Board.

Stiff board.

Cone board.

Strawboard Reel.

Philosophy: The company believes in

providing the quality

product with full customer

satisfaction and build

long-term relationship

with customers. The

company believes in no

compromises with quality.

Introduction To Marketing

Management

Marketing is the business function that

identifies customer’s need and wants determines

the target market the organization can serve the

best and designs appropriate products and

services and program to serve these markets.

However, marketing is much more than just an

isolated business function. It is a philosophy that

guides an entire organization. The goal of

marketing is to create customer satisfaction

profitability by building value-laden relationship

with important customer. Thus marketing calls

upon everyone in the organization to “think

customer.”

Many people see marketing only as

advertising or selling but real marketing dose not

involve the art of selling what you make so much

as knowing what to make. Organization gain

market leadership by understanding consumer

needs and finding solutions that delights

customers through superior value, quality, and

service. If customer value and satisfaction are

absent no amount of advertising or selling can

compensate.

People throughout the organization need to

know how to define and segment a market and

how to position themselves strongly by

developing need satisfying products and services

for chosen market segments. They must know

how to price the offering to make them attractive

and affordable and how to choose and manage

intermediaries to make their products available to

customers. The need to know how to advertise

and promote products so customer will know

about them and want to buy them. Clearly

marketer needs a broad range of skill in order to

sense, serve and satisfy customer’s need.

Emergence of anything comes form ideas and

these ideas need to be sold. Marketing executives

and managers can very well do this. Psychology

of end users and all supporting parties need to

be understood by marketing managers. In short

marketing revolves around the convincing power.

Marketing channel decisions are amongst the

most important decisions that management

faces. A company’s channel decisions directly

affect every other marketing decision. The

company’s pricing depends on whether it uses

mass merchandiser or high quality specialty

stores. The firm’s sale force and advertising

decision depends on how much persuasion

training and motivation the dealers need.

Whether a company develops or acquire certain

new products depend on how well those products

fit the abilities of its channel members.

Distribution channel can be well known as the

backbone of any manufacturing unit. In today’s

competitive environment where the products are

to be delivered where and when the customer

wants distribution channel is of strategic

importance. Thus to understand how actually a

distribution channel works along with its various

components can be very much beneficial to a

student.

Company Profile

Shri Mahavir Strawboard Mills Pvt. Ltd. was

established in the year 1964 and in all these

years it has grown to be one of the best company

in this field with cutting edge in technology, best

quality and best customer satisfaction.

The company was started as a private

limited concern and saw tremendous success in

the industry and is continuously running

profitably due to the expertise of its management

and the visionary power of its chairman. The

company has adapted with time and expanded its

business. The company has acquired subsidiaries

business and in diversfiying in rice processing

units. The company gets advantages as its uses

the waste by product of rice industry as its main

imputes in straw board industry. This makes the

company’s product cost effective and gives an

edge in the market.

Company renovates its machinery according

to the latest development in the technology. It

has a better chance to stay as a leader in the

market with its superior technology with its

established brand name in the market.

Product Profile

The basic and main product of this unit is

automatic straw board in both sheet and form

and reel form. This product was launched in the

year 1964 and since then every year the

company has undertaken tremendous effort in

enhancing the quality f the product. The company

has also renovated its plant and machinery

according to the demand of the market.

The other product of the company is stiff

board and cone board these products are not

manufactured on regular basis but as per the

demand in the market. They are mostly seasonal

in nature. The company also manages subsidiary

concern and has undertaken diversification

program.

The company produces its products as per

the customer specifications. The company has to

undertake production of different variety in order

to satisfy the different markets.

The company enjoys a widely recognize

brand name in the industry this is due to the long-

term existence of the company in the market.

And also strong technological backbone. That

helps the company to sustain in difficult times.

Hierarchy of the Marketing

Department

General manager

Area sales manager

Sales executive

Distributor agent

Distribution Channel Network

In today’s competitive world customer is the

king and always deserves the best. Each and

every activity of a company is directed towards

customers. it is the responsibility of the marketer

to delivery the products as when and where the

ultimate user wants. It is because of this reason

that the function of distribution of the products is

so much important and has acquire a position

amongst the 4 “P” s of marketing process.

