CHOCOLATES

Presented by:Group:1

NISHANT VARSHNEY -13

NISHANT KUMAR-22

HARSHITA JAIN-30

ANNA JAIN-51

MEGHA SINGH-53

HEENA VYAS-57

AAKASH MINOCHA-60

MAJOR PLAYERS

Cadbury with 54% market share and Nestle with 37%

DISTRIBUTION NETWORKFactory

Mother Warehouse

Depots

Distributor Warehouse

Retailers

Diamond Stores

Super Stockists

Retailers

Primary Sales

Secondary Sales

CHANNEL PARTNERS Factory

3 Factories at Malanpur, Thane, Induri. Responsible for production of different products

Mother-warehouse Exists at the Mumbai. Finished products from each of the factories are sent to this

warehouse from where there is direct dispatch to the depots.

Depots – Around 24 depots throughout the country with an average of one in each state. Responsible for dispatches to all the distributors or super stockists of that particular state.

Distributors and Super Stockists Points of primary sales Have their own sales people

Retailers Come in direct contact with the customers responsible for converting secondary sales to tertiary sales. More than 30 lakh retail stores being covered throughout the

country.

Intermediaries

CLASSIFICATION OF RETAIL OUTLETS

Based upon Coverage

Based on products being sold

Based on Size

A. BASED UPON COVERAGE

Coverage

Direct Indirect

DIRECT V/S INDIRECT Direct Retailers

Covered by the distributors or the super-stockists of the Company

Are visited directly by the representatives of the distributor.

Get benefits and are eligible for the schemes undertaken by the Company, including Cash Discounts (CD), as all the sales to them are on cash basis.

Indirect Retailers - Ones which are not on the coverage list of the distributor. - Catered by the wholesalers. - For the Base Business category the number of such outlets

is very low. But for Mass Market products the number is very high.

- Exist more in Class D and Class E places. - Benefit that these retail outlets get is that they do not need

to pay in cash always. Can also get sales in credit.

B. BASED ON PRODUCTS BEING SOLD

Groceries Confectionary Cosmetic Shops Department Stores Variety Stores Kitchenware Stores Plastic Products Shops Paan-wala

C. BASED ON SIZE

Size-based Classification

Diamond Stores

Normal Outlets

SELECTION OF CHANNEL MEMBERS

DISTRIBUTOR / SUPER STOCKISTSKey aspects to ponder while selecting for a

distributor

Market segment - the distributor must be familiar with your

target consumer and segment.

Changes during the product life cycle - different channels can

be exploited at different points in the PLC e.g. Foldaway

scooters are now available everywhere. Once they were sold

via a few specific stores.

Producer - distributor fit - Is there a match between their

polices, strategies, image, and yours? Look for 'synergy'.

Qualification assessment - Establishes the experience and

track record of your intermediary.

How much training and support will your distributor require?

DISTRIBUTOR / SUPER STOCKISTS

Analysis of the distributors & super stockist:Exclusive Partner – Cadbury India tries to look for

distributors that are exclusive to it. The Company officials feel that if that does not happen then the partner might not be in a position to do justice to Cadbury. But in small places, especially rural areas, it is not possible. So the super stockists appointed there are the ones that do not carry brands of competitors.

Proper Storing Capacity – After the worm infestation incident, the Company has made a point to go in for the partners that can provide proper hygienic storing to the product.

Well-defined Territory – The areas of the distributors are geographically well defined so that no clash of interests takes place.

RETAILERS Importance

Have a much stronger personal relationship with the consumer.

Hold several other brands and products. A consumer will expect to be exposed to many products.

Offer credit to the customer.Products and services are promoted

and merchandised by the retailer. Give the final selling to the product.

Products are stocked at different outlets depending upon: Type of store – This not only includes the type of

products being sold at the outlet but also the size of the store is kept in consideration. Based on this criterion it is decided as in what all products could be sold at the outlet.

Proper Infrastructure – Need to analyze the storing capability of the store. A store in Jodhpur cannot store chocolates if there is no provision for cooling.

Proper Storing Capabilities – Must have a safe and hygienic place to store the products. This clause is kept in mind considering the worm infestation issue.

As far as the selecting criterion is concerned for the diamond outlets, no condition is laid because at all these stores the bare minimum requirements are automatically met in the process of giving better ambience to the customers.

MOTIVATION Monetary – Margins / Profits Visi-coolers – Retail outlets are given Cadbury visi- coolers to stock the chocolates. Available to the shopkeepers on various schemes and agreements like EMI, cost-sharing. Discounts – At different times of the year, the Company gives discounts to the outlets on purchase. Retailers get Cash Discounts of around 2% for cash sales. Competitions – Various contests are run for the retailers in for decorating the shop with the banners, hangers or other below-the-line promotions. The Company gets exposure for its products and an opportunity to satisfy the retailers. Re-purchase – Expired or spoiled goods, by no fault of the partner, there is a provision to replace the goods. This value proposition has been introduced by the Company only after the incident of worm infestation as a part of Project Vishwas. This is yet another way of establishing trust among the intermediaries.

