A Study on Distribution Channel of Britannia, ITC and Parle Biscuits in Bangalore

A Study on Distribution Channel of Britannia, ITC and Parle Biscuits in Bangalore Submitted towards partial fulfilment of completion of course on Sales and Distribution

Submitted by Students MBA 2012-14 Jain University

Under the guidance of Internal Guide: Prof. Mohan Kuruvilla Professor School of Business

Jain University School of Business Bangalore MAY 2013

Distribution Channel of Britannia History Type

Public

Founded

1892

Area Served

India

Key people Industry

Vinita Bali (MD) Prashant Vatkar (CEO) Food

Products

Biscuit, Cake, Rusk

Revenue

Rs. 5650 Crores

Parent Company

Wadia Group

Distribution Network Britannia is Bangalore based company situated in Britannia Garden, Vimana Pura Bangalore. To reach consumers at their nearest locations Britannia follows intensive distribution. Channels are different to cover the mass markets. They are as follows  For institutional trade such as in IRCTC, flights, and hotels etc the distribution channel is direct.

Company Depot

Hotels/flights

The direct marketing channel of Britannia is through tie ups with corporate canteen, kiosk, railway station and coffee day express.  Urban customers the distribution channel is

Company Depot

Wholesaler/Distributer

Retailer

Customers

 Rural Customers the distribution channel is

Company Depot Agent Wholesalers Wholesalers Retailers Customers

They use same channel to reach Kirana store and provision stores so that it will be available every point. The wholesaler gets the product for 80% of MRP and sells to retailer for 85% of MRP. Finally retailer sells to customer at 1.5-2% of profit margin after deducting all expenses. Distributors are selected on the basis of space for stock, financial viability and customer (retailer) database.

Distribution Channel of ITC Biscuits (Sunfeast) History Type

Public

Founded

1910

Area Served

India

Key people

Y C Deveshwar (Chairman)

Industry

FMCG, Service

Products

Biscuit, Cake, tobacco, Services

Revenue

Rs. 45102 Crores

Distribution Network Sunfeast has a manufacturing unit in Whitefield, Bangalore and products are distributed to all over Bangalore from there through distributors. It uses FIFO method to reduce wastage. The distribution objectives of Sunfeast is as follows    

Fast and effective sales ordering processes Availability Flexibility Quick reaction

To achieve above said objectives ITC has 2 plans  Beat plan for general stores  Route plan for modern trades Beat plan is where sales person visit a particular area on weekly basis and main outlets are visited twice a week. Sales person will cover 30to 40 stores daily. Route plan is where purchase orders is received and supply it on next day through transportation.

Distribution Channel They follow direct distribution to institutions such as hospitals, hotels and reach customers through their own hotels

Manufacturer

Hotels/flights/customers

To reach rural customers it use 3 level channel

Manufacturer Distributor

Wholesaler Retailer Customer

For urban customers ITC follows 2 level distribution channels where distributor will supply to retailers and retailer will sell it to customers.

Manufacturer

Distributor

Retailer

Customer

Distributors are selected on following basis  Intense Competition  Strict compliance standards  Space available The factors which motivates the distributor are as follows  Constant movement of biscuits from low sales area to high sales area.  The company collects all the expired Biscuits from market and destroys them.  Retailers must return expired or damaged products within time before the date of expire.  ITC provides their retailers with racks, fod’s, (face on display), standees and Glow shine board, etc to display the products.  ITC has hired merchandiser to promote Biscuits  The benefits received by the retailers depend upon their sales volume and also the location of their shops  Distributors are given cash or credit of 7 to 15 days.

Distribution Channel of Parle Biscuits History Type

Private

Founded

1928

Area Served

India

Key people

Mr. MOHANLAL DAYALJI (Founder) Mr. KANTILAL CHAUHAN (CMD) Food and Beverage

Industry

Parle opened its manufacturing unit at Bangalore in 2001. First started manufacturing KrackJack biscuit and after 2 years it started 2 more biscuits i.e. Parle G, and Hide & Seek. Distribution Network Parle has manufacturing unit in Bangalore (K.M.Stone, Tumkur Road) but it is closed its unit in Bangalore (Sept 29) because of labour strike and illegal activities. Now Parle has only one manufacturing unit in Karnataka i.e. in Hubli. It uses intensive distribution for its product available to customers. The distribution objectives are as follows  Increases coverage and sales  Increases product availability  Encourage retailers to compete aggressive. Channel levels Parle has a multi-channel marketing system since it uses more than two marketing channels to reach all its customer segments. They use direct distribution or 0 levels to those customers such as schools, hotels, flights etc. they have tie with these institutions.

Parle depots

Hotels/flights/customers Parley uses one level distribution channel to all departmental stores.

Parle Depot

Retailer

Customer Parley uses two level distribution channels to all Kirana and provisional stores. Parle Depot

Wholesaler/carry forward Agents

Retailer

Customer

Parley uses three level distribution channels for National and International coverage. For e.g. Parle's international operations consist of serving markets in the Middle East, Africa, South America, Sri Lanka, Australia and North America.

Parle Depot Agents Distributors Retailes Customers

Distributors are selected on following basis  Authentication is required by the regarding the identity of the channel members, which includes the name and address, photograph of the location.  Proof of solvency which requires name and address of the channel member’s bankers.  Safety of the inventory, which means that the distributor/ dealer should get the stock of the company insured.  Inventory or the perishable goods kept by the distributor/ dealer should be in good condition which means a detail of storage space and Refrigeration facility is to be provided.

Motivation to channel members is as follows  Margins offered by Parle are 8%. Now-a-days it has been raised to 8.5%.  The demand for Parle product also motivates distributor to keep stock of the product.  Total Quality Management initiatives and workshops to channel members to improve the network  Schedules of the sales man for retailers to estimate the quantities of various products needed. Parle evaluates its distribution channel in 3 ways. They are  Beat plan: This plan is generated for the various product categories. A weekly schedule is prepared for various markets and the retailers the turnover for each of the product is calculated for the wholesale dealers.  Cumulative performance: The performance of the dealers is averaged out over a period of three years where a comparison is made of the present performance vis-à-vis the previous ones.  Target versus achievement: The performance and the targets are compared and therefore the gaps are identified which help in evaluating the wholesalers and the distributors and planning for the next year as well. This is done for each of the product category.

Learning Experience In this study we learnt  How distribution channel is designed  How level of channel changes according to distribution objectives  How companies select channel members  How manufacturer motivates channel members to achieve the objective and maximize the sale  How company evaluate a channel