Technically speaking the machinery through

which the product is reached up to the final

consumer is called distribution channel.

Theoretically a distribution is a set of independent

organizations, involved in the process of making

the product available for use and consumption by

the final user. Marketing channel decisions are

amongst the most important decision that

management faces. Distribution channel can be

of two types.

1. Conventional distribution system

2. Vertical distribution system

Shri Mahavir Strawboard Mills Pvt. Ltd. has

adopted the conventional marketing system

that may be because of the reason that such a

form the owner or producer has a better

independence and control over the system.

Channel network of Shri Mahavir Strawboard Mills

Pvt. Ltd.: -

Following diagram broadly explains the

structure of distribution channel of Shri Mahavir

Strawboard Mills Pvt. Ltd. The distribution channel

starts form manufacturing plant.

Factory Depots

Distributor

Wholesalers Retailer

Consumers

The market penetration and distribution

reach of the company complements the brand

promotion effort. The company has a network of

over 50 distributors all over the country and

thousands of retail outlets making the company’s

product available to each and every consumer.

The company’s efficient distribution network has

given it the ability to tap even the remotest

customer.

Effective distribution is critical for the

success of any brand in the strawboard market.

The company has to its credit a strong and

effective distribution network. Which has

achieved the highest reach and penetration of the

company’s product in the retail universe.

Generally form the factory the goods are

dispatched to depots, which are located sate wise

and are owned by the company itself. For the

depots the goods are sent tot he distributor and

wholesaler. The retailers can order to the

wholesaler and the wholesaler can directly sell to

the customer.

Selection & Function of

Intermediaries

Distributor:

They are exclusive company’s distributors.

The company enjoys full control over the

distributors. They company following exclusive

dealings and exclusive territories. The distributor

enjoys 5% return on investment on the

company’s product. If the company is going to

launch a new product the company goes for the

exclusive distributorship for the entire range of

products. This is because the company feels that

the old distributor may not have interest in

having a range in their product portfolio. As it is a

new product it may not fetch sufficient return.

Thus they may not exert much effort and interest

in promoting the products. The distributors are

directly responsible to the company with regard

to the variation in their sales volume. As a

precautionary measure the company takes

sufficient care and effort at the time of

appointment of distributors. Generally there are

four major criteria which are taken into

consideration.

They are-

1. Financial stability:-

Distributor has to give fixed deposit to the

company as a security amount. Company also

has right to seek and scrutinize information about

the financial position in the past business.

Company appointed field force to maintain

regular and constant check on distributors. They

check monthly stock statement and these

monthly stock statements are forwarded tot he

company on regular interval. The company also

ensures that the distributors appointed are

capable enough to put further investment and

effort as and when needed vis-à-vis company’s

expansion policy or market fluctuations. It is

preferred that the distributors have offices in the

prime locality in the market and should have

sufficient space for inventory holding.

2. Goodwill in the market.

A sound goodwill happens to be a major

factor in developing business. So the company

takes care that the person appointed as a

distributor possess a sound reputation in the

market. The company also ensures that there are

no legal or criminal offense registered against the

distributor. They should not have any claims

pending against them.

3. Market know how

The distributor should be sufficient to judge

the market ups and downs. He should be capable

of forecasting the sale and future trends and also

competitors product launches. The should be able

to formulate a strategy the vis-à-vis to the

company strategy.

4. Other factors.

The person should be willing to be exclusive

company’s distributor. He has to sing exclusive

contract with the company and should be ready

for penalty in case of breach of contract. In

adverse cases if the distributor proves to be unfit

for the company it can either curtail its market

coverage or can with draw certain core products

form his product portfolio if necessary the

company can cancel his distributorship.

Wholesalers

Wholesalers are generally appointed by the

distributor and not by the company. Thus

company dose not have any sort of control over

wholesalers. They need not be exclusive

company’s wholesalers. They are legally bound to

the distributors and not the company. It is

preferred that the order is routed through the

distributors. Generally direct dealing is

discouraged unless the company has harmonious

relations with the wholesaler.

Retailers:-

The company has a very aggressive strategy

for the market penetration. Therefore the

company ask the distributors to go in for every

retailer through its sale force. The company

remains in contact with its wholesalers to know

the effect of incentives during promotional offers.

Channel logistics

In all marketing channels the product must

be moved in the right quantity at the time to a

right place in order to be delivered most

efficiently to the end user. For that management

of the flow of the goods and information form the

point of origin to the point of consumption.

Warehousing.

The finished goods are kept at the

company’s warehousing localities near its

manufacturing facility. When the company

receives the order form the distributor the

company’s dispatch department takes care of it

and deliver the goods to depots form the

warehouse, which then are routed to the

distributor.

Order processing.

Generally the method of the order

processing of the company is that it receives

order only by the distributors. The received order

is sent through dispatch department. After the

dispatch department verifies the company and

send goods to the distributor through the

convenient means of transport. Company charges

18 percent rate of interest on the value of goods

dispatch after a stipulated credit period specified

by the company form the date of delivery of

goods. The company transports its material

through road routes.

Inventory.

The company tries to minimize the inventory cost

of the company by delivering the goods as and

when required by the dist5ributors. Generally the

distributors as per the corporate policy of the

company keeps 15 days of inventory. Thus the

company dose not try to dump the products but

see that they are available as and when required.

If the distributor fails to maintain minimum

inventory then the company raise inquiry and ask

for possible explanation. The company uses cost

based pricing for its products. The company has

to its credit a strong and effective distribution

network which have achieved highest reach and

penetration of the company’s product in the retail

market.

Product Life Cycle & Marketing

Strategies

The company was started in the year 1964. It

has completed almost 40 years in this field and

has grown to be an industrial leader. First few of

its establishment company has enjoyed monopoly

in the market. Over the years the competition has

increased and the company has taken some

strategic moves to compete with the situation.

Under these strategic moves the company has

renovated its technology form time to time. At

present the company is using the most modern

technology available. The industry is still in its

growth stage and there are huge prospects for

future improvement in the demand. So the

company has undertaken the massive task of

increasing its customer base for expanding its

business. The company sets high targets and

achieves them

In future the company can adopt the

following strategies

To do more intensive sales efforts than it

presently does for which it will recruit more

sales people.

Also it should try to differentiate its products

from that of rival and increase its brand

awareness amongst the end user.

The company should communicate the

usefulness and uniqueness of its product it its

clients.

The company has big names like INDIAN Rayon

and BSNL and numerous other names in its

client list. The company sales force can use the

name of these clients to promote the

company’s name and image in the minds of

potential customer.

The company is having offices in the different

parts of the country. By proper coordination

and effective information form different places

the company can increase the volume of its

revenue.

To increase the sales the company can

motivates their present client by offering them

good package in terms of price, credit terms,

and create new uses for its existing products.

The company should enter into new market

segments.

Competitive Strategies

With the company’s constant efforts to

improve itself it has modernize plants and

machinery’s to stay ahead of competitors, and

move ahead of the competition it can follow the

following strategy.

New user:

To remain ahead of competition it should try

to widen its customer base as much as

possible. Higher number of customer will give

the company an additional strength in the case

of sudden emergence of competition. For this it

can penetrate the market segment or expand

the market geographically.

New uses:

It should try to increase the uses of the

existing products as well.

More usage:

It can offer competitive and lower price

products to its present client to motivate them

to use their products.

Promotional Strategy

To be successful a company needs a well-

organized marketing system. The sales

department of the company is very well

organized and effective in this matter. As the

advertising is not effective for these products the

company uses a wide variety of sales promotional

tools.

There is a specific objective behind every

sales promotion effort. Sales promotional

schemes are to be designed for the particular

purpose or occasion. The company dose not give

any direct incentives to the end user but it gives

incentives to the distributors and wholesalers who

pass these benefits to the end customers.

The company offers trial samples to the

distributors to give them to customers. the

company gives heavy discounts in off-seasons

and cash discounts to increase the liquidity of the

company. The company undertakes aggressive

sales promotional strategies to remain ahead of

its competitors in the market.

Human Resource Management

Recruitment and selection procedure.

1. Give the advertisement in the newspaper.

2. Collect bio-data.

3. Scrutinize the bio-data as per the

requirements.

4. Give an interview call to the scrutinized

candidates.

5. Take the interview and sometimes CEO of the

company also involves himself in the

recruitment process.

6. Select the suitable candidate, the company

selects suitable candidates on the basis of the

following criteria.

Educational qualification.

Communication ability

Aptitude

Attitude

Experience

Personality

Basically company selects candidate form

the external sources such as college campuses.

Competitors and other sources. This recruitment

procedure has the following advantages and

limitations.

Advantages

By this way company has the benefit of new

talents, new skills and new experiences.

Scope of resentment, heartburn and jealousies

can be avoided.

Limitations

Better motivation and increased moral

associatedness with promoting existing

employees is lost.

It is more costly than the internal recruitment.

Here chances of wrong candidate selection are

more.

Training

After selection procedure is over, the

selecte4d candidate is given training. Company is

providing practical or on job training to the newly

employed. Also some times the company

provides hands on training tot he employees. In

this training the trainer gives instruction to the

trainee about how to operate a particular system

and how to deal with adverse situation. Training

is an attempt to improve current or future

employee performance by changing the

employee’s attitude or increasing his or her skill

and knowledge. Generally the company gives

training to the staff immediately after the

selection.

Performance appraisal and employee

remuneration:

Basically in the company appraisal is done at

regular intervals. In this performance appraisal

following things on the basis of which the staff is

evaluated:

Quality: The degree to which the process or

result of carrying out an activity approaches

perfection, or is there other conforming to

some ideal way of performing the activity or

fulfilling the activity's intended purpose.

Quantity: The amount produced expresses in

monetary terms number of units or number of

completed activity cycles.

Punctuality:The degree to which an activity is

completed or a result produced at the earliest

time desirable form the stand points of both

coordinating with the outputs of others and of

maximizing the time available for the other

activities.

Cost effectiveness. The degree to which the

uses for the organization’s resources are

maximized in the sense of getting the highest

gain or reduction is loss form each unit or

instance of use of a resource.

Need for supervision:the degree to which a

performer promotes feelings of self-esteem

goodwill and cooperation among coworkers and

subordinates.

Remuneration:

Remuneration is paid on the basis of basic

salary plus the amount of sales made by them in

case of marketing executives. Whereas in the

case of regular workers and other staff the

remuneration includes basic salary plus overtime

sometimes awards are given to exceptional

performers on the job and in the market system.

Feedback system:

Each worker is required to fill up a form that

contains the details about a particular day’s work

performance. Company decides feedback and any

changes to be made in production processes on

the basis of these forms. Such forces not only

help in keeping a check over the activities but

also help the company to make adequate

changes in structure and processes.

Motivation:

As the company offers fair package of

remuneration and other benefits the commitment

of the staff remain high. Here we can say that the

following factor is the motivating factor for the

staff.

Recognition by the top management.

Work itself.

Responsibility defined.

Advancement and growth.

While other factor such as salary status

working condition interpersonal relation

supervision and company policies are at the

background for motivating the staff. Even

thought this factor doesn’t motivate the staff

but they are essential.

Leadership role

The company follows work oriented methods

of leadership style meaning the follow Blake and

Mounton model of leadership where production is

given more importance to the people. In some

situations company is overly concerned with

production to the exclusion of the employee

needs, means it is basically authoritarian style

leadership. They follow participative management

style in the matter that can affect the moral of

the employee.

Future Plans

The company pans to expand its

manufacturing capacity. The company also plans

to add new product to its product range. The

company is planning to manufacture duplex

board. This product has a large market share in

paper industry and is used in a number of

industries for packing products. The company

also plans to establish new plants for the

production of draw board in the near future.

Observations

After studying the company I have observed

that the company produces high quality goods

using the latest technology and strives for the

best in everything it do. It also treats its

employees very well and because of this there is

no union in the plant. The company undertakes

public welfare projects in the near by area. The

company is also running a charitable hospital for

he welfare of the public.

The company has progressed a lot in all these

years and I view that the future is bright.

Suggestion

I have the following suggestions for the

company:-

1. The quality of the product need to be

maintained and should keep on improving for

better customer satisfaction. Looking at the

strong technological base of the company

this dose not seem as a far fetch possibility.

2. The company should appoint creative people

in its workforce so that they will generate

ideas and new uses for the same product.

3. The management of the company is not fully

professionalized which hampers the growth

of the company in the international market.

4. The company should try to educate the

potential customer by arranging conference

and make them aware of the benefits of

quality products.

5. The company should try to expand its

international market, as there is a huge

scope for these products in the international

market.

Conclusion

After a detail study of this company I can

evaluate that the company is day to day

expanding industrial corporate. While it was

started at a very small scale no one can imagine

it in this large form. The company shows its

tremendous performance and potential as a

successful marketer. User of the product always

says that company’s product are the best value

for their money. When it entered the market as a

manufacturer of the straw board it product largely

connected on few users but as time passed the

market has expanded and the competition has

increased. The company has introduced a wide

variety of products, which shows the

characteristic of a successful marketer.

When we consider financial profit aspect of

the company we cannot say that profit increment

is only result of increment in sale or increment in

price. But it is more based on reduction of

production cost. The company has successfully

challenged and changed the conventions of the

paper board industry. The company not only

makes better product but also infuses the values

with affect perceived characteristics of the

internal customer oriented environment of the

organization. Following is the SWOT analysis of

the company.

SWOT Analysis

Strengths

1. The company is having rich experience of

the market.

2. The company is having a good reputation in

the market.

3. The company has good customer retention

ability.

4. The customers are fully satisfied with the

company’s product.

5. The company has high growth market

potential due to increase usage in textile

industry, book manufacturing and in packing

industry.

6. The cost of production of the company is

very low as compared to its rival.

7. Mass production and modern technology

gives the company a cutting edge over its

competitors.

8. Good export market is developing for the

company.

Weakness

1. Constant innovations and upgradation have

created a major challenge for the company.

2. Less flexibility in the production line.

3. Demand is more and the production of the

company is cannot be increased to meet the

rising demand.

4. During the recessionary period the company

has no choice. Value addition at the same

price or get out to the market.

5. The company distribution channel has still

not been able to tap the remotest consumer.

6. Transportation cost is a major constraint in

serving remote markets.

7. Infrastructure facility is not available which

hampers the production capability.

Opportunity:

1. The company has opportunity to grab the

market share in the present circumstances

where no major competitors are present.

2. The company has established the most

modern and well organized unit.

3. Few players in the market who produces the

same product.

4. The government is giving support to the

agro-based industries and as the company

procures its raw material forma agriculture

sector it gets benefits of government

incentives and subsidies.

5. Moreover the cost of procurement of raw

material is also low as agricultural by

byproduct is available in plenty.

6. Wide usage of the company’s product and its

applicability in the different fields gives a

high growth potential to the company.

Threats:

Threat indicate challenges posed by an

unfavorable trend and development that would

lead in the absence of defensive marketing

actions to deterioration in sales or profits. The

company has a threat in the following areas.

1. As the government policy changes the

increase in excise duty and taxes will affect

the company.

2. Other threat is the economic environment of

the country the recession prevails in the

market and this has hampered the growth of

the company.

3. New technology is to be procured form other

countries and the company has to spend a

lot of money for procuring the latest

technology.

4. Opening up of international market has

increased the threat of cheap imports

especially form China.

Bibliography

The following is the list of useful information

sources, which helped e to present this report and

to make it much more informative than it could

ever be.

Books

Principle of Marketing: Philip Kotler

Principles of Marketing: Gary Armstrong &

Philip Kotler