MONETARY

Channel Intermediary Margin

Distributor / Super Stockist 5-6%

Retail Outlet 10-12%

Diamond Outlet 12-13%

CHANNEL CONFLICT At best, channel conflict can result in tension among

trading partners. At worst, retailers, wholesalers, and even the internal

sales force can retaliate, using such tactics as:Reducing the manufacturer's retail shelf spaceDecreasing marketing support for the manufacturer's

productsProviding additional shelf space or marketing

support for a competing brandPromoting the retailer's or wholesaler's own private-

label brandDropping the manufacturer's product line

CONFLICTSNo major conflict in Cadbury India Lack of multi-channel in case of the Indian

subsidiaryNo sales through electronic means in India Minor tussle exists between the two retail types.

Organized v/s Unorganized retail stores. Reasons

Benefits given to the organized stores in terms of better margins and bargaining power of these diamond stores.

RESOLVING CONFLICT Proper measures by compensating traditional

partners by providing benefits in the form of Visi-coolers Discounts Competitions & Rewards Re-purchase Cash Discounts

Cadbury has so far been very successful in striking the equilibrium and keeping the interests of both the types of partners.

FORMAL STRUCTURE INFORMAL STRUCTURE

Mother Godown

Respective C&F Agents

Distributors as per assigned

territories

Retailers in their respective territories

End Consumer

Wholesalers in their area.

Distribution Structure of Nestle

FACTORY

MOTHER GODOWN

C&S AGENTS C&S AGENTS C&S AGENTS

C.D C.D C.D

STOCKISTS

ST

OC

KS

AR

E C

OM

PA

NY

PR

OP

ER

TY

INVOICING AGAINST PAYMENT

Transfer Challan

Transfer D.A

Ow

nersh

ip

Transfe

r

Moga Factory

Sahibabad Mother Godown

By Rail By Road

Indore

Guwahati

Patna/ Calcutta

Hyderabad

Dire

ct b

y ra

il co

nta

iners

Delhi-UP borderTranshipment Godown

Direct Trucks

Mostly by Road :

Containers / trucks

C&S C&S C&S C&S

C.D. C.D. C.D. C.D. C.D. C.D. C.D.

By trucks

By Canters / Vns

Tran

sp

orta

tion

S

yste

m

SELECTION OF DISTRIBUTORS

Capital Investment Relevant Experience Infrastructure

INCENTIVE TO THE DISTRIBUTORS

Company

Distributor

Wholesalers

Retailer

Retailer

5.8%

11.5%

Flexible

Negotiable

NESTLÉ'S POLICIES FOR DISTRIBUTION Credit Policy

Nestle India Limited: The distributors are termed as Cash Distributors

because the company charges the distributors before the stock is delivered; the company has connected the distributor online and the transactions happen online. 

The Distributor: The distributor sells goods on credit; the period of

credit ranges from 1-2 week. The wholesaler allows discount of 1% on cash payment (policy followed by the wholesaler).

 

As per the company regulations the distributor is supposed to maintain a stock of 3 weeks; the distributor maintains a stock of 3 -3.5 weeks in monetary terms it equals to Rs. 30 lakh for the distributor.

STOCK POLICY

LEAD PERIODWholesaler:The lead periods in providing stocks to the dealers

differs from the SKU and quantity ordered; some SKU’s are delivered correspondingly with taking order but some are sent from the warehouses. A higher quantity ordered has to be replenished from the warehouse.

 Company: The stock from the company is provided every

month but company keeps replenishing stocks at the requests of the distributors. It takes 2 days for company to replenish stocks.

OTHERS…..Return PolicyThe company follows a policy of return when the product has past its

expiry date, damaged or has a defect; the replenishment is done with cash and happens at the end of every six months.

Return On InvestmentsThe company does not gives any guarantee to the distributor with regard

to returns on his investment which is in line with the market credentials of the company.

 Storage PolicyThe distributor maintains Cold Storages and Deep Freezers for the storage

of the products; the investment in infrastructure is considerable for the company to maintain such infrastructure.

 Sales ForceThe company does not have a policy to train the staff of the distributor,

the distributor trains his own sales force. The remuneration and all other expenses are borne by the distributor.

 Promotion PolicyThe company follows a policy for consumer promotions but as regard the

trade promotions they are scant rather negligible, the promotions put in extra pressure to push more quantity. The problem of maintenance of the promotional item is considerable and takes in huge energies and money.

CHANNEL CONFLICT

Sources of Channel ConflictWholesalers' Invasion by Sales Officer

MOTIVATION OF CHANNEL MEMBER

PROUD TO BE nestle

KC71V-822F-24F7-47B6-63AB