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Study of Distribution

Network of ITC

Shampoos

ITC HISTORY

Parent Company ITC Limited^ ITC Limited Category Sector Consumer Products, Hotels & ServicesPublic & Conglomerate Tagline/ Slogan^ 100 Inspiring years; 100 years 1 mission India first Founder

Henry Overton Wills on August 24, 1910(as Imperial Tobacco Company of India)

Segment Products and services for daily needs^ STP Target Group^ Every Indian household especially the middle class Positioning^ Enduring Value. For the Nation. For the Shareholder.

A Brief Overview

• (^) Rs. 2900 crore Shampoo Market in -^ IndiaOther Players : -^ Dabur, WiproMajor Players : HUL and P&G - (^) Growth of Industry : 15% pa - (^) FMCG Revenues: 12,955 cr. - (^) ITC : a Rs.18,000+ cr. turnover company - (^) ITC’s Share : 5% (despite being a very -^ late entrant)Rs. 145 cr. Revenue contribution through shampoos

Distributors of PCP in India

 (^) The total number of distributors in India of ITC is 5027 in PCP products.  (^) Some of the Major cities include the metro cities Nagpur, Ahmedabad, Kochi,

 Jaipur, HyderabadIn Mumbai it is divided into 3 regions^. etc  (^) Each region consists 6-8 distributors having a total 25 distributors.

Territory division in Mumbai

Mumbai divided into 3 sub cities : “City 1” , “City 2”, “City 3”^ Mumbai divided into 3 sub cities : “City 1” , “City 2”, “City 3”Every “City” consists of 4 regions A total of 12 regions^ Every “City” consists of 4 regions A total of 12 regions6-8 distributors per region : A total of 23 distributors^ 6-8 distributors per region : A total of 23 distributors

Distribution Channel Process

Distribution Channel

Production at Haridwar^33 rdrd^ Fee Based^ Fee Based^ Service ServiceParty WSPParty WSP (^) BhiwandiCFA at

Distribu tor

Customer^ End s^ Unorganiz ed Retail

Organized Retail

TOT on Case to Case Basis : Decided by Central Office Margin: Margin:Fixed^ Fixed 3.5% 3.5% Distributor pockets 3.5%

TOT on Case to Case Basis : Decided by Central Office Distributor pockets 3.5% 10% on 24% on Bottles Sachets

10% on 24% on Bottles Sachets

Company^ Company Freight Freight Rs.10 0

Rs.103. Rs.113. 85

Rs. 102 Rs.100 Rs. 95

Flow of Damaged Products

ITC^ ITC

Distribu^ Distribu tor tor Retail^ Retail er er Consu^ Consu mer mer

Only replacement of Damaged Products, No reimbursements Paid^ Only replacement of Damaged Products, No reimbursements Paid

Moving Back to ITC^ Moving Back to ITCDamaged Goods^ Damaged Goods

May Replace May Reimburse^ May Replace May Reimburse

Achieving Economies of

Scope

Cigaret tes^ Cigaret tes Food^ Food PCP^ PCP

Distributor Sales Team PCP^ Sales Team PCP

Sales Team^ Sales Team Food Food

Sales Team^ Sales Team Cigarettes Cigarettes

Single distributor for all 3 verticals Single Sales team for entire PCP: Soaps, Shampoos and Agarbattis

Sales tracking sheet

 (^) Sales persons use PDA to transfer information into the FORUM system. Database consolidation

 (^) Uses FORUM – IT system to monitor distribution^ happens every evening. activities, link distributors with company, track orders, etc  (^) The system helps to track inventory, determine reordering levels other than

about^ being a one-stop-shop for all the information salespersons and retailers

Linking “IT”  FORUM system

Selection of Distributors

 (^) Exclusivity of distributors is strictly maintained in ITC  (^) Company leverages its brand and high inherent demand of its products in the market to enforce  exclusivity on distributorsNot possible for smaller manufacturers to force exclusivity, as they don’t enjoy bargaining power with distributors Advantages  (^) No need to push products through distributors as

 they have access to only ITC productsSaves on extra margins company gives to distributors to lure them in ITC’s favor

Area Wise Strategy- Organised Retailers vs Unorganised Retailers Mumbai standard of living^ Areas with High Bottles of Fiama Di Wills and Vivel decided by company on the basis of no. of retail outlets of key^ Distributor margin A/Cs in the territory

standard of living^ Areas with low Sachets of Superia as the key product and Vivel selected Distribution margin is distributors fixed for all

Area selection according to Standard of Living SKU and key Products Profit Margin Superia^ Share of Sachet by^ revenue 80^ Share of Bottles by^ revenue 20 Vivel Fiama Di (^60 ) Wills